TAX STRATEGY
Just as offline corporations dodge taxes by operating separate holding companies overseas, Web merchants can now set up virtual offshore holding companies over the Net. In fact, one tireless promoter has come up with a "turnkey solution" to offshore ecommerce. It's called eSuite, the latest service from EOCnet.com.
EOCnet.com is the exclusive beneficiary of the EBS Limited Act, a private law passed in Bermuda this spring. (In Bermuda, individuals and businesses can propose legislation that applies only to them; if ratified, the custom-tailored law is enacted by the government.) Under the EBSact, EOCnet.com now offers eSuite - an independent, legal entity that has many characteristics of a corporation, including the ability to issue stock. An eSuite costs $2,000 annually and includes an account at the Bank of Bermuda so merchants can process credit card transactions. (Visa and MasterCard issuers require merchants to set up shop wherever they process card charges. In this case, the eSuite is that "shop.") In short, ecommerciers who never set foot on Bermuda can base their business there.
Granger Whitelaw, CEOof EOCnet.com, insists that his venture was not established as a tax haven, but acknowledges that Internet taxes elsewhere will be good for his bottom line. In his words, EOCnet.com gives "clarity to ecommerce" and "levels the playing field." For example, because of government regulations, etailers in Germany cannot offer buying incentives on their Web sites. But a German company's eSuite can, as there are no such regulations in Bermuda. Whitelaw claims EOCnet.com carries out due diligence to ensure clients are not laundering money or engaging in activities that are illegal in Bermuda (such as dealing in pornography).
Competitors rightly note that EOCnet.com isn't really offering anything new. Incorporating offshore by snail mail has been going on for years and is less expensive in other jurisdictions (just have a look at the classifieds in any edition of The Economist). Still, Whitelaw maintains that eSuite makes it easier than ever to set up an offshore company, and expects his eSuites to be fully operational this month.
EOCnet.com: www.eocnet.com.
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