Offshore Corporations and Companies
Introduction
With Hedge fund investments seemingly too hot to contemplate and our major national banks failing and needing federal support, perhaps now is the time to seriously consider the idea of an offshore company or offshore banking. Unfortunately, national governments are not keen on their citizens setting up or investing in offshore companies, or even using offshore banking. The reasons for this are quite simple - anyone setting up an offshore company or investing in existing offshore companies and banks will be able to avoid, or at least reduce, the taxes they pay to the country they’re living in. Subsequently our governments prefer to paint all offshore dealings as in some way being untrustworthy or even illegal, which is simply not true and could mean that some people actually miss out on opportunities to maximize their profits.
What is an offshore corporation?
An offshore corporation simply gives you the opportunity to set up a company, make investments or use banking facilitiesin a country other than the one which you normally reside and/or work in. Anyone seeking to use offshore financial services is recommended to use the services of a reputable and established company to advise and guide them through the process, avoiding any potential pitfalls of legal jargon and where your investment will be best placed; which often means choosing between offshore corporations in the British Virgin Islands (BVI), Belize, Panama and Dominica.
Advantages of an offshore company
With a population of a little over 22,000 the BVI has over 500,000 companies registered in it. You won’t be surprised to learn that the vast majority of those BVI companies are BVI offshore companies. One report has estimated that BVI companies make up over 40% of all the worlds off shore companies! So, why is getting a BVI company registered so popular? Well one simple reason here is the 20 year exemption you get from paying any taxes on your profits and the fact that the BVI authorities won’t come along demanding to inspect your records and accounts, which can in fact be held anywhere in the world. Of course, the fact that some countries offering offshore facilities do not insist on any over-bearing financial regulation of their offshore companies - is the reason why some governments perceive them as being used only by investors and companies with something to hide financially; rather than simply wanting avoid unnecessary ‘red tape’ and paying ludicrous amounts in taxes. Many national governments paranoia about anyone forming an offshore Panama company, or even investing in offshore Panama companies, would have some people think that anyone doing such a thing must have criminal intent, rather than a good head for business. As usual on this one, it seems that the larger and established companies can be involved with offshore companies and accounts; whereas a small or new business venture doing so ‘must’ be suspect! It’s all rather like the big multi-national oil companies, using ‘flags of convenience’ for their tanker fleets, but hardly anyone queries them about it!
How do I start an offshore company?
Establishing an offshore company means that you have a company that is incorporated in a country where the business of that company is not carried out. Choosing the country in which it will be best to set up your offshore company isn’t as simple as just sticking a pin in a map. Different countries have different rules and advantages to having offshore companies set up in them. Setting up your offshore company as a Belize company would be a great idea if you were looking for a tax haven, where you’ll pay little or no taxes and any taxes you do pay will be at incredibly favorable rates compared to at home. Despite what some people think - offshore companies are not a ‘free for all’ and lawless, like in the ‘Old Wild West’. However, some countries are more liberal than others when it comes to laws and financial regulation. Using an experienced offshore company development adviser will help you to identify the advantages of choosing say an offshore Dominica company, compared to ones from other friendly countries.