“How can I benefit from an offshore company?” is a typical question. Not only does an offshore company take advantage of a favorable tax regime offered by most offshore landscape, but also there are more possibilities when it comes to incorporating an offshore company.
Here are some advantages of going offshore:
Tax optimization. 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. Thanks to business-friendly taxation laws of certain jurisdictions, these companies are tax-exempt or just need to pay a modest rate of tax on their corporate income.
Hong Kong is a typical example. It is among the most desired territorial taxation systems for foreign investors. If your company’s profits are derived from trading activities outside Hong Kong territory, it will not be subject to pay profits tax.
Asset protection. Besides offshore company tax advantages, another appealing reason for moving offshore is wealth protection. The act of moving your assets to offshore corporations and legal business structures abroad will add a stronger protection layer for your wealth from unexpected liabilities.
To achieve it, a wise choice is to seek a well-reputed jurisdiction to incorporate your offshore company or to hold your assets. Obviously, the soundness in both politics and economy is a worth-considering factor as well.
Widely preferred in the world as the best destinations to go for asset protection, some offshore centers that offer favorable laws regarding financial privacy include the BVI, Belize, Seychelles, Cayman Islands, Nevis and so forth.
Brief reviews of such highlighted countries will be mentioned in Part 3.
Minimal maintenance requirements. Not only do offshore companies offer simplicity during the setting-up process, but they also are offered more flexible regulations in the post-registration 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, maintaining an offshore company is easier in comparison with onshore companies.
Note that the level of information required by the registrar of companies in each offshore jurisdiction could be not the same.
Our advice is that do examine whether you can fulfill that jurisdiction’s requirements after you have determined your suitable jurisdiction for offshore company formation
A guideline of full steps on how to set up an offshore company will be discussed in Part 4.
Guaranteed privacy. Generally, it is a must for companies to register and maintain the company profiles and data with the Company Registrar. However, you can feel secure as all information of identity would be kept confidential.
Offshore countries shall not disclose the company’s beneficial owners, directors, and shareholders to the public, except in certain cases like a court order or international arrangements between related overseas jurisdictions.
On account of many potential benefits, offshore company setup has become an effective and efficient solution for tax planning strategies of many small and medium-sized enterprises.