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Offshore corporations in a changing offshore world. Alternative tax havens and offshore strategies. Offshore corporations in a changing offshore world. Alternative tax havens and offshore strategies.

Iceland

• International Trading Company (ITC)
• Not perceived as offshore company
• Low tax of 5%

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OFFSHORE-FOX.COM
with Michael Isaacson

Scandinavia's delights do not end with Denmark. Cool Iceland entered the market in 1999 with an innovative piece of corporate legislation and a tax rate of just 5%.

Iceland's Prime Minister David Oddsson is a conservative; this is at odds (no pun intended) with the rest of the Nordic region, which is dominated by social democrats. Under Oddsson, the country is a masterpiece of free enterprise and capitalism, and the population is healthily euro-sceptic.

Regulation and punitive tax rates have been pruned away like weeds that strangle a well-managed garden. Iceland has an unemployment rate of 1%, will probably be free of public debt within a few short years, and has the highest rate of mobile phone and computer usage in the world among its population of 280,000.

The Islandic International Trading Company (ITC) was brought into being in March 1999 when the Icelandic Parliament passed Act no. 31/1999, on International Trading Companies and Act no. 29/1999, on Amendment to Various Taxation Laws in respect of International Trading Companies.

An International Trading Company is a normal Icelandic limited liability company that has met certain operational conditions and as such has been granted a special operating licence.

International Trading Companies pay just 5% income tax and are exempt from net worth tax and stamp duties.

In Iceland, both private limited companies (Einkahlutafelag - ehf.) and public limited companies (Hlutafelag - hf.) can be established by persons of any nationality. Achieving the ITC status is a matter of proving bona fides to the relevant committee -- a process that you can be guided through by a lawyer in Reykjavik.

The annual cost of an Icelandic International Trading Company is ISK 100,000 (about US$ 1,400).

There are some limitations on the scope of operation of an ITC, such as the fact that ITCs cannot trade in goods covered by the EEA agreement.

ITCs can act as intermediaries in the trading of services between entities located outside of the jurisdiction of Iceland. This includes the ability to provide end consumers with, for instance, financial and insurance services, telecommunication services, internet services, computer advisory services and others. Note that the services must be supplied by the foreign entity and not the ITC.

The ITCs attraction as a low-tax pass-through point for services between two parties gives the shrewd tax planner an exciting new weapon in the struggle against tax conformity.

Icelandic ITCs offer a number of further specific benefits, particularly with regards to aircraft and vessel leasing.

The invention of the ITC has made Iceland -- an ultra-respectable European jurisdiction with excellent communications and banking facilities -- yet another non-traditional haven in which to accumulate "under taxed" profits.

 



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