E-Commerce & Offshore – Boost Your Business

E-Commerce is a specific discipline in economy of each nation which entails financial and monetary activities performed via the internet. In simpler terms, it is a method of purchasing and selling goods or services online with no restrictions of distance or time. Online shopping stores are the most prominent example of e-commerce businesses.

 Types of e-Commerce

There are various kinds of e-Commerce, although this article emphasises on the activities conducted between consumers and businesses. Let’s understand them briefly :-

Business to Consumer : Any individual that has experience buying items online is well-acquainted with this kind of e-Commerce transaction. It occurs in online stores selling goods or services to consumers linked to the webpage of the business over the internet. It is a highly accessible manner of purchasing for a consumer as they can see and assess all the attributes of the product while in the comfort of their home. Notable examples include Amazon and AliExpress.

Business to Business : Two businesses are engaged in the method of electronic commercial operation where one of them sells the goods or services to another. Via the utilisation of online payment processes, the trade between two companies tends to get clearer, accessible and easier. Alibaba is a popular example of a B2B e-commerce store.

Customer to Customer : It is a commercial activity between two people which exchange goods or services with each other online. There are several well-known platforms that can be used for this kind of transactions. Common examples include E-Bay and Craigslist, wherein any individual linked through the Internet can exchange any type of legal goods or services.

Customer to Business : This kind of e-commerce is dependent on business functions generated by the consumer who positions the demand and decides on terms and conditions of the service or goods which they wish to buy. C2B is conventional in tourism and luxury sectors where the client puts in a personalised request and the organisations provide to accomplish it in exchange of money.

All the nations with a stable financial system and favourable tax regime are ideal jurisdictions to setup business for the development of e-commerce, regardless if they are an onshore or offshore tax domiciled. Many tend to setup in a low-tax offshore jurisdiction for obvious reasons which include the relatively low tax rates (from 0% to 20%) and low share capital that has to be paid out when the company is registered.

Read more: Opening a bank account in Malaysia for foreigners

 Benefits of Offshore e-Commerce

Substantial Saving on Tax : Offshore non-resident companies can enjoy favourable tax regimes provided by several tax havens such as Labuan.

Potential to Enter International Markets : To sell your goods and services to consumers in other nations preventing the impediments of distance and time.

Simplicity to Regulate All Incoming Money and Expenses : Credit and debit card transactions get documented by the payment gateway and can be simply assessed through client’s dashboard and online banking.

Duration of Transactions : When accepting money from the client or making payment to a provider, online transactions are executed in less time than cash or wire transfer.

Hassle-Free Annual Accounting and Auditing : Offshore companies (in its majority) are not obliged to present annual accounts. However, it is advisable to keep a record of them. Nonetheless, it is always advisable to subscribe to an offshore jurisdiction that requires annual accounting and audit to avoid any tax issues later.

Ease of Communication : Any enquiries can be attended to and resolved by sending instant e-mail or contacting customer support via online chat, which usually responds promptly.

Offer a Competitive Advantage : By saving on tax payment and office maintenance, more financial resources can be invested into the business which in return offers more competitive advantage to the business and customers.

An Interesting Read: The Growing Demand of Offshore Businesses

 Labuan – For International Businesses

Labuan is mainly ideal for businesses involved in international trade and transactions as such business model does not need to be domiciled in their own home jurisdiction which is regulated by the onshore authority.

In addition, Labuan’s robust regulatory banking framework, flexible and favourable tax regime including its low operational and set-up cost have attracted many international players to domicile their international business in Labuan. At present, Labuan has more than 60 reputable banks, which include prominent names like HSBC, DBS, Sumitomo, BNP Paribas, Goldman Sachs etc. to support the offshore global business.

E-commerce which mainly focused on international customers is suitable to set up via an offshore and internationally based company. Such structure offers the business to operate with much flexibility and ease from your own home jurisdiction or from anywhere in the world, as an e-commerce business is the ultimate portable venture. To find out how to setup your offshore structure and business, do reach out to QX Trust team of consultants at CONTACT US or consultant@qx-trust.com.