Offshore Companies

Offshore companies are considered to be companies which are incorporated in offshore tax havens or offshore jurisdictions. Offshore companies receive tax exemptions on their annual profits making them very popular business or investment companies. Offshore companies can be incorporated in many countries around the world including the popular offshore tax havens of the Caribbean. Countries which are tax havens and incorporate offshore companies are sometimes called offshore jurisdictions and include St Kitts, Anguilla, Dominica, Belize, Bermuda, Bahamas, Antigua, Hong Kong, Seychelles, British Virgin Islands, Cayman Islands, Mauritius and Barbados among others.

Offshore companies registration is done more often for the purposes of trading or to act as investment companies although there are other reasons why offshore companies are registered. Once offshore company registration has been complete in an offshore jurisdiction the offshore company becomes a legal entity and can engage in business as long as it follows the regulations under which it was incorporated and it keeps within the laws of the country where business is conducted. Most offshore jurisdictions prohibit offshore companies incorporated by them from doing business within the jurisdiction or with residents of the jurisdiction however there are offshore jurisdictions such as Panama which permits offshore companies to carry out business in the country.

Offshore companies are well known for not paying taxes in the jurisdiction of registration but this by the way is legal. Most offshore company formation legislation makes allowances for offshore companies to be exempted from paying local taxes on income which has been gained outside of the jurisdiction of incorporation. Offshore jurisdictions which allow offshore companies to do business within the jurisdiction normally apply a low form of taxation on such companies. Offshore companies must pay an incorporation fee and at the end of each business year must also pay an annual license fee to the registration authorities in the respective jurisdictions. The price of incorporation and annual license fee differs in the jurisdictions. Most offshore jurisdictions do not have capital gains tax and withholding tax in place which makes using an offshore company for the purpose of carrying out business very profitable.

Offshore companies are sometimes incorporated for depositing wealth such as cash and properties. This is done as a means of asset protection. The names of the shareholders of offshore companies do not appear as public records in many offshore jurisdictions. Further anonymity can be provided for protecting offshore companies shareholders by using nominee directors and nominee directors which is supported by legislation in offshore jurisdiction. This makes it harder for third parties to make claims on assets which are placed in offshore companies. Offshore jurisdiction protects the offshore companies by safeguarding them from laws of foreign countries. Information concerning assets placed in an offshore company is rarely given out only in cases where there is substantial proof that the company is engaged in illegal acts such as drug trafficking and terrorism and a court order is handed down then the move to divulge such information is considered.

Offshore companies are easily registered by a process which takes just one working day in certain offshore jurisdictions. The process of offshore company formation is similar to that of a regular business company. One advantage of offshore companies’ formation is that the companies are not obligated to file annual financial audits with the tax authorities in the jurisdictions since they do no business within most of the offshore jurisdictions where incorporation took place. Offshore companies are known to protect assets and make good business companies thousands of offshore companies have been incorporated around the world taking advantage of tax exemptions.