More in the offshore industry than anywhere else – cost is NOT everything. But it still is important, and a rather obvious factor.
Throughout the time, offshore financial centres have diversified greatly in terms of cost. There are some, like Liechtenstein, where absolutely first-class service comes at a quite eye-watering price. At the other end of the spectrum there are some jurisdictions where high incorporration volumes and high competition have driven the prices down into the ground.
After the corporate features and legal aspects of the offshore jurisdiction are all taken into the account, price comparison may still yield useful results. One particular position to compare is the minimum possible state duty. This is the fixed amount that the offshore company will pay every year in lieu of tax. As these amounts are fixed and don’t fluctuate unless the laws are changed (doesn’t happen often), easy comparisons are possible. In this respect, one may indeed prefer a jurisdiction where the minimum state duty is USD 100, as opposed to another, where it is USD 550 or more.
Certainly, the professional fees also come into the consideration, as those constitute the bulk of the cost for the annual maintenance of an offshore company. What is the incorporation fee and what are the continuing domiciliary and management fees? What are the audit and other statutory compliance requirements and how much will it cost to take care of them? Generally, the level of the professional costs will depend on (A) how much competition there is in the market? (B) how old and reputable the jurisdiction is? (C) what is the general cost of business operation in that country? (D) how old, big and reputable is the particular service provider and how much does it want new business? (E) what’s the level of greed and common sense of the particular offshore service provider?
A combination of all these factors often yields a clear conclusion that some offshore jurisdictions are definitely more competitive than others, BOTH in terms of price and quality of service! In a similar fashion, inside one jurisdiction, some offshore service providers will definitely prove to be much more competitive than others, again BOTH in terms of price and reliability of service. Given that an offshore company is for all practical reasons the same, going for the expensive offer will not buy a guarantee of quality, speed and reliability – in fact, very often the opposite will the case! So, some prudent research will usually be worth it.
To gain more insight on this one, You may like to read the other article in this chapter: How to choose the right offshore service provider?
