In international trade, cross-border tax costs are a relatively large burden for enterprises. In the investment process, we have to consider the tax law risks of the investment destination country and the home country of investment.

After registering an offshore company and conducting foreign trade through the offshore company, a considerable part of taxes can be exempted. There are many offshore jurisdictions in the world that do not levy corporate business tax and sales tax that ordinary companies have to pay. Some even do not levy personal income tax. They only charge a small amount of annual management fee. For example, island countries such as the British Virgin Islands, Cayman Islands, or Bermuda. Hong Kong is also a popular registration place for offshore companies among mainland enterprises. Although Hong Kong is not as preferential in taxation as island companies, its simple tax system and low tax rate are also highly recognized in the international market.

A typical practice of tax planning with offshore companies:
Company A has been doing business with an American company C and has obtained a certain amount of operating income and profit. Company A also pays taxes to the local government according to the obtained operating income and profit. If now Company A uses an offshore company B in the British Virgin Islands (actually belonging to the same company as A) as an intermediary, and then Company B buys goods from Company A and sells them to Company C in the United States. Since Company A only reflects a small part of its operating income and profit, and most of the rest of the income and profit is reflected by Company B, the taxes of Company A are greatly reduced, and Company B does not have to pay taxes as an offshore company itself.