Offshore zones are called the countries or certain territories of the states where considerable privileges in the taxation are established for non-resident companies. Opening foreign companies under jurisdiction of such zones attracts foreign capital into the local economy and protects national business from its influence.
Offshore zones: peculiarities and benefits
The main futures of offshore zones are:
- Simplified and rapid registration of companies with anonymity of founders;
- Zero or low taxes;
- No governmental monetary control;
- Confidentiality of foreign companies’ operations;
- Non-resident companies are forbidden to do business in offshore zones and offshore countries where they are registered.
Business in offshore jurisdictions is profitable for medium and big businessmen, as it helps to reduce tax burden and cut company expenses, and has cheap registration cost. Among other benefits of opening a company in an offshore are:
- Obtaining a foreign company status;
- No financial or accounting records required;
- Free management of financial assets;
- Possibility to open bank accounts in any country in the world;
- Full confidentiality of transactions;
- Full security of assets;
- Simplified financial operations with other offshore participants.
Offshore countries, offshore types
There are currently more than 50 offshore countries and territories. All of them can be devided into three big groups depending taxation:
- Countries with moderate tax rates and tax privileges only for certain types of business;
- Classic offshores, or countries with preferential tax rates for all business activities of non-residents, provided they conduct their business outside of the country;
- Tax havens – special territories in a country with tax preferences for non-residents.
The main difference between tax havens and free economic zones is that a non-resident can not conduct business in this territory, nor can he purchase residency.
There is also an unofficial offshore classification depending on their location, dividing offshore zone countries into three categories:
- Island states with zero taxes for non-residents, small fixed payments and lower requirements for accounting records (the UAE also belongs to this group and is considered the best offshore option thanks to its respectability, steadiness and capital protection guarantees);
- Highly respected European and Asian offshore zones with tax preferences only for certain activities: Monaco, Gibraltar, Lichtenstein, Ireland, Hong Kong, China and Singapore;
- Substandard offshores – certain territories within a country with tax preferences: some US states, Labuan in Malaysia and Russia’s Kaliningrad Oblast.
When selecting a suitable zone, you should consult with specialists, who will advise you which type of offshore is best for a certain business.