A rather obvious factor. However, in the offshore industry, same as anywhere else – price is not the whole thing.
Offshore financial centres have developed a considerable variety in terms of cost. There are some jurisdictions, like Liechtenstein or Bermuda, where paying premium fees is unavoidable, and not always the level of service is up to par. On the other side there are some jurisdictions where high incorporation volumes and lots of competition have driven the prices down to the bottom. Often, unfortunately, at the expense of quality.
After the corporate features and legal aspects of the offshore jurisdictions are all compared, price still remains an interesting variable. One particular position to compare is the minimum possible government duty. This is the fixed amount that an offshore company will pay every year instead of income tax. As the government fees are fixed and don`t fluctuate unless the laws are changed (that does not happen often), easy comparisons are possible. In this respect, one may indeed prefer a jurisdiction where the minimum state duty is USD 100 or USD 150 (Belize), as opposed to another, where it is USD 350 (Bahamas) or USD 450 (BVI).
The level of professional fees are even more significant, as these constitute most of the annual maintenance cost of an offshore company. What is the incorporation fee and what are the continuing management fees? What are the reporting and statutory compliance requirements and how much will it cost to fulfill 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 is the jurisdiction (C) what is the general cost of living and business operation in the country (D) how old, successful and reputable is the offshore service provider (E) how much does the offshore service provider wants to attract new business – some of them are not very enthusiastic to take on new clients.
A combination of all these factors may yield a victory for one or another offshore jurisdiction, BOTH in terms of service quality and price! Similarly, inside one jurisdiction, some offshore service providers will definitely be more competitive than others, again both in terms of price and service quality. Given that an offshore company will essentially be the same product, regardless of who is the provider, going for the most expensive offer will not buy a guarantee of quality, speed and reliability – in fact, very often the opposite will be the case! So, it definitely pays off to do some careful research before committing to a particular firm.
For more insight on selecting an offshore incorporation agent, please read the next article in this chapter: How to choose the right offshore service provider?