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WHICH JURISDICTIONS ARE WORTH CONSIDERING?

How to choose Forex jurisdictions, consider regulation and obtain licensing – Part 2

Cyprus

One of the main and largest islands in the Mediterranean Sea became one of the top locations in the world to obtain a Forex license. Due to the combination of highly-skilled professional services, modern infrastructure and a wide variety of investment opportunities mostly because of country’s attractive tax regime together with its EU Member status, individuals can operate a Forex business in a tax-friendly jurisdiction.

Cyprus boasts one of the lowest corporate tax rates in Europe, which amounts to 12.5%.
Moreover, The Cyprus Securities and Exchange (CySEC) is a Forex licensing and regulatory
body and is notable for being one of the top licensing bodies in the world – obtaining the CySEC license takes between 4 to 8 months.
The costs of obtaining licenses ranges from 2,000 EUR to 51,000 EUR depending on the type of licence you need. When applying, you should also know the requirements of a share capital, which depending on a license ranges from 80,000 EURto 1,000,000 EUR and must be maintained at all times.

Belize

An English-speaking country is a well regulated and stable jurisdiction. The Belize International Financial Services Commission is a globally recognized financial regulator that has a set of strict, rigorous rules that must be satisfied in order to obtain a Forex license. On the other hand obtaining it is relatively quick (the average time is around 40 days) and inexpensive (500 USD$ Government fee for a license application) with the initial capital of 100,000 USD$. One of the biggest benefits for a Forex company owners of doing business in Belize is that they are able to start and operate their FX company without having to pay any corporate tax within the country. Moreover, Belize also boasts very strong secrecy laws, which makes it extremely difficult if not impossible for governments and researchers to determine who the beneficial owners and shareholders of a company are.

Mauritius

Favorable tax regime with a corporate tax rate amounting to 15%, which might be reduced to a net effective tax rate of 3%and relatively low cost of setting up a Forex company in this small island attracts many investors from all over the world. Obtaining a Mauritius Forex Brokerage license seems to be inexpensive and easy.  An Forex Brokerage license is issued by The Financial Services Commission (FSC) that is the regulatory authority responsible for the regulation, supervision and inspection of all financial services other than banking and global business in Mauritius.
Not only is the waiting time for a license easy to obtain (takes 4 to 5 months)  but also the minimum capital requirement is only 17,000 EUR.

New Zealand

It makes a highly reputable and catchy business jurisdiction which offers you an easy access to the Asia/Pacific region. Limited bureaucracy, low start-up costs and clear procedure when applying for FSP regulation (accepting applications since 2010) makes this jurisdiction very attractive to new investors.However, if you wish to register your company in New Zealand, you must remember about several requirements thatentered into force in 2013:

– New Zealand FSP Registered companies must have a physical office in New Zealand,

– a Compliance Director must be employed at the office,

– all client record keeping, KYC and AML procedure must be handled from an office in New Zealand. This facilitates on-site compliance inspections,

– The company must be a registered corporation and comply with the business law within the jurisdiction of New Zealand.

– a minimum required capital must be 1,000,000 USD$,

Moreover, the financial regulatory authority responsible for accepting Forex broker license applications is New Zealand Financial Markets Authority. Licensing process takes around 40 days and the initial setup costs approximately 14,000 USD$.

However, if you wish to meet the criteria and establish an entity there you may use one of professional services consultancy firms there.

British Virgin Island

One of the most popular jurisdiction, Where the financial services industry is overseen by the Financial Services Commission and among others BVI FSC is responsible for issuing BVI broker licenses. Fx Brokerage License can be obtained within 6 to 8 weeks. The initial capital requirement starts from 30,000 USD$, depending on the type of license, the whole process takes typically 3-4 months with costs around 20,000-30,000 USD$.

Malta

With a steady growth for investment services Malta, as a part of EU, has become a desirable jurisdiction for Fx Companies. However, such companies need to be specifically formed for the purpose of providing Forex services, with special Memorandum and Articles of Association and full required documentation. The jurisdiction’s regulator The Malta Financial Services Authority (MFSA)  has played a key role in a growing investment field and it’s responsible for the issuing of all financial licenses including Forex licenses. Unfortunately applying for a Fx license is a quite long, complicated and expensive process. Depending on which category of license you will apply for, the required initial capital will range from 125,000 EUR up to 730,000 EUR. The costs of obtaining the Fx license is approximately 35,000 USD$ with the time frame of 6 months.

Seychelles

These small independent Islands at the Indian Ocean with a stable political and economical structure, offer excellent business condition to all entrepreneurs. Among many privileges that Seychelles offers, are flexible company law and no taxes levied on business income, dividend and banking transactions. If you’re planning to conduct a Fx brokerage business fully outside the Island and you do not have an operating office in Seychelles, only the registered address, then technically there is no need to apply for Seychelles license. On the other hand, if you wish to cooperate with a reputable Forex platform provider, you should apply for a Fx Broker License. Since 2014, requirements to obtain the Seychelles license from the Seychelles Financial Service Authority (FSA) have significantly changed. When applying, a local office in Seychelles for the purpose of liaising with the local regulator and maintaining local records is required. Furthermore, the minimum paid the capital amount to 50,000 USD$. The whole application process costs approximately 13,000 USD$.

Note that, when applying for a license in all mentioned jurisdictions you need to pay  some additional fees like stamp duties, certificates and proof of license. Moreover, you need 
to submit a full package of documents including a business plan that meets all  the requirements for obtaining a license, and pass a fit and proper test.

Above we describe only a few jurisdictions that offer you a possibility to engage in Forex activities, however the list is inexhaustible. When choosing a suitable jurisdiction for your business, and before starting the application process. it is crucial to conduct a research on all the requirements and consider the pros and cons against your own business needs and objectives.

 

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