An offshore company is an internationally recognized business company that is used for many different types of commercial activity. In most cases, that business activity is can be conducted anywhere except in the jurisdiction in which the company is incorporated. However, many offshore financial centers and tax haven are trending toward the disambiguation of onshore and offshore, offering tax regimes that are beneficial to both local and non-resident business. In those cases, rather than call such companies onshore or offshore, they are more favorable referred to as international business companies or offshore business corporations.
For clarification, companies governed by similar attractive legislation with low or no corporate tax and do all the business “offshore” are known by many different names the most common which are: offshore company, offshore corporation, non-resident company, exempt company, exempt corporation, international Business Companies, and IBC.
Most of the features and characteristics of offshore jurisdictions are similar from territory to territory, since many countries simply adopt and already working and functional (laws) and simple progressively develop and amend to be more investor friendly, and attractive for business.
Offshore Company Features
The ideal model of an international business company or an offshore company should feature:
- international trading capabilities
- beneficial and advantageous tax schedules
- nominee services (where agent provided officers director, or shareholders are provided to enhance owner privacy
- single director company, and single shareholder
- Power of attorney so you retain control and management of your company
- a full range of administration and maintenance offshore company services
- the ability to open multicurrency offshore bank accounts
- laws that offer privacy and confidentiality of company owners
- fast incorporation
As such, investors will find that many offshore laws have the basic features as it pertains to structure, governance, privacy and confidentiality, schematics of law governing the offshore entity.
Due to the adopted characteristics of offshore companies, the offshore entity is forbidden from being used most cases cannot be used locally, this will be explained shortly. The defining feature of an offshore company is the conditions of its formation.
Offshore companies like other offshore entities such as offshore trust or foundations are companies formed and registered as a legitimate company in an “offshore” jurisdiction sometimes referred to as an offshore financial center, and more loosely applied and somewhat misunderstood tax haven. Often the word “offshore” and tax haven invokes images of financial secrecy, tax avoidance, and the geographical limitations of remote islands in far-away places, but truthfully, an offshore jurisdiction is actually an important and necessary business that can be anywhere, can be across state lines, even your own state may be an offshore jurisdiction.
The views on offshore companies and offshore financial centers are divided, but supporters of offshore financial centers prove (by numbers) that these offshore companies are a legitimate and vital part of international finance and trade. Many opponents of offshore financial center actually, legally utilize the same financial services they that competitive tax structures, to stimulate and diversify economies.
Offshore companies, by their nature are often legally designated the name International Business Company, or IBC, However, there are many other names by which an offshore company can be called, and choice of description is jurisdiction based. Some familiar terms used to refer to offshore companies are, International Business Company, Corporations, Companies, Non Resident Corporations, International Companies and even Extra territorial Companies. The offshore companies can be formed in many available legal structures including LLCs, Partnerships. All of these offshore entities, in chosen form can be used to conduct business and open bank accounts.
Offshore Company Formation
Offshore companies, offshore corporations can be formed by individuals or by other corporate bodies, i.e. a company forming a company, and there are no restrictions on who can own an offshore company, or limitations on such.
Offshore companies, are ideally for investor’s tax planning tools, and were in a sense first formed to offer a legitimate tax benefits, since the countries where offshore companies were offered imposed little or no taxes, the attract investors to these locales. Eventually, the tax planning benefits become the primary reason for offshore company formation.
Offshore Companies – Reasons to use
There are many other reasons investor’s private and corporate use offshore companies:
- Tax savings -Set up in no tax or low tax, with laws that exempt earning from practically all forms of taxes, such as corporate tax, capital gains tax
- Asset protection -Assets in an offshore entities, or held by an offshore entity are under the legal control of the offshore jurisdiction and not affected by ruling from other countries
- Privacy, anonymity, confidentiality for owner
- Flexible business laws, structures – laws that make it easy to set up offshore corporations, with one director, one shareholder, minimal reporting requirements, flexible capital requirements easy to administer to
Factors affecting offshore companies formation based on the individual; offshore strategy: cost, benefits, advantages, justification stability. Offshore company registration and offshore company incorporation simple process often conducted through offshore service providers located on the tax haven, which simplifies the process, and enables the offshore incorporation to be done in absentia. No trip to the offshore jurisdictions is required to set up offshore companies..
Offshore banking services and offshore company banking are all closely linked. Offshore bank accounts are offered with offshore incorporation packages. Offshore companies have the combined benefits of tax exemption, anonymity, privacy protection and limited liability. It is little wonder that so many business people are choosing to incorporate their offshore companies.