Offshore Company Locations
Here you can find some popular Offshore Company Locations:
Saint Kitts and Nevis
British Virgin Islands
Antiqua and Barbuda
United Arab Emirates
What is a Offshore Company?
The term offshore means situated or located outside one’s national boundaries. An offshore company refers to a company, corporation, or an LLC and sometimes a division thereof registered and incorporated outside the country where its principal investors reside, where its main office is situated, and operations are undertaken. These companies engage in offshoring business processes.
The motive of forming such an entity is seldom to benefit from the laws that are not existing or available in one’s country of residence. Some of the reasons are asset protection from lawsuits, minimizing tax obligations, lower set-up, and maintenance costs, financial privacy, lower capital requirement, reduced administration and encashing foreign business opportunities.
Some more benefits of choosing the offshoring route are higher confidentiality about the business, and the records of the business, international financial diversification, business laws that are much more in favor of business owners and generally owners, directors, managers, and officers have a privacy shield.
Generally, countries offer to let offshore companies get incorporated into their country to bring in revenue, to bring in the required foreign exchange and employment opportunities. An offshore company is entitled to open bank accounts, enter into contracts, sell and buy goods and services, own property just like any other local company. This is why a large chunk of Multinationals have established offshore structures. Developing nations or relatively smaller countries with smaller economies are more likely to welcome offshore companies with open arms. These countries are considered as tax havens. These companies select best offshore tax haven based on crucial criteria such as processing time, proximity to offshore banking facilities, reputation, popularity, incorporation and renewal cost and tax benefits.
Typical Offshore Company Locations
UAE, Singapore, India, Hong Kong, Panama, Gibraltar, Gambia, Antigua, Anguilla, Seychelles, Mauritius, Nevis, Belize, Bahamas, Cayman Islands, Delaware and British Virgin Islands are just a few countries popular for accepting offshore companies. Irrespective of its place of incorporation offshore companies have a few common characteristics. The most important core characteristic that all offshore companies share is that they are broadly not subject to taxation in their country. The corporate regime is planned to promote business flexibility. The regulations of corporate activities are generally lighter in the developing nations when compared to developed nations.
There are a lot of myths doing the rounds of the internet about offshore companies being illegal. To put it straight, an offshore company is a legal entity, it is an effective and smart way of protecting your money and legally reducing your tax liability. Big Names like Google, Apple, Microsoft, Starbucks and Facebook have considered this path. These companies save on their tax liabilities and reinvest that money in their companies for a more comprehensive growth. Besides who would not want to legally take advantage of the global tax market and maximize their potential profits.
Who uses a Offshore Company?
E-commerce, web-based businesses, international investors, forex and stock traders, international businesses, businesses holding intellectual property rights, coaches and consultants are a few business types that will largely benefit if they take the offshore root. If you own a location independent business then going offshore is the most obvious option for you. If you have a trademark or a patent then registering it under the banner of an offshore company can facilitate its buy and sell options, and make it easier to grant the rights to a third party. Having an offshore company that has an offshore bank account will keep your assets protected if your home country is hit drastically by inflation and hyperinflation.
Hopefully, this article has given you more insights about what is an offshore company and the opportunities associated with it.
Just the way a coin has two sides to it, setting an offshore company has advantages and disadvantages associated with it. Before you take this route, it is better to ensure that the risks are lower than the perks. This blog is an attempt to give you a better understanding of both the pros and cons of establishing an Offshore Company.
Advantages of an offshore company
This is one of the top reasons for companies to consider establishing an offshore company in the first place. Non-resident companies are seldom tax exempt or take effective advantage of very low levels of taxation depending on the country they select for incorporating their offshore company. You will surely be able to minimize your tax liability, but the extent depends on your country of tax residence, your country’s tax laws and the jurisdiction in which you choose to incorporate your company.
In some countries, non-resident companies do not need to publish the details of shareholders and directors and financial information. Except when a terrorist activity or a criminal activity is doubted, most offshore financial jurisdictions will not provide any information to any third party.
Lower capital requirement
The registration of an offshore company usually requires minimal capital. This is generally much lower than the capital requirement needed for an onshore registration. In some jurisdictions, no capital is required for registration.
Safety of assets
If you have an offshore company, you can shield your assets from creditors. Hence in an adverse business or legal development, you can be assured that your assets are protected. An offshore company is a valued vehicle for holding valuable assets such as real estate investments and intellectual property.
Minimal maintenance requirement
Unlike onshore jurisdictions, you don’t need to do a lot to keep your offshore company compliant with the local government. Most of the offshore companies parked in tax havens are not required to file financial accounts or file annual reports with the registrar of the companies. However, you need to comply with two basic requirements to maintain good standing. One is to pay the annual company license fees to the local government of the country you choose to park your offshore company in. Two you must maintain a reliable local registered agent who on the company’s behalf shall be accountable for accepting service of process and receiving any official correspondence from the local government.
Offshore companies enjoy flexibility regarding requirements to hold annual meetings, capital requirement, the structure of the company, meeting locations, the location of directors, shareholders, public filings, accounting requirements, etc.
Offshore companies are usually enjoying the advantage of simplicity in setting up a company, and in its maintenance. Formation of an offshore company is some tax havens are a speedy and seamless procedure unlike the procedures required for incorporating an onshore company.
Low administration costs
In offshore jurisdictions, some company administrators specialize in offering offshore companies administration and secretarial services and because of automated systems and economies of scale they can provide these services at reasonable rates which are lower than the administration cost required to render for an onshore company. Some of the services include accounting, virtual office, secretarial services and professional directors. This helps the management invest more time in the core revenue-generating
Disadvantages of Offshore Companys
Now let’s talk about the other side of the coin, the disadvantages of establishing an offshore company
The concept of an offshore company is not usually given the highest regard because usually the media only reports bad cases and scams.
Appraisals and financing
Establishing an offshore company provide you with privacy, but the major limitation here is that this also makes determining the actual worth of your business difficult for the potential investors and partners. Lenders are also very hesitant in granting or approving financial aid to a business that is apparently out of their reach.
Bank Account Opening
A substantial disadvantage of establishing an offshore company that international banks consider offshore companies high-risk Hence sometimes it is potentially difficult to obtain approval of an offshore bank account opening after company registration.
Some offshore jurisdictions are safer than others regarding economic and political stability. Factors like lack of familiarity with the local customs, social attributes, government, and the physical distance can increase the risk of a potential financial loss in some jurisdictions. You can negate the jurisdiction risk by registering an offshore company in a tax haven and keeping a bank account in an established country.
While transmitting data or sharing data with another party there is always a risk of compromised data integrity and security breach. Even though there is shared space collaboration, transfer issues are bound to crop up.
Hopefully, this article has helped to extend your understanding of the pros and cons of establishing an offshore company.