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Tax havens

  • February 25, 2022 2:56 AM EST

    An offshore corporation is usually referred to as a corporation incorporated for the purpose of operating outside of the country of its registration. This means that such a company can be registered and operated outside the national borders of a person or company. This can be particularly worthwhile when it comes to legal, financial or tax advantages. A company can also legally move abroad to enjoy relaxed regulations or, in other words, to take advantage of international laws. This is also the main reason why entrepreneurs choose to start businesses abroad.

    Some countries deliberately make their local business attractive in order to harness foreign capital and investment. The well-organized and well-known worldwide offshore destinations are UK, USA, Belize, Cyprus, Hong Kong, Dominica, Singapore, Seychelles, Panama and St. Kitts & Nevis, to name a few. Buying a business remotely these days is beneficial and easy to do.

    Advantages of offshore companies

    There are certain advantages to running an offshore business. For example, asset protection when a person has a large amount of money and can use such an opportunity to protect them from legal proceedings and divorce settlements. Another benefit is low taxes. Some jurisdictions are known as tax havens due to the level of taxation that varies depending on the jurisdiction: tax exemptions, flat taxes, 0% capital gains tax, etc. The other benefit is related to international expansion when a company faces many legal and bureaucratic problems in its home country . Other benefits include: lower operating costs, tax deferral, compounding of deferred profits, easy annual reporting, multiple income streams, VAT savings on services and anonymity.

    Typically, the benefits of an offshore company depend on the jurisdiction of the offshore company and, to some extent, the laws of the country in which the company owner is located. Because of this, business people need to be mindful of the offshore jurisdiction they choose and take into account the local laws of that country.

    Procedure for establishing offshore companies

    There are just a few basic steps to starting a business in Hong Kong, Belize, Seychelles, or St. Kitts & Nevis. Firstly, the basic service costs of a company have to be covered, which includes a deed of incorporation, a decision to rent an office and a directory of directors (approx. € 700). Second, there is an additional privacy fee; depending on the law firm (approx. 400 €). There are also costs for opening a bank account with personal presence to open it for the security of the entrepreneur, a fee for obtaining a logo, stamp, seal, name badge, as well as fees for apostilles, virtual offices, etc. A person must provide his or her personal credit card information and contact details. A mandate also needs to be signed, specifying who has the right to control the opened bank account, add signers, remove it and close it. It depends on the company's articles of association.

    Frequently, the above services can optionally include the formation of international trading companies, the provision of a registered agent, the provision of corporate governance, the custody of documents and company administration services, the management of the company, the participation, the formation of offshore investment funds and the assistance with licensing of offshore insurance include corporate and offshore banks, introduction of offshore bank accounts, virtual office services and corporate searches. These services may be offered and provided by professionals such as high net worth individuals, private entrepreneurs, professional advisers, accountants and legal advisors working in local companies in the local jurisdictions in Hong Kong, Belize, the Seychelles or St. Kitts and Nevis, etc.