“How can I benefit from an offshore company ?” is a typical question. And here are some advantages of going offshore:
2.1. Tax benefits
This seems to be the top reason why people opt for offshore business. By forming an offshore company, foreign investors can be entitled to gain a deduction of tax burden. In other words, they are often tax-exempt or just pay a modest rate of tax by virtue of the business-friendly taxation laws of certain jurisdictions.
Take Hong Kong as a typical example, the territorial taxation system in this country allows profits which derive from trading activities outside its territory to be not subject to suffer profits tax.
2.2. Asset protection
Besides offshore company tax advantages, another appealing factor that makes people seek offshore is wealth protection. Jurisdictions with a strong reputation and stability in both politics and economy are the most favorite place to incorporate an offshore company.
Obviously, the act of moving your assets to offshore corporations and legal business structures abroad helps to create a stronger protection layer for your wealth from unexpected liabilities.
Some offshore centers which offer favorable laws regarding financial privacy such as the BVI, Belize, Seychelles et cetera have been widely preferred in the world as deemed best destinations to go for asset protection.
2.3. Minimal maintenance requirements
Not only do offshore companies offer simplicity during the setting-up process, but they also are offered more flexible regulations after the incorporation stage.
There are fewer requirements in terms of annual reports and financial accounts with the Companies Registrar (providing that they do not carry out business activities inside the jurisdiction whey they register). In addition, most offshore companies tend to be easier to maintain in comparison with onshore companies.
It should be worth mentioning that the level of information in which the registrar of companies at each offshore jurisdiction requires could be not the same.
Our advice is that once you have come to the first step for offshore company formation which is to choose a suitable jurisdiction (a guideline of full steps on how to set up an offshore company will be discussed in the last part), do examine whether you can fulfill that jurisdiction’s requirements after registration.
2.4. A high degree of confidentiality
Typically, most offshore countries do not disclose the company directors, beneficial owners, shareholders to the public, thus you can feel secure that all information would be kept confidential. However, it is a must to register and maintain these profiles and data with the Company Registrar.
Because of many potential benefits, offshore company setup is the widely-used solution for tax planning strategies of many small and medium-sized enterprises.
For those who are ‘newcomers’ to the offshore world, you probably wish to know more about Tax Evasion vs Tax Avoidance vs Tax Planning >>