Why is it reasonable to set up an offshore?
February 18, 2016
Running a business is not an easy process per see, especially when taking into consideration the necessity to maximize profit. This is the main reason why investors, corporation holders and company owners incorporate their businesses in offshore jurisdictions. Offshore companies pay insignificant amount of taxes and dues to the country of registration. This allows saving company’s profit but is often criticized and demonized by the most of the international community.
Nevertheless an offshore activity is completely legal and supported by such financial institutions as the World Bank, WTO and OECD. Many business owners round the world avail of opportunity to avoid income tax or to pay a small amount of it.
There are some more reasons making such type of company organization attractive:
- Tax reduction. Being properly incorporated in a certain jurisdiction an offshore company may be exempted from paying an income tax that plays a big role in revenue redistribution. The income tax as such may not even exist or the company may be obliged to pay imperceptible its amount. In some cases business is organized as offshore in order to avoid double taxation.
- It is true that offshore companies’ owners have the opportunity to stay in the background without appearing in public registrars. Thus the company is registered on a nominee director which doesn’t have the power to take management decisions. It makes sense when the domicile country of the company owner chases such type of activity.
- Organizational simplicity. Brokerage agencies suggest creating an offshore company in 2 – 3 days suggesting the hassles process which doesn’t require personal participation. It is also very easy to maintain and manage the company and its bank accounts. Besides offshore jurisdictions suggest simplified reporting and accounting systems.
- Assets protection on a high quality. Creating an offshore company is the most perfect way to protect assets of any kind. Offshore centers strong financial and elaborated legal systems ensure the highest level of protection.
- Administrating outsourcing. Such services as secretarial or administration may be outsourced to professional agencies on a reasonable price. This is a perfect opportunity to save time on more important tasks. Such services as nominee directors and shareholders appointment,virtual office, audit and accounting are also available.
- No minimum startup capital. Most of jurisdictions don’t require company creators to have the minimum startup capital however some of them may provide such requirement. There are also no requirements to capital structure.
- No tax on property. Offshore company owners are not burdened with any kind of property or real estate taxes.
Offshore business organizing is available to the wide range of investors and corporations involved in various activities. It doesn’t matter whether the organization produces products or services or is involved in transnational activity it has an opportunity to enjoy all those benefits mentioned above.
So which companies or individuals may benefit as offshore organizations?
- Companies involved in international trading. Importing as well as exporting companies may avail of transferring the difference between sales price and purchase price to a tax-free area. It is important to choose an appropriate jurisdiction because documentation should be correctly organized.
- Holding organizations. It makes sense when facing the necessity to pay dividends to subsidiaries operating in different countries.
- High-priced property owners. Owning the overseas expensive property or real estate will turn into a cost-effective experience when putting it to an offshore company’s balance. In the issue the owner doesn’t have to pay tax on property and has the opportunity to conduct sales transactions easily.
- Inheritance recipients also have a chance to avoid an inheritance tax and to maintain confidentiality if desirable in case of incorporating a company for this purpose.
- Financial service providers benefit with opportunity to get access to the highest level of bank privacy and ability to conduct operations anywhere in the world in any currency and of course enjoying the available tax benefits.
- Specialized service providers. Such categories of people as singers, designers, advisers, authors may enjoy the tax-free income.
- Shipping companies. Activities associated with ships owning and chartering may also be tax exempt.
- Copyright and patent agencies.
Making a long story short
Building own business is difficult process, but offshore organization helps to do it easier and more profitable for you. There are many pros for any activity: Organizational simplicity, high quality of protection, no taxation, no initial capital.
It doesn’t matter which activity your company is engaged in, a thorough jurisdiction’s analysis is required before setting up a company in it. All offshore areas have its own particular qualities and it is better to use the professional assistance when opening an offshore in order to avoid serious mistakes.