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Going Offshore
Some time ago, only superwealthy knew about all the advantages of incorporating offshore.
Today, going offshore could very well be a viable financial strategy for many entrepreneurs,
from large international corporations to small business entities.
Clients are engaged in wide range of business activities. They seek the
advantages offered by different corporate structures and jurisdiction abroad. Their most
common characteristics are low or no taxes and less rigorous compliance requirements.
There are many advantages going offshore including:
- tax efficiency and minimisation
Many offshore jurisdictions have developed special taxation schemes and legislation
that favours tax-advantage business entities. This kind of industry usually brings
financial revenues and many other benefits to the jurisdictions that apply the low-tax
system, and thus is strongly protected. Offshore companies usually pay a nominal or
low tax rate on the profits they earned.
- confidentiality
Another benefit offshore accounts offer entrepreneurs is privacy. Privacy is
considered important because privacy and risk planning complement each other.
Offshore clients seeking confidentiality in their affairs can protect their
business strategies.
In an increasingly hostile environment, privacy is essential to risk
planning. The clientele of offshore trust companies typically seek
confidentiality in their affairs to protect assets from disasters, unwarranted
third-party interferences and an ever-growing burden of unnecessary disclosure.
It is a trust company¡¦s business to provide legal structures and, in some cases,
private banking services to protect client assets, ensure privacy, and reduce
risk, taxes and costs.
- asset protection
Asset protection is certainly one of the leading benefits offered by these kinds
of tax havens, since assets held offshore are essentially immune from seizure
and enforcement as a result of litigation. Money that is held offshore is
protected from almost all forms of judicial proceedings. There are literally
millions of individuals and companies who maintain offshore accounts in
safe-harbor jurisdictions.
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- liability protection in doing business
Being a legal person, a limited liability company is separated from its
shareholders, officers and directors. So, if a corporation is sued, it
can lose only its own assets, and not the assets of the individual shareholder.
The liability of an individual associated with the company is limited to his
share in this company.
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- transfer of assets
For example, owning property by an offshore company may help to avoid income tax,
capital gains tax and inheritance tax. Furthermore, selling the property is achieved
simply by the transfer of shares in the company rather than transferring the property
itself, thereby reducing the usual property purchase costs for the buyer and seller.
It is often recommended to seek help and advise of a qualified and experience professional,
if possible preferably one who is physically located in the jurisdiction in which you are
interested.
Going offshore need careful planning and structuring of the offshore entity. It can be complicated.
Finding the right help can reap substantial rewards such as guaranteed
privacy, premier asset protection, various tax-shelter options, and higher and safer investment
returns which will certainly prove well worth the risk and effort it takes to get there.
Where to go offshore?
In choosing the jurisdiction that is right for yourself or right for a particular transaction,
a number of elements will need to be considered. You are recommended to seek professional
advice to determine which jurisdiction to use. You need to ask a number of questions and
some of them are listed below:
- How will the jurisdiction be perceived by the home regulator?
- Is physical access/geography important?
- Capability of the legal, accounting and banking professionals in the
particular offshore location to do the job to the requisite level of complexity and at
reasonable speed?
- Is the jurisdiction politically stable, with a reliable and clear legal
and political system and can the courts and civil service handle the work involved?
How expensive will it be - cost is important, but not all decisive, as cheap jurisdictions
can “lose?assets/cause problems by reason of low quality.
- How modern are the legal structures available and is it possible to create
new legal structures at a client’s request?
- Does the jurisdiction impose any local taxes, duties or exchange controls?
The aboves are just a number of key reasons why individuals and businesses consider going
offshore. A better understanding of what to consider is important before taking the plunge.
Need some help? Ask and get answers from the forum.
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