Exploring Comoros: A Tax-Friendly Offshore Business Hub

Comoros offers a number of advantages that attract investors and entrepreneurs. It is considered one of the most open offshore jurisdictions to foreign investment among the states of the Indian Ocean and the Arab countries of the Persian Gulf.

Business owners who want to attract investors from Gulf countries usually prefer this destination because it offers a high level of confidentiality and other beneficial conditions. Let’s determine whether Comoros can be called a real tax haven for businesses.

Why Do Investors Opt for Comoros?

Thanks to its strategically advantageous geographical location and beautiful nature, the Comoros Islands attract entrepreneurs who want to invest in promising areas such as tourism, construction, and agriculture.

If you decide to establish an offshore company in the Comoros, the first thing you need to do is understand the peculiarities of this country’s tax system.

A Brief Overview of the Comoros Taxation System

This offshore jurisdiction has a territorial tax system. Businesses pay corporate tax only on profits earned from activities conducted within the country. If the company operates in other countries, it is exempt from paying corporate tax in Comoros. That is the reason why non-residents opt for an International Business Company (IBC) in this jurisdiction, among other available structures.

The government also offers various tax incentives to foreign investors:

• Companies that are just starting to operate are exempt from paying corporate tax for a certain period (the terms depend on the business niche).
  • Certain types of assets are subject to accelerated depreciation.
  • Companies involved in the implementation of investment projects are exempt from paying duties on imported equipment and materials.

Favorable tax conditions serve as a real draw for many entrepreneurs who see the economic potential of the developing region.

Main Kinds of Taxes

Let’s look at some of the types of taxes that are levied in the Comoros.

Corporate Tax

The standard corporate tax rate is 35%, and the minimum corporate income tax rate is 3% of annual turnover. Companies registered in Comoros do not pay tax on dividends and capital gains, which makes them even more appealing to foreign investors. Also, International Business Companies (IBC) are not required to conduct an audit and submit financial statements and do not pay tax on profits received outside this jurisdiction.

Personal Income Tax

Residents of the Comoros Islands are required to pay taxes on all types of income, including profits earned outside the jurisdiction. There is no fixed rate, as individuals pay personal income tax on a progressive scale. It depends on the amount of income received and varies from 0% to 30%. Non-residents pay tax only on income earned within the jurisdiction, and the interest rate is also progressive.

Value-Added Tax (VAT)

A 20% value-added tax is levied on all goods and services in Comoros. Essential goods are subject to a reduced or zero rate, which is yet another benefit for international business.

Customs Duties

Imported and exported goods are subject to customs duties. Tariffs are applied in accordance with international agreements since the state is a member of the WTO (the World Trade Organization).

Tax Incentives and Tax Breaks

The government offers tax breaks and various benefits to attract investors and stimulate economic growth. Benefits include lower interest rates on profit tax and exemption of certain types of income from taxation. Companies operating in certain regions and sectors of the economy can count on fiscal relief. Priority niches are constantly changing, so business people need to monitor up-to-date information regularly.

Conditions for Obtaining Comorian Citizenship for Investors

This offshore jurisdiction has a non-disclosure agreement for non-residents who want to become citizens of the Comoros. Foreigners can be sure that the following rules will apply if they obtain citizenship in this jurisdiction:

• No notifications will be sent to their country of residence.
• The applicant will not be required to renounce their first citizenship.
• Investments in any government projects will not be required until the application is approved.
• The applicant does not have to reside in the jurisdiction for a certain period.
• Citizenship can be revoked in case of serious violations of the law.

Conclusion

Comoros is an attractive offshore jurisdiction for doing business. Its location in the Indian Ocean and minimal corporate tax rates make it possible for business people and investors to gain access to three world markets at once: Asian, Middle Eastern, and African, and give them an opportunity to conduct successful large-scale commercial activities. 

The country has great potential for establishing a business in various areas: tourism, construction, agriculture, and renewable resources. Investors enjoy a flexible tax system and a number of benefits. If you want to register a business in the Comoros, waste no time and contact our company straight away. Go through all the stages with expert assistance and legal support from professionals.