The following four types of typical companies are selected to discuss the specific tax avoidance methods of offshore companies in detail.
1. International business company (intermediary trading company): An international business company refers to a company that deals in goods and services internationally. Its main function is to issue invoices for procurement, sales, leasing and other businesses, and reflect the business process on the account books. Through meaningless entrepot trade, the sales profits of high-tax companies and profits from other sources are transferred to tax havens through transfer pricing. International trading companies take transfer pricing as the main means of tax avoidance.
2. International holding company: A holding company refers to a company that owns most of the shares and creditor's rights of one or several other companies, for the purpose of control rather than investment. Because tax havens do not levy capital gains tax on offshore companies, they can also play a role in tax avoidance under the condition of making full use of tax treaties signed between countries.
3. International Finance Corporation: The International Finance Corporation (IFC) refers to an institution that acts as an intermediary for the internal lending business of multinational corporations or provides loans to third parties. This corporate form mainly uses the preferential policies of tax havens that do not levy capital gains tax or interest withholding tax in tax treaties to reduce the high taxes that need to be paid for direct lending business. The company's tax avoidance model is similar to that of an international holding company.
4. Atypical offshore holding company: Atypical offshore holding company mainly operates in the form of holding company, because it is mainly used for reinvestment in the home country to obtain the super-national treatment enjoyed by foreign capital in the home country, and its operation direction is different from that of typical international holding companies; In addition, this corporate form is very common in developing countries where foreign capital enjoys super-national treatment.
Offshore companies have been widely used in international tax avoidance and achieved good results. Today, when China's national industries begin to implement the strategy of going global, it is a very effective choice to make full use of the convenience brought by offshore companies in international tax avoidance, reduce the tax burden of entering the international market and enhance their competitiveness.