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Jurisdictions with low maintenance costs

Areas with low maintenance costs are those jurisdictions with particularly cheap tax systems where the company's annual maintenance costs are lower. An effective tax planning strategy often revolves around these jurisdictions as low taxes and maintenance costs are among the most effective and easiest cost reduction tools for any business.

Company maintenance In general, company maintenance includes any operations that ensure a business is active in its day-to-day endeavours. In addition, many favourable tax jurisdictions require every international company to undergo a company renewal procedure on an annual basis, by submitting a renewal application and paying a certain fee to the state. In terms of tax planning, company maintenance is normally understood as referring to the expenses associated with paying taxes, state fees, stamp duties, charges and any other costs that may arise from operating a company. These include, but are not limited to:

Taxes Import/export duties Salaries License fees Office rental Stamp duties Annual renewal fee Notary fees State fees Maintenance usually does not include any expenses directly related to business transactions, such as the cost of raw materials to be used in production or the purchase of goods for resale.

Depending on the jurisdiction, company maintenance can either be the biggest source of expenses (especially due to taxes and renewal fees) or a barely noticeable cost of conducting a profitable business. This is the main reason why jurisdictions with low maintenance costs are so popular with companies seeking to optimise their taxes.

Steps for maintaining a company The first step in effective company maintenance is financial planning, including tax planning. A company needs to identify its biggest source of expenses and then find a way to gradually reduce these costs. One of the primary goals for maintaining a company effectively is reducing its tax burden and annual renewal fees. The second step is to choose a jurisdiction with low maintenance costs and an advantageous tax regime. Confidus Solutions will be happy to share our professional knowledge in this matter, in order to help you analyse the options and choose the best jurisdiction in which to incorporate.

The third step is relocating the actual business or incorporation to the jurisdiction of your choice. The particular details of this process may vary between jurisdictions and legal business structures, so each company should carefully assess which business structure is most advantageous in their particular case.

In the long term, maintenance costs are mainly related to wages, taxes and supplies. Wages are effectively determined by the labour costs in each jurisdiction, which, in turn, are influenced by working culture, education and skill levels, competition level, etc. Taxes depend on the legal business structure and the activities performed by a company — some will require licenses and patents, which must be regularly renewed for a fee. Finally, the supplies required will depend on each particular company, but usually include rent (supply of premises), utility bills (supply of heating, electricity, water, etc.) and operational resources, such as petrol and office supplies.

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