Offshore incorporation is the act of forming a legal entity in an offshore jurisdiction. Offshore incorporation of business companies is a favored for many legitimate reasons and functions including:
- Minimize tax liabilities ;
- Maximize tax planning opportunity;
- Form a versatile and flexible company used to conduct international trade and commerce, or used as an investment vehicle
- Use to transact in foreign currencies, exempt from foreign controls
- Operate a company with low operational cost, low maintenance, low administration and minimal reporting requirements
- Enhance asset and wealth protection (protection from litigation, creditors, economic, financial instability et al)
- Provide anonymity and privacy options
With these reasons in mind, offshore incorporation is undertaken by individuals and companies alike.
There are many common features and characteristics of offshore-incorporated entities. They are not limited to these listed here and do vary with jurisdictions. The main features of offshore-incorporated entities are:
- Offshore company can do business anywhere in the world;
- the offshore company is restricted from conducting business in the territory of incorporation;
- the beneficial owner of the offshore company cannot be a resident of the incorporation territory;
- the offshore company’s assets under protection cannot originate in the jurisdiction;
- the has a no or low tax regime
Offshore companies are used by companies and individual for a broad range of activities, and purposes. Mostly, offshore incorporation is opted to take advantage of tax schedules that legally mitigate taxes; they are also used to engage in a wide range of international commercial business activities. When used offshore companies can enhance wealth earnings, protect assets and maintain privacy and confidentiality when necessary.
Offshore organization founding, identical to Dominica company formation, is available in hundreds of jurisdictions worldwide spanning from the popular Caribbean tax havens like Anguilla, Bermuda, Dominica to Asia, for Hong Kong and Singapore incorporations.
When considering offshore incorporation, it is important to consider the features of the type of company, the local legislation governing the company and the benefits or advantages of the company. Offshore company incorporators must exercise careful planning and consideration For starters, look for a jurisdiction that is politically and financially stable,. The jurisdictions should have sound confidentiality legislation, and a sound reputation should be evident. Tax agreements and other tax directives can affect the offshore company, so it is important to know what if any are in place. Sometimes the unapparent benefits may outweigh the obvious, for example, while a Hong Kong company maybe taxable, it may be more beneficial to accept the low tax regime, and use Asian corporation with an Asian company name rather than choose a 100% tax exempt company from a jurisdiction that may not be as immediately or widely accepted. The possibilities and capabilities may be greater with an Asian company. Some regions are territorial about business ventures and not very welcoming or trusting of foreigners.
Territories that offer offshore company incorporation have low or no taxes; and have laws that enhance the privacy and confidentiality of the owners. To be aggressive placed in competitive offshore markets, offshore incorporation territories feature flexible corporate structures with minimal administrative requirements. However, there are variations and degrees of these features.
Essentially, the offshore incorporation process follows international and standardized guidelines and requirements. Some aspects of the offshore incorporations may vary but traditionally the offshore incorporation follows the same rules.
The general rules and guidelines for incorporation process of the offshore company hold that:
- The fundamentals of the offshore company are the same;
- There are incorporation cost payable to government body and agents ;
- There are annual maintenance costs payable to Government and agents;
- The offshore incorporation process, the cost are variables and are not fixed but jurisdiction based;
- The offshore incorporation process must be directed by local, licensed agents or intermediaries;
- Local legislation governs the offshore incorporation process and the offshore corporations.
The offshore incorporation process may take from 1 to 30 days depending on jurisdiction and where sanctioned, offshore “Shelf companies” are available instantly.
The incorporation costs would include payments to the agent and the government agency. The cost for incorporation dependent on the jurisdiction, the market and the agent and the services required. Offshore incorporation costs spans from US 500 to US 2000.
All offshore companies are subject to annual maintenance charges. In order to maintain the good standing of the offshore company (this effectively tenders the company as one that is valid for use) annual fees are paid to the government. These maintenance/management services are available through the agents with whom the company is incorporated who charge for such supplementary services.
The flexible Company Structure and form and the relaxed requirements for offshore incorporation and company launching, like Panama company formation, are very attractive features. Generally, only one director/shareholder is required to form a company. The minimum number of Shareholders is one, and some may require 2. Often there are no requirements for the shareholders to be residents though some countries require at least one shareholder to be a resident. There is either no minimum authorized share capital or a set amount of share capital. Some jurisdictions issue bearer shared some do not but most jurisdictions allow redeemable shares. Disclosure of beneficial Ownership is a key feature, some countries do not require the disclosure of beneficial ownership, others require the shareholder to reveal identity to the agents, in others disclosure is made to some regulatory body or agency. The minimum number of Directors is one or two. In some cases, the director may be a shareholder, so a company can be formed legally with one person. Directors may be corporate or individual beings.