1. What is the single most important advantage your jurisdiction provides for Chinese clients?
Malta is one of the most attractive holding locations for investment into China. A combination of the new favorable China-Malta Tax Treaty (effective as from 25th August 2011), Malta’s advantageous tax environment and Malta’s holding regime means that Malta is becoming the jurisdiction-of-choice from which to hold Chinese Subsidiaries.
2. What is the main reason a Chinese client would consider using a shelf company in your jurisdiction?
Main reasons to consider using a Malta company include: tax efficiency, ease of administration and relatively low cost for an onshore and tax treaty-friendly jurisdiction.
The Maltese holding company regime can be used by Chinese companies to hold European and international group subsidiaries and share investments across the world.
3. What is your jurisdiction’s unique selling point in setting up offshore companies for Chinese clients?
Malta is not a pure offshore tax haven like BVI, which is caught up by Chinese CFC rules. It is an onshore (EU) tax resident and compliant jurisdiction with a very beneficial corporate tax system.
For Chinese clients, there are two main advantages of using a Maltese holding company:
1) Chinese dividends may be paid with the lowest level of Chinese withholding tax (WHT) and no further Malta tax
2) Profit (capital gains) arising on any disposal of a Chinese subsidiary are exempt from both Chinese and Maltese tax
4. It has been suggested that price remains a major factor for consideration for Chinese clients. Do you agree with this statement, and how do you think this will change in the years to come? Are you noticing a shift in emphasis on price to an emphasis on the quality of offshore structures?
I agree. Today price is a major factor and this is why Chinese clients prefer zero tax low cost offshore jurisdictions like BVI. This will change as the offshore world is changing and becoming more transparent. With an upcoming global automatic exchange of tax information, Chinese clients need more sophisticated structures with more substance. Such corporate solutions are tax resident and compliant. This is a shift towards better quality too.
5. Do you agree that as the industry comes under increasing regulatory pressure, Chinese business will gravitate to jurisdictions that are perceived as more transparent?
Chinese clients will be looking for tax and treaty-friendly safe and established jurisdictions for holding foreign investments, asset protection, estate planning and tax efficiency. Malta fits the bill on all those accounts.
Source: Prospera
