Choosing between an onshore and offshore company structure in Asia is one of the first decisions that actually costs you money if you get it wrong. The wrong structure means you cannot sell locally, cannot get a bank account, or end up operating illegally in a market you thought you had covered. Both structures are legitimate. Neither is universally better.
Key Takeaways
- An onshore company is incorporated in the country where it conducts business. It pays local taxes, holds local licenses, and can sell to customers in that market.
- An offshore company is incorporated in a different jurisdiction from where the business actually operates. In Asia, Singapore and Hong Kong are the most commonly used offshore or holding jurisdictions.
- Markets like Indonesia, Vietnam, Thailand, and the Philippines generally require a local onshore entity before you can conduct commercial activities and generate revenue.
- Singapore and Hong Kong work well as offshore holding or trading structures because of their territorial tax systems and treaty networks.
- Many investors run both structures together: a Singapore or Hong Kong holding company above an onshore operating entity in their target country.
What Is an Onshore Company?
An onshore company is a legal entity incorporated and operated in the country where it conducts its primary business activities. It is subject to that country’s tax laws, corporate reporting requirements, and regulatory framework.
In Indonesia, for example, an onshore foreign-invested company takes the form of a PT PMA (Perseroan Terbatas Penanaman Modal Asing), a foreign-owned limited liability company established under Law No. 25 of 2007 on Investment. In Vietnam, it is an FDI enterprise registered under the Law on Enterprise No. 59/2020/QH14. In the Philippines, it is a domestic corporation registered with the Securities and Exchange Commission.
Onshore companies can generate revenue locally, hold local business licenses, employ staff on local contracts, and open domestic bank accounts. These are not optional perks. In most Asian markets, they are legal requirements for conducting commercial activities.
What Is an Offshore Company in Asia?
An offshore company is incorporated in a jurisdiction where it has no significant local commercial activities. In Asia, this typically means a company registered in Singapore, Hong Kong, or a classic offshore jurisdiction like the British Virgin Islands, that then conducts its business elsewhere.
Singapore and Hong Kong are not traditional “tax havens.” They are full-service business hubs with transparent regulatory frameworks. What makes them attractive as offshore structures is their territorial tax system: profits generated outside the jurisdiction are generally not subject to local profits tax, subject to specific conditions and the country’s anti-avoidance rules.
Dubai Free Zones operate on a similar principle. A company registered in a Dubai Free Zone can enjoy 0% corporate tax on qualifying income, 100% foreign ownership, and simplified setup, but faces restrictions on direct trading into the UAE mainland market.
Offshore companies in Asia are typically used for holding shares, managing intellectual property, conducting international trade, receiving dividends from subsidiaries, or serving as regional headquarters above multiple local entities.
Onshore vs Offshore: How Do They Actually Differ?
The gap between the two structures is not just about taxes. Banking, licensing, credibility, and compliance obligations all look very different depending on which structure you choose.
| Factor | Onshore Company | Offshore Company (Asia) |
|---|---|---|
| Corporate Tax | Full local rate applies (e.g., 22% in Indonesia, 20% in Vietnam) | Territorial: foreign-sourced income often exempt (e.g., HK profits tax only on local income) |
| Local Market Access | Full access: can sell locally, bid for contracts, hold sector licenses | No direct local market access without a separate onshore entity |
| Foreign Ownership | Varies by country and sector (0-100%) | Usually 100% foreign-owned by default |
| Banking | Domestic bank accounts; full local payment infrastructure | International banking; some restrictions in certain jurisdictions |
| Compliance Burden | Higher: local tax filings, annual reports, sector licenses | Lower in many jurisdictions; varies by substance requirements |
| Local Credibility | High with local partners, clients, and regulators | Depends on the jurisdiction; Singapore and HK carry strong reputations |
| Setup Cost | Varies widely; Indonesia PT PMA requires significant minimum capital | Generally lower initial setup; ongoing substance costs may apply |
| Typical Use Case | Active local operations, retail, manufacturing, services | Holding structure, international trading, IP management, regional HQ |
When Does an Onshore Structure Make More Sense?
