Why Go Offshore ?
The words “offshore business” and “offshore company” have no precise legal, tax or general business meaning. The word “offshore” often means nothing more than anywhere other than the place of physical location of the person using the word (i.e. overseas). We use the words “offshore business” and “offshore company” as terms of definition in connection with matters such as the structuring of international business and family wealth management or tax planning. There may be substantial benefits obtained through moving your business and assets into an offshore entity.
Perhaps you’re worried about your future, about the potential of a crippling liability action, perhaps you’re trading internationally and have income arising in different parts of the world, or perhaps you are concerned about inheritance taxes on your death.
An offshore company is a very flexible corporate entity commonly used in international tax planning, and can be integrated into a wide variety of business arrangements. Tax minimisation, asset protection and confidentially are just a few benefits which can be achieved by a proper application of an offshore company. A clever use of an offshore company can reduce, defer or eliminate some tax that would be otherwise payable in a high-tax jurisdiction, but does not relieve its beneficial owner from all personal tax liabilities in his home country.
Incorporation of an offshore company (or non-resident company) can be used for various purposes. One of the most common is the use of an offshore company as a holding company to hold interests in other companies in various jurisdictions, to hold trademarks, copyrights and other intellectual property rights, as well as to serve as the holding company for licensing of franchises.
The income from taxable jurisdiction flowing to the offshore company (holding company) is not taxable. Interest in establishment of offshore companies has been popularised by the ability of the offshore corporate entity to mitigate taxes to its beneficiaries. Residents of countries with high tax rates may be able to reduce the tax they pay by arranging for profits to be attributed to a company incorporated in a territory, which does not tax the income earned outside of the territory.
Going offshore: Reasons and Benefits
Reasons and benefits for individuals and corporations to utilize offshore companies include:
- Maintain financial privacy
- Reduce tax
- Manage risk
- Avoid costly bureaucracy
- Reduce costs
- Enhance assets
- Free remittance of profits and capital
- Access to tax treaties
- Security of property rights
- Banking privacy
- Availability of offshore experts
- Access to foreign insurance and reinsurance
- Enhanced privacy
- Territorial taxation on foreign income
- Fewer restrictions
- Sanctity of contracts
- Foreign investment inducements
- Higher yields and returns
- The search for political stability
- No inheritance, succession or gift taxes
- Protection from inflation
- Reduce legal liabilities
- Reduce operating expenses
- Freedom from currency exchange control
- No international trade tariffs
- No annual tax return requirements
- Data on owners and directors not publicly available and remain confidential
- World class banking and investment management services available
Offshore Companies Applications The principal uses of offshore companies are:
- Trading
- Investment
- Holding
- Financing
- Patent, royalty and copyright holding
- Real property ownership
- Ship management and yacht owning
- Personal and corporate tax planning