Offshore Company

The term offshore company is used to refer to a company which has been incorporated in one country and does business in another country or a company which has been formed in a country which is an offshore financial center. Offshore companies are also referred to as exempted companies. Offshore companies have many uses and can be incorporated in many offshore jurisdictions. Types of companies which can be incorporated as offshore companies are Partnerships, Limited Liability Companies and International Business Companies. The International Business Company simply called an offshore company is the most frequently incorporated offshore company and is offered by many tax havens.

An offshore company like an onshore company can be used for carrying out business transactions anywhere in the world. Offshore companies are not allowed to carry out their business within the jurisdiction of incorporation. Very rarely is an offshore company allowed to carry out business in its jurisdiction of incorporation, in fact only one jurisdiction which allows this comes to mind right now, the jurisdiction of Panama. An offshore company is not allowed to carry out business with or on behalf of residents of the country of incorporation. Although offshore company can be incorporated to hold properties an offshore company is prohibited to hold land or other types of assets in the jurisdiction of incorporation. The offshore companies can only lease or rent property which can be used as an office on the jurisdiction.

Offshore companies formation in a tax haven means that the offshore company is guaranteed tax exemptions. Since offshore companies do not operate in the country of formation then there are no local incomes to be taxed. Offshore legislation generally exempts offshore companies from paying taxes on capital which has been accumulated outside of the offshore jurisdiction. Offshore companies are only liable to pay a registration fee when incorporating the company and an annual company license renewal fee. The offshore company is exempted from local stamp duty and transfer fees.

Offshore companies are mostly used for asset protection as assets placed in an offshore company are heavily protected by offshore legislation in most jurisdictions. The laws which govern offshore company formation in the tax havens make it extremely hard for third parties to access assets in the companies. Tax havens seldom recognize the court rulings of foreign countries. Offshore companies laws provide security and privacy for the offshore company owners. The names of offshore company owners do not appear in public registry files in the majority of tax havens making it difficult to acquire the identity of the beneficial owner. For further protection offshore company owners are encouraged to use nominee shareholders and nominee directors for offshore companies making it even harder to obtain information of the offshore company’s beneficial owner. The offshore tax havens prohibit offshore agents and other persons working directly with incorporating offshore companies from giving out information about offshore companies. This is in many offshore jurisdictions against the law and punishable by imprisonment along with heavy financial fines.

An offshore company has a simple structure and a company of its type can be formed with just one shareholder and one director. Offshore company formation is very affordable and the process is completed in a very timely manner. Offshore jurisdictions with legislation in place for offshore companies are Dominica, St Kitts, Bermuda, Barbados, Anguilla, British Virgin Islands, Seychelles, Singapore, Gibraltar, Mauritius, Belize, Panama and Antigua. There are other tax havens which incorporate offshore companies which have not been mentioned in this article. Offshore companies make good business companies which are easy to maintain.