You Want to Sell Directly to Local Customers
If your revenue comes from customers in Indonesia, Vietnam, Thailand, or the Philippines, you need an onshore entity. There is no legal shortcut. Invoicing local customers through an offshore company without a registered local presence exposes you to penalties and tax liability in the local jurisdiction.
Your Business Needs Local Licenses or Permits
Restaurant chains, healthcare providers, education businesses, import-export operators, and many other sectors require specific local licenses that only a locally registered company can hold. An offshore holding company cannot obtain an import license in Indonesia or a food business permit in Thailand.
You Are Hiring Local Staff on Formal Contracts
Labor laws across Asia tie employment contracts to locally registered entities. If you plan to hire and pay staff in Vietnam or the Philippines, your company must be incorporated locally. This also applies to work permit sponsorship for your own staff who will be based in the country.
You Are in a Market Where Foreign Ownership Rules Require Local Setup
Sectors like media, telecommunications, retail, and legal services often carry foreign ownership caps. In those cases, you may need a local joint venture or locally structured entity regardless of your preference for an offshore arrangement.
Also read; Best Countries in Asia to Set Up a Business (2026 Guide)
When Does an Offshore Structure Make More Sense?
You Are Holding Investments or Subsidiaries Across Multiple Countries
If you plan to own companies in three or four Asian countries, the practical solution is a single Singapore or Hong Kong entity at the top at the top of the structure. This simplifies dividend flows, reduces cross-border withholding tax through treaty networks, and gives you a single clean corporate umbrella for investors or lenders to evaluate.
Your Business Is Primarily International Trading
Trading companies that buy goods in one country and sell them in another can benefit significantly from a Hong Kong or Singapore company. Under Hong Kong’s territorial tax system, profits from offshore trading transactions may be exempt from profits tax. Under Singapore’s rules, foreign-sourced income can be exempt from corporate tax under certain conditions.
You Need a Tax-Efficient Holding Structure for IP or Dividends
Intellectual property rights, royalties, and dividend income are common reasons investors set up an offshore holding layer. Singapore and Hong Kong both have developed frameworks for managing these flows tax-efficiently, backed by extensive double tax treaty networks.
You Are Testing a Market Before Committing to Full Setup
In some countries, a representative office is a legal middle ground: a non-revenue-generating entity that allows market research and liaison activities before the investor decides to set up a full onshore entity. In Indonesia, a KPPA (Kantor Perwakilan Perusahaan Asing) serves this purpose alongside the existing representative office setup service offered by InvestinAsia.
Not Sure Which Structure Fits Your Business?
Our team has helped investors across 10 Asian markets pick the right structure from day one, before costly mistakes happen.
How Do InvestinAsia’s 10 Markets Compare?
The onshore vs offshore choice plays out differently in each market. Some countries make it simple. Others give you no good options without a local entity. Below is a direct summary of each of InvestinAsia’s 10 markets.
Indonesia
Foreign investors who want to operate commercially in Indonesia must set up a PT PMA (Perseroan Terbatas Penanaman Modal Asing). This is the onshore foreign-invested limited liability company, governed by Law No. 25 of 2007 on Investment and overseen by the Ministry of Investment (BKPM). Foreign ownership can reach 100% in sectors open to foreign capital.
The authorized capital requirement is IDR 10 billion (approximately USD 630,000), with a minimum paid-up capital of IDR 2.5 billion. If you are not ready to commit fully, a KPPA (representative office) lets you run market research and liaison activities without generating revenue. For full commercial operations, only a PT PMA registration covers you legally.
Indonesia punishes non-compliance harder than most ASEAN markets. Getting the structure right from the start is cheaper than fixing it later. Explore Indonesia company setup with InvestinAsia.
Malaysia
Malaysia’s onshore structure for foreign investors is the Sdn Bhd (Sendirian Berhad), a private limited company regulated by the Companies Act 2016. Most sectors allow 100% foreign ownership, though retail, certain professional services, and Bumiputera-reserved industries carry restrictions. Minimum paid-up capital requirements are low in most cases.
Malaysia is less bureaucratically complex than Indonesia and has good connectivity to the rest of ASEAN. It also offers Labuan as a midshore jurisdiction for companies with a regional function that do not require full mainland operations. Explore Malaysia company setup with InvestinAsia.
