3 Tips for Understanding Foreign Ownership Structures

As an investor, are you looking to take on a new venture across seas? Tehran-based international legal consultant Shahram Shirkhami knows a few important aspects to consider when undertaking a new foreign investment. His work with many international companies and investors culminates in extensive knowledge of infrastructural investments, primarily in the Middle East region. Here, he shares his insights in making the most of foreign investments.

  1. Know Country-Specific Rules

When undertaking a major infrastructure project, it is crucial to understand the ownership structures of the individual country in question. “Certain Middle Eastern countries, such as Bahrain and the United Arab Emirates, do not place any tax burden on foreign-based investors,” says Shahram Shirkhami. This means that overseas incorporation can be quite the ideal strategy! Just make sure you do your research to understand the tax structure of the country where you’re looking to invest.

  1. Understand the Risks

While some countries offer tax-free investing opportunities, not all Middle Eastern countries operate this way. Some countries, such as Oman, require that foreign ownership be transitioned to a domestic ownership base at some point within the project life cycle. At this point, the shares are offered to the general public and reincorporation takes place. “In this case, the tax benefits of incorporating overseas must be carefully weighed against the hurdles and expenses associated with reincorporation,” says Shahram Shirkhami. In other words, investors should be certain that the long-term benefits can hold up to the risks related to this potential roadblock.

3. International Tax Treaties

When engaging in long-term operational planning, consider the international tax treaty of the country in question. Tax treaties might allow for reduced rates, or even tax exemption, on certain items of received income. Tax treaties can make investing in partner countries much more lucrative.

In summary, it can be truly profitable to invest in foreign ventures, primarily in the Middle East. Certain countries harbor tax laws and treaties than can benefit international investors. However, one must be aware of the risks involved when dealing with countries that require foreign ownership to be reincorporated to the domestic. Even in these situations, the threats might be overshadowed by tax benefits.