What is Offshore Company?
Most business people have heard of offshore companies. However, there are very few, who really have idea about what is the core purpose of establishing these companies and how they differ from other common companies. We will present here some basic concepts and unique benefits associated with offshore companies.
Where are the tax havens?
Tax havens are countries where financial secrecy laws are very strict while tax laws are quite in favor of foreign investors I a sense that they charge no or very nominal taxes to foreign investors.
Andorra, the Bahamas, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, the Channel Islands, the Cook Islands, Hong Kong, the Isle of Man, Mauritius, Lichtenstein, Monaco, Panama, Switzerland and St. Kitts and Nevis are all considered tax havens.
What is Off-Shore?
First, it is necessary to define a term “offshore”. Offshore entities often carry out business, or work in a foreign country to get financial, legal and tax benefits. Offshore Company is an established company whose managers, shareholders and holders of registration are resident out of the country space. Again, these are usually after financial, legal or a range of tax benefits.
What are the benefits of incorporating offshore companies?
- Low Taxes: Many offshore companies or offshore corporate entities, earning revenues from activities outside the jurisdiction of the company formation, do not pay local taxes.
- Anonymity: The Registrar of offshore companies does not disclose information of the beneficiaries of the offshore companies. Therefore the underlying key beneficiary remain anonymous, and can make all transactions in the name of offshore company anonymously.
- Asset Protection: In the context of international trade, it is often the case of companies where mainly jurisdiction laws applies. Many offshore jurisdiction has a reputation for its favorable asset protection laws. An offshore company also protects the assets of an offshore company with banking facilities.
- Reports Ease of use: Offshore companies has limited reporting requirements to meet relative to the companies in onshore jurisdictions. Most offshore companies, are not required to file reports and financial statements. Instead, offshore companies are required to pay some annual fee to local authorities.
- Costs and operating expenses: offshore company with limited information requirements are generally bear lower maintenance and operation costs. Incorporated offshore companies avoid special expenses like accounts preparation and audit costs which are generally very large and have to bear by onshore companies.