Thailand
Thailand’s Foreign Business Act B.E. 2542 (1999) restricts foreign majority ownership in many sectors, including retail, advertising, and certain services. In practice, foreign investors either secure a BOI (Board of Investment) promotion, which unlocks 100% foreign ownership and tax incentives for qualifying activities, or they operate through a majority-Thai-owned structure.
US citizens and companies may also rely on the Treaty of Amity with Thailand, which grants national treatment for most business activities. Thailand suits manufacturing, export-oriented businesses, and regional distribution. Explore Thailand company setup with InvestinAsia.
Singapore
Singapore’s Private Limited Company (Pte Ltd), registered with ACRA (Accounting and Corporate Regulatory Authority), allows 100% foreign ownership in virtually all sectors. Corporate tax is 17% with significant partial exemptions for the first SGD 200,000 of chargeable income.
Singapore is the most common offshore holding and regional headquarters structure in Southeast Asia. Foreign-sourced income received by a Singapore company may be exempt under Section 13(8) of the Income Tax Act when conditions are met. Many investors pair a Singapore Pte Ltd as a holding company above onshore subsidiaries in Indonesia, Vietnam, or Thailand. Explore Singapore company setup with InvestinAsia.
Vietnam
Vietnam requires foreign investors to register an FDI enterprise, either a limited liability company or a joint-stock company, under the Law on Enterprise No. 59/2020/QH14 and the Law on Investment No. 61/2020/QH14. Most commercial activities require this local presence before any revenue-generating work can begin.
Certain business lines are conditional, meaning foreign ownership is capped or subject to additional licensing. The list of conditional sectors is detailed in Annex IV of the Law on Investment and changes periodically. Processing times and investment certificate requirements add complexity compared to Malaysia or Singapore. Explore Vietnam company setup with InvestinAsia.
Philippines
The Philippines Corporate Code (Republic Act No. 11232) governs company registration through the Securities and Exchange Commission (SEC). The Foreign Investment Negative List (FINL), updated by executive order, specifies sectors where foreign ownership is capped at 0%, 25%, or 40%. Outside restricted sectors, foreign investors can own up to 100% of a Philippine corporation.
Minimum paid-up capital for 100% foreign-owned retail enterprises is USD 200,000 (remitted from overseas). The CREATE MORE Act (Republic Act No. 12066), with implementation rules finalized in 2025, improved incentives for high-value foreign investment. Explore Philippines company setup with InvestinAsia.
Cambodia
Cambodia is one of the most open investment environments in Southeast Asia. The Law on Commercial Enterprise (2005) allows 100% foreign ownership in most business sectors without a local partner requirement. Setup is relatively straightforward and costs are lower than in Singapore or Hong Kong.
Cambodia suits manufacturing, garments, and export businesses. Corporate income tax is 20%, and the Council for the Development of Cambodia (CDC) offers additional incentives for qualifying investments. For first-time investors testing Southeast Asia without the compliance overhead of Indonesia or Vietnam, Cambodia is worth a serious look. Explore Cambodia company setup with InvestinAsia.
Hong Kong
Hong Kong operates a territorial tax system: profits arising in or derived from Hong Kong are subject to profits tax at 16.5% (8.25% on the first HKD 2 million). Offshore income, income derived from transactions completed entirely outside Hong Kong, may be exempt from local profits tax, though the Foreign-Sourced Income Exemption (FSIE) regime effective from April 2024 has tightened how passive income is treated.
Hong Kong Companies Registry allows 100% foreign ownership with no local director requirement. Hong Kong is the most efficient structure for businesses with China exposure: CEPA market access, RMB conversion infrastructure, and an established legal framework for organizing Mainland joint ventures and WFOE structures are all available. Explore Hong Kong company setup with InvestinAsia.
Dubai / UAE
Dubai offers two distinct onshore/offshore tracks. A Mainland company is registered with the Department of Economy and Tourism (DET) and can trade across the UAE and internationally. The UAE corporate tax of 9% (per Federal Decree-Law No. 47 of 2022, effective for financial years from June 1, 2023) applies to mainland entities with taxable income above AED 375,000.
