Offshore company?! Do I need one?
Offshore business and company are the words with no definite legal or general meaning. In plain words, offshore means “anywhere other than the place of physical location of the person using this word”, in other words – overseas. Offshore business and company are mainly used in relation to the subjects such as structuring of international business and family fortune management. Utilization of international corporate or fiduciary trust structures has many reasons and advantages.
|Many individuals and corporations who use offshore companies and planning aspire to:|
|– Reduce tax||– Protect assets|
|– Manage risk||– Enhance assets|
|– Maintain privacy||– Reduce costs|
|In general, the reasons for using offshore companies for business are:|
|– Free remittance of profits||– Access to top-rated jurisdictions|
|– Security of property rights||– Accessing low cost areas|
|– Access to tax treaties||– Banking privacy|
|– Availability of offshore experts||– Access to foreign insurance|
|– Customs and duty exemptions||– Exchange convertibility|
|– Enhanced privacy||– Government cooperation|
|– Fair treatment||– Territorial taxation|
|– Sanctity of contracts||– Foreign investment inducements|
|– Fewer restrictions||– Tested legal systems|
|– Higher yields and returns||– Sophisticated banking facilities|
|– The search for political stability||– Reduced taxation|
Offshore companies are mainly used for:
|– Trading||– Investment|
|– Holding||– Financing|
|– Services and consultancy||– Intelectual property|
|– Ship management||– Tax planning|
- Companies incorporated in ‘tax haven’ countries offer individuals and businesses little or no tax liability which include company formation centers such as Seychelles, Marshall Islands, Panama, Dubai, etc.
- Companies registered in jurisdictions can provide both offshore and onshore companies which may gain from beneficial tax regulations and/or uncommon company systems.
- Companies registered in many onshore countries with laws which enable systems that are tax favorable for specific international purposes.
- Although the world of offshore was presented by the media as black-and-white world, it is far more complex. The offshore business includes both tax havens and onshore high tax jurisdictions striving against others to attain international companies and individuals with all methods of regulations and opportunities.
These beneficial regulations are used for diverse tax planning business, such as:
- Double tax treaty planning in relation to dividends, interest and royalty payments.
- Formation of international head-quarter treasury, holding and finance operations.
- Specialized business, for example, leasing.
- Personal and family wealth management.
To stimulate inbound investments, almost all countries offer one sort of tax regulations or another.
Existing opportunities for improving general efficiency presented by low tax regimes offered by the high tax jurisdictions looking to encourage international business have been recognized by the international advisers for some time.
Still, in order to implement such structures successfully, a wide range of issues, frequently relating to subjects such as provisions of anti-avoidance, double tax aversion, controlled foreign company and management and control tests and stipulations, transfer pricing, narrow capitalization, participation indemnity, capital gains tax and a multitude of other ever-changing regulations.
- Latterly, once held in the arms of the tax collectors, the weapons have now been reinforced by exchange of information treaties and provisions.
- Nowadays, the offshore world involves skilled implementation of special tax favorable structures domiciled in high tax jurisdictions(Switzerland, UK, Singapore, the Netherlands etc).