The offshore corporation or offshore company is created and formed for both personal and business reasons. An offshore corporation is an investment vehicle with many benefits not usually afforded to domestic corporations. One very important feature of the offshore corporation is its structural adaptability. When combined with its asset protection, privacy and tax savings advantages, the offshore corporation is ideal tool and corporate vehicle for international business.
Offshore corporations, similar to Belize corporation, are legitimate business companies registered in a jurisdiction other than the one where primary business is conducted. Hence the name ‘offshore”, and generally, these offshore companies are not allowed to do business in the jurisdiction where the company is registered. However, more competitive and progressive legislation is redefining offshore corporations, removing some limitations, expanding investment capabilities that essentially economically benefit the jurisdiction and the corporation. As a result, some jurisdictions now allow offshore corporations to operate onshore as well. Upon incorporation, offshore corporations are certified legal entities, with the ability to carry out any type of lawful trade, investment or commercial enterprise, in any part of the world.
An offshore corporation may own or have interest in stock and shares in other corporations; may own assets (real, tangible, intangible), may own other corporations. Offshore companies enhance trade capabilities by operating through offshore bank accounts that offer additional tax savings and tax planning opportunities. When most of the offshore corporations business activities are international, in the absence of foreign exchange control and currency limitations, offshore banking in a very competitive banking climate deliver key saving features.
A few of the top offshore jurisdictions (based on features such as progressive and inventor friendly legislation, advantages, benefits, regional accessibility) include:
- The Cayman Islands
- Hong Kong
- St Kitts
Offshore companies are carefully designed to provide flexible options that enable sound wealth management, asset protection and tax savings. As such, there are many “forms” of offshore corporations or companies available. Of these offshore structures used for business, investment ventures, the offshore company limited, often called international business company IBC, and the LLC are the two most commonly incorporated. The ability to use these offshore corporations with on limitations and with instant credibility is critical to its success.
Ideally, an offshore corporation’s structure should include and combine the following features for maximum wealth and asset protection:
- Full tax exemption;
- Legislation providing privacy, confidentiality
- Flexible corporate structure;
- Nominee officers (enhances privacy and confidentiality;
- power of attorney so you can control and manage the company
- minimal reporting and accounting requirements
- non disclosure of beneficial owners to local body
- satisfactory limitations or restrictions
- no currency exchange
An offshore corporation should provided privacy and confidentially by way of enacted laws. In key jurisdictions, the names of the directors and shareholders of offshore corporations are not filed in the public records therefore this information is not known to the public. Top jurisdictions further protect the beneficial owners and directors of company by allowing companies to be registered using Nominee directors and shareholders.
The main (document but not limited to) for offshore corporation formation is the Memorandum of Association and Articles of Association, containing:
- The name of the company
- The name and address of the registered agent
- The address of the company
- Name addresses and nationality of subscribers and officers ( directors, shareholders, members)
- Share details & information (if any)
As a standard, one shareholder and one director is necessary for offshore corporation formation. Conveniently, the director and shareholder can be the same person, and can be a corporate body (another company or trust company).
Not all offshore jurisdictions incorporate a company by the same requirements, Panama for example, requires that the minimum number of directors need to incorporate a company is three. Some jurisdictions require a Secretary (sometimes a resident) for the company.
The management of offshore corporation is intentionally uncomplicated. It is more common not to have auditing, reporting or meeting requirements than to have any, and when there are such requirements, they too are minimal. As an example, where corporate meeting must be held, they can be held anywhere in the world, and by any available means.
One of the characteristics of offshore jurisdictions is the privacy and secrecy that they provide for owners and directors offshore incorporations. Incorporating offshore means in most cases that the names and any other information regarding owners and directors submitted during incorporation will not be made public record. For added privacy, there are jurisdictions which permit the incorporation of offshore corporations using Nominee directors and shareholders.
The primary reason for offshore corporations use is tax planning and tax savings. The key component in jurisdictions is the tax schedule imposed on offshore companies. The tax paid by offshore corporations depends on the jurisdiction in which the offshore company is registered. In general, offshore corporation taxes rate from 0 % to 30%. However, in cases where offshore corporation taxes are not zero, they are competitive and there are other fiscal incentives to further reduce the overall tax rate. Offshore corporations are exempt from capital gains tax, estate tax, corporate tax, income tax, inheritance tax, withholding tax and some enjoy exemption on stamp duty.
The process for incorporating offshore corporations is very straightforward. Most offshore providers have a website with simple and easy incorporation steps. Though incorporation can also be done via fax or telephone, and there is no need to visit the remote location for incorporation. Incorporating an offshore company can take just a few hours, and where offshore shelf corporations are available, a fully functional corporation is available in hours.
Offshore corporations are becoming more popular as people seek to maximize their profits and protect their assets. Offshore corporations are very easy and economical to maintain.