A Free Zone company benefits from 0% corporate tax on qualifying income, 100% foreign ownership, and no customs duties within the zone, but faces restrictions on direct trading into the UAE mainland without a local distributor. Free Zones like DIFC, DAFZA, and JAFZA each have their own regulatory frameworks and sector focus. Explore Dubai company setup with InvestinAsia.
Learn more: How to Register a Company in Dubai: Complete Guide for Foreign Investors (2026)
China
Foreign entities conducting commercial activities in China must establish a WFOE (Wholly Foreign-Owned Enterprise) or a joint venture (JV) under the Law on Foreign-Invested Enterprises. A representative office (RO) is the limited non-revenue option for liaison and market research functions.
China’s Catalogue of Industries for Guiding Foreign Investment specifies restricted and prohibited sectors. Most foreign investors structure a Hong Kong holding company above their China WFOE to take advantage of the China-HK Double Tax Agreement, which reduces withholding tax on dividends from 10% to 5% for qualifying holdings. Explore China market entry with InvestinAsia.
Learn more: How to Register a Company in China as a Foreign Investor: Complete Guide (2026)
All 10 Markets at a Glance
The table below summarizes the typical structure, foreign ownership position, and where InvestinAsia can support your entry into each market.
| Country | Onshore Vehicle | Foreign Ownership | Best For | Get Started |
|---|---|---|---|---|
| Indonesia | PT PMA | Up to 100% in open sectors | Domestic market operations, manufacturing, services | Explore Indonesia |
| Malaysia | Sdn Bhd | Up to 100% in most sectors | ASEAN hub, trading, services, regional distribution | Explore Malaysia |
| Thailand | Thai Ltd. / BOI entity | 100% with BOI; restricted otherwise | Manufacturing, export, automotive supply chain | Explore Thailand |
| Singapore | Pte Ltd | 100% in virtually all sectors | Regional HQ, holding company, fintech, professional services | Explore Singapore |
| Vietnam | FDI Enterprise (LLC or JSC) | Varies by sector; conditional sectors require local partners | Manufacturing, consumer goods, tech, export | Explore Vietnam |
| Philippines | Domestic Corporation (SEC) | Up to 100% outside FINL-restricted sectors | BPO, IT services, export manufacturing, PEZA zones | Explore Philippines |
| Cambodia | Cambodian Company (Ltd) | 100% in most sectors | Manufacturing, garments, Mekong region distribution | Explore Cambodia |
| Hong Kong | Private Limited (Companies Ordinance) | 100%; no local director required | Holding company, international trading, China gateway | Explore Hong Kong |
| Dubai / UAE | Mainland LLC / Free Zone Entity | 100% (Free Zone or Mainland since 2021) | Middle East hub, global trading, financial services | Explore Dubai |
| China | WFOE or JV | 100% WFOE in permitted sectors; JV in restricted sectors | China market operations, manufacturing, retail, tech | Explore China |
Expanding Across Multiple Asian Markets?
With 380+ in-house experts across 10 countries, InvestinAsia sets up the right structure in each market and coordinates your corporate umbrella from holding to operating entity.
Can You Run Both Structures at Once?
Yes, and many investors do. The most common arrangement in Asia is a Singapore or Hong Kong holding company at the top, with one or more onshore operating entities below it in the target countries.
This works because the holding company collects dividends from the operating subsidiaries with reduced withholding tax (often 5% to 10% under tax treaties, rather than the standard rate), manages the group’s IP and cash, and provides a clean corporate structure for investors or exit events.
A typical example: a Singapore Pte Ltd holds 100% of an Indonesia PT PMA and 100% of a Vietnam FDI company. The Singapore entity issues invoices for management services and licenses IP to both subsidiaries. Profits flow up as dividends, and those dividends can qualify for Singapore’s foreign-sourced income exemption under Section 13(8) of the Income Tax Act if the conditions are met.
The structure works. Substance is the catch. Both Singapore and Hong Kong have tightened their rules on what counts as real economic activity. A shell with no genuine management, no staff, and no actual decisions made in the jurisdiction will have trouble keeping a bank account, let alone claiming treaty benefits.
What Are the Risks of Choosing the Wrong Structure?
