Most of the people are aware of the existence of offshore companies. However, very few are familiar with what these terms actually mean. In this article, we will try to introduce some of the key concepts in the context of the offshore corporate services industry. First of all, the term Offshore relates to managing, registering, conducting or operating in a foreign country, generally with legal, financial and tax benefits.
offshore company it is then a company incorporated outside the country of its main business activities and/or the place of residence of its principals, that is, directors, shareholders and final beneficiaries. Again, this is usually done to obtain certain legal, financial, or tax benefits. Like most other companies, an offshore company can enter into contracts, buy property, goods and services, open bank accounts, etc. A typical offshore company is also known as an international business company (or IBC). This type of entity does NOT pay tax in its home jurisdiction, however it must also conduct ALL its business activities outside of the country of registration. A typical IBC would be a company incorporated in Belize, Seychelles, or Anguilla.
Offshore incorporation can be carried out in various jurisdictions. The main decision criteria are the price, the reputation of the jurisdiction and the time of incorporation. For example, a BVI offshore company is the most popular offshore entity, highly regarded by founders and business owners alike. An alternative would be a Seychelles company, which is the most affordable among the popular offshore company formation jurisdictions.
Here are some other important offshore incorporation considerations.
Taxes: Most offshore companies do not pay tax on income derived from offshore operations.
Ease of reporting: Reporting and compliance offshore is limited compared to onshore jurisdictions. Most ibc offshore companies do not require annual reports or account filings in the jurisdiction of company formation. Instead, a flat annual government fee is charged.
Costs and operating fees: With limited reporting requirements, offshore companies generally pay lower overall maintenance fees, as the cost of preparing and auditing accounts is often negligible. Registered office fees are considerably lower than buying or renting premises in land jurisdictions.
Anonymity: Most offshore registrars do not disclose information about the directors, shareholders and beneficiaries of an offshore IBC company. Therefore, the underlying principal can transact anonymously on behalf of an offshore corporation, which is a separate legal entity. Asset Protection: In the international business environment, it is common for the laws of the jurisdiction of incorporation to apply, rather than those in which the company is being sued. Many offshore jurisdictions are known for their favorable asset protection laws.