Nowadays most business people have heard about offshore companies. However, very few of them are aware of their benefits and their difference from other more common onshore entities. An offshore company is a legal entity established in a tax haven or offshore financial center, being protected by specific legislation which guarantees a status of partial or full tax exemption. Additionally offshore companies are easier to administer and more confidential than onshore companies.
This article will be related to offshore companies and it will show some of their unique benefits. It is important that the offshore location suits your needs and criteria, so careful consideration and advice are paramount.
What are the benefits of offshore company?
- Reduction of Taxation
- Simplicity of set up
- Complete Financial Privacy
- Easy process of Reporting
Confidentiality is one of the key features of offshore company. In many jurisdictions, the company shareholders and beneficial owners can be removed from the incorporating documents and their personal information will not be disclosed. So you can be provided with significant privacy and confidentiality benefits. Thus, all the transactions can be carried out in the name of an offshore company while remaining anonymous.
Major difference between an onshore company and an offshore one is that the rate of tax applied by the government in the jurisdiction in which an offshore company is incorporated is either very low or zero. Offshore companies established in low or zero tax jurisdictions may reduce or even completely eliminate the taxation on the company. Registering an offshore company can legally minimize the tax obligations of a business and this is often the primary reason for incorporating a business offshore.
Offshore company formation in many jurisdictions is a quick and seamless process. Registering an offshore company will require minimal capital, usually less than what is required for an onshore registration. Be aware that in certain jurisdictions there is in fact no capital needed for registration. In spite of increasing anti money-laundering measures being applied and measures to prevent terrorism and criminal activities, the process of setting up an offshore company can be relatively fast and simple. This can translate into lower costs in both the establishment and maintenance of an offshore company.
Conducting business and undertaking banking transactions in the name of an offshore corporation, provides significant financial privacy. The placing of assets into offshore corporations and overseas legal structures can provide a strong layer of protection from future liabilities. Many offshore jurisdictions are renown for their favourable asset protection laws. Offshore companies provide highly effective asset protection and effectively screen your finances from public view.
Most offshore companies are not required to do annual reports and accounts in the jurisdiction of the company formation. Instead, local authorities can charge a flat annual licence fee, which is low in comparison to reporting expenses and taxes in onshore jurisdictions.
So you can see that not only taxes and increasing confidentiality are the benefits of setting up an offshore company. Although tax effectiveness is the first and foremost benefit that comes to mind when considering offshore companies, the opportunity to considerably reduce business overheads is also a very attractive bonus.