According to the Tax Justice Network, around $32 Trillion of the money have already flowed to Offshore. 
What does it mean? And why does this kind of situation happen?
It is very natural for money to move from unstable to stable economies or countries. It is also natural for business owners to look for a more flexible and stable country in terms of business activity and tax regulation. We can classify these jurisdictions as offshore countries.
One may say offshore company is about tax evading or keeping illegal fund somewhere else.
It is not true, offshore companies are 100% legal.
Google, Apple, Starbucks, Microsoft, and many other big companies have cut their taxes by billions of dollars using a 100% Legitimate ways of company structure. So you can do the same thing. You do not need to have large amount of money to think about this system. With small amount of money and small company you can save a lot your income and reinvest on your business.
There are many articles and websites that are talking about Offshore Company. I found them somehow so difficult for newcomers to understand the term fully. So I will try to give you a simple and useful definition for the term “offshore company”.
An offshore company is a company you establish in a foreign country in which you are not allowed to do any business inside that country. For example, you incorporate a Belize Company under the laws of Belize country. You can do business from your home or any other places except Belize. You are prohibited to conduct any local economic activities inside Belize. It is also called International Business Companies (IBCs) in some countries.
In general, the main characteristic of an offshore company is being a tax-free company in its country of formation. Tax haven countries such as Belize, Seychelles, British Virgin Islands (BVI), Cayman, Anguilla, Panama, and Bermuda do not impose any form of taxation on companies and those companies are fully tax-exempt.
Separately from above-mentioned jurisdictions, companies incorporated inside countries like the UK, Hong Kong, Delaware, Uruguay, and Cyprus can be considered as offshore companies if they operate their business outside the country. So, as long as the operation of the company is done outside the country of incorporation and the profit is not returned to the country, the company is not forced to pay any form of tax.
In conclusion, generally an offshore company should have at least the following main characteristics:
Well, this is all about bringing some additional revenue to the country. Normally, small and non-developed countries that do not have enough resources for their income create flexible company laws to attract foreign investors and businesses. In this way, they can bring some more revenue for their country; create more job opportunity and make a new form of income for their corporate services agents. In addition, the government will also make a profit in the form of annual government fee or license fee.
In fact, their plans somehow depend on the existent of inflexible and strict company laws in advanced countries. Without them, offshore countries will not be able to survive; even if they offer good opportunities for doing business and personal services. The reason is that offshore jurisdictions are targeting wealthy people from developed countries who are tired of current laws and limitations exist in their own home country. So, developed countries should have a strict law for offshore countries to make revenue. It is funny but it is true.
At the same time, however, offshore countries can´t sustain if they accept all directions that come from developed countries. That is why there is always a minor tension between offshore jurisdictions and developed countries.
Thus, it´s natural for people to go to a place that offers more freedom. It seems that when it comes to the financial aspects of businesses, an offshore company is an up-and-coming trend these days.
There are, of course, instances where developed countries don´t always accept offshore businesses; situations vary for every prime minister or president in each government. For example, one president of the US refused to deal with Offshore, while another recommended it in his State of the Nation address. It may be hard for us to understand these speeches, but this is something we can get off of the Internet.
Lastly, we should understand that the world is changing dramatically. Many offshore countries are changing their systems and regulations based on new demands, technologies, and economic relations with other countries. So, offshore business is not just one color now. There are different colors in each jurisdiction and we need to choose a color that matches more to our needs.
The reason why business people would incorporate a company in offshore countries is to take advantage of flexible and sufficient regulations that are not available in their own country. For example, they might form a company for tax saving purposes, low maintenance fee, asset protection, and international business opportunities.
An offshore company is not necessarily suitable for all businesses. For example, if you have a local business and your income depends on the local market, going offshore is not a good choice. Offshore company formation can be suitable for plenty of businesses such as global (international) businesses, e-commerce or web-based businesses, advisory and couches, forex and stock traders, investors, and buying a property in a foreign country.
In the following we will explain some of the advantage and reasons people form an offshore company:
One way is to focus on tax avoidance, which is the practice of reducing taxes legally. Most of offshore jurisdictions are tax haven. So practically, you do not need to pay any tax on your income. Some countries are not a tax-free country, but you can structure your company a way that you are not obligated to pay any tax. One of the interesting tax avoidance examples can be Apple, Inc. Apple has a holding and trading companies in Ireland and their technology company are located in California. Ireland law allows some Irish companies to claim as Non-residence Company if they are associated with another company. They will be tax-exempt if the managed and controlled out of Ireland. In addition, "US law asks where a company was filed (IRC Sec. 7701(a)(5))". So, none of Apple's Irish companies pay taxes in anywhere at all. Another way is to pay fewer taxes. For example, for Japanese and US companies with high corporate tax, a Bulgaria company with only 10% tax can be very interesting. Incorporating a company in Cyprus, Malta, and Bulgaria will grant you a VAT number and you can enjoy a lower tax rate. In addition, holding companies in Cyprus and Malta are taxed exempt for the dividends received by their trading companies. The third option is something that we call tax deferment. It means you are postponing the payment of taxes by reinvesting the profit into your company again. You can pay tax only when you decide to sell the company a few years later.
The followings are the most common jurisdictions for offshore companies:
Other low-tax countries:
One important fact about US companies, U.S. Jurisdiction for the non-U.S. citizen is the best now.
The US is one of the most secure places for foreign business owners in terms of privacy. Unlike other jurisdiction, the US refuses to participate in tax information exchange with OECD's initiative. It means that your business information in U.S. jurisdictions can't be accessed by your home country government. Some of the most common US jurisdictions are:
Ok, this completely depends on how you want to use it. It is same as other types of company formation.
If you incorporate an offshore company or any type of corporation and use it for tax evasion and fraud, it is definitely illegal. It does not matter which kind of company you use or in which country you incorporate.
We do not aim or support such an idea. What we offering or providing is how to expand our business globally and plan our tax legally in a more efficient and cost-effective way.
So, this 100% legal. If not why do reputable banks set their branches up in offshore jurisdictions? Why do some countries like UK, Hong Kong, Singapore, Ireland, or Malaysia offering offshore incorporation? And, why do they have the offshore system?
If you think carefully, you will find out the answer.
The offshore company is not illegal. To incorporate a company, maintain it and do business globally, living wherever we like using such a system, are part of our rights.
To maintain high security, use an overseas address, get our own secretaries, and open bank accounts in reputable banks, are all legal and are our lawful rights.
the cheapest offshore company can be incorporated in Belize as Belize IBC with only EUR 599. the second cheapest is Seychelles company which cost you around EUR 799.
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