Offshore zone is a country (or its part) which has special business environment for foreigners. Companies registered in offshores have low or zero tax rate, lowered requirements for accounting audit and a possibility for real owners to remain anonymous. At the same time, there are also certain requirements for such companies, including:
- Annual fixed duty;
- Prohibition of doing business or generating profits within the territory of an offshore;
- Company owner to be a non-resident (foreign citizen).
More and more businessmen are becoming interested in opening an offshore company, which can help them to revise or get rid of taxes. This method enables redirection of financial flows in order to minimize financial burden. Meanwhile, opening an offshore company is perfectly legal provided all the commercial and tax laws are not violated. To learn more, contact our experts at Brahma Business Consultancy.
Business in offshore zones: benefits and specifics
Offshore is an international legal entity operating within a tax-free zone («tax haven»). Popularity of this business model is attributable to its undeniable advantages:
- Low or zero taxes;
- High degree of owners’ privacy;
- Swift opening procedure;
- Wide range of legal organizational forms;
- No annual audit and streamline accounting;
- Possibility to simultaneously register and open a company
Classic offshore companies can conduct any kind of business in different countries, which does not require special licensing – such as banks and insurance companies. Doing business in an offshore zone is forbidden; in case of non-compliance with that rule, a company loses its status and has to pay taxes just as local market participants. Companies under these jurisdictions are controlled by the International Monetary Fund (IMF) and central banks.
Types of offshores
Offshore zones can be divided into three categories, each with its own peculiarities.
- Zero tax offshores
Small countries and island territories with highly stable political situation: Panama, Beliz, Seychelles, and others. The UAE, which is a home to 36 free economic zones, also belongs to this category.
The benefits of such jurisdictions are zero tax rates and no obligatory accounting, as well as anonymity of business owners. Companies pay mandatory fixed payments annually.
- Offshore zones with high respectability
The key features include tax preferences (for certain kinds of activities), as well as mandatory submission of financial records. Moreover, offshore companies are strictly supervised by the authorities. Information about owners is not confidential. Examples: Cyprus, Ireland, Hong Kong, Switzerland, Gibraltar and others.
- Low-tax offshore zones
Such jurisdictions have a special taxation policy, information about company owners is public, financial records and audit are mandatory. This category includes some US
Offshore in UAE for CIS citizens
Choosing a jurisdiction is a complex process which should be approached with responsibility, taking into account all the specifics and up-to-date information. Both legislation and economic conditions of a country of registration should be considered. Moreover, you should define the goals of opening an offshore.
The procedure of opening bank accounts for offshore companies has become even more complicated over the recent years. Popular jurisdictions, such as Latvia and Cyprus, have virtually ceased opening accounts. It is already nearly impossible to open a bank account in former classic offshores, like BVI, Panama, or Virgin Islands. As a result, the UAE in terms of a tax jurisdiction remains the only real option.
To choose the perfect offshore jurisdiction, you should seek help from professionals. Brahma Business Consultancy has a solid experience in the field. Our qualified team is ready to offer you a comprehensive consultation, selecting the best option suitable for your business.