Using Offshore When Onshore Is Required
If you invoice local customers in Indonesia or Vietnam through an offshore company without a registered local entity, you risk penalties, back taxes, and the possibility that your contracts are unenforceable. In Indonesia, operating commercially without a PT PMA is a violation of the Investment Law and can result in your business being shut down.
Using Nominee Arrangements to Bypass Ownership Rules
In the Philippines, nominee shareholder arrangements, where a local citizen holds equity on behalf of a foreigner, are explicitly illegal and increasingly targeted by regulatory enforcement. Similar restrictions exist in Thailand and Vietnam. These arrangements carry serious legal and financial risk for both parties and offer no protection when problems arise.
Building a Holding Structure Without Substance
Singapore and Hong Kong are both under OECD and FATF scrutiny. A holding company with no genuine activity, no real directors present in the jurisdiction, and no records of actual decision-making will have trouble maintaining a bank account and may not qualify for treaty benefits. Substance requirements are not optional; they are the foundation of any legitimate offshore structure.
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Frequently Asked Questions
What is the main difference between an onshore and offshore company in Asia?
An onshore company is incorporated in the country where it operates and generates revenue. It pays local taxes and holds local licenses. An offshore company is incorporated in a different jurisdiction, typically one with a territorial tax system or favorable regulatory framework, and does not directly conduct local commercial activities in its home jurisdiction. In Asia, Singapore and Hong Kong are the most commonly used offshore or holding locations.
Which Asian countries allow 100% foreign ownership for onshore companies?
Singapore, Cambodia, and Hong Kong allow 100% foreign ownership in virtually all sectors. Malaysia allows it in most sectors. Indonesia, Vietnam, Thailand, and the Philippines allow 100% foreign ownership in specific sectors but restrict it in others. The restricted sectors vary by country and are updated periodically by each government.
Should I use a Singapore company as a holding structure for Southeast Asian operations?
Singapore is the most common holding jurisdiction for Southeast Asian investment structures. It offers 100% foreign ownership, an extensive tax treaty network, foreign-sourced income exemption under Section 13(8) of the Income Tax Act, and strong banking and legal infrastructure. However, the holding company must have genuine substance in Singapore to maintain banking relationships and treaty eligibility.
Can I use a Hong Kong company to do business in Asia without setting up locally?
A Hong Kong company can conduct international trading and hold investments without needing a local presence in each market it serves. However, if you want to sell to customers in Indonesia, Vietnam, or Thailand, your Hong Kong company cannot directly do that legally. You will need a separate local entity in each country where you conduct commercial activities. Hong Kong works best as a holding layer or trading intermediary for cross-border transactions.
What are the main risks of setting up the wrong structure for Asian market entry?
The two most common mistakes are (a) trying to operate commercially in markets like Indonesia or Vietnam through an offshore company without a registered local entity, which leads to tax liability, unenforceable contracts, and potential shutdown, and (b) setting up an offshore holding structure without sufficient substance in the jurisdiction, which can result in loss of treaty benefits and banking access. Getting the structure right before you start operating is substantially cheaper than unwinding a wrong one later.
References
1. Indonesia Ministry of Investment / BKPM. Law No. 25 of 2007 on Investment (Undang-Undang No. 25 Tahun 2007 tentang Penanaman Modal).
https://www.bkpm.go.id
2. Accounting and Corporate Regulatory Authority (ACRA), Singapore. Guide to Setting Up a Company in Singapore.
https://www.acra.gov.sg
3. Companies Registry, Hong Kong. Company Formation under the Companies Ordinance (Cap. 622).
https://www.cr.gov.hk
4. Securities and Exchange Commission, Philippines. Company Registration under Republic Act No. 11232 (Revised Corporation Code).
https://www.sec.gov.ph
5. Ministry of Planning and Investment, Vietnam. Law on Enterprise No. 59/2020/QH14 and Law on Investment No. 61/2020/QH14.
https://www.mpi.gov.vn
6. Department of Economy and Tourism, Dubai. Business Setup and Licensing Framework, UAE Federal Decree-Law No. 47 of 2022 (Corporate Tax).
https://www.dubaidet.gov.ae
