What is an offshore company?
An offshore company is an institution based outside the country of its company, providing offshore business solutions for clients either in its country or internationally or both. Put simply, a business’s workload is passed on to the institution (offshore company) located outside of the country.
Businesses may favour to register as an offshore company in countries that offer the alleviation of certain taxes. — One of the main reasons for registering for an offshore company is to save money that would otherwise be taxed by the county in which you operate. By setting up shop, as it were, in countries with very low tax systems (or as they call it in the business, ‘tax havens’) your business has the potential to reinvest monies that would otherwise be taxed.
A tax haven is a country, territory or part of a country that offers extremely favourable tax rates. In fact, some of them have a zero-tax rate. Examples of tax havens include the British Virgin Islands, Bermuda, Gibraltar and the Cayman Islands. Small intermediate countries such as Singapore and Hong Kong are also popular places to register an offshore company.
Features of an offshore company
There are many different types of offshore companies. In fact, not everybody sets up an offshore company for the same reason. However, they all share the following core features:
_They do not pay corporate tax in their home jurisdiction.
_People set them up with ‘business flexibility’ in mind.
_Corporate rules and regulations are usually less stringent than in the country in which they are active.
_It is difficult to obtain information about these companies. Information regarding the company’s setup, structure, activities and behaviour is not available to the public.
In the Cayman Islands, for example, there is virtually no information available to the public. However, in Hong Kong and Singapore, law enforcement authorities have access to much more data.
Why use an offshore company
Professional trustees and nominal officials in the country of incorporation perform routine contact with the local government but take no active part in and have no authority to manage the company. Here are the reasons why you should register for an offshore company:
- Low or zero taxes
- Ease of international operations
- Freedom from State regulation
- Multi-currency funding of accounts out of the country.
The above information hopefully clarifies the offshore company definition. Offshore companies are usually formed in tax-haven countries in which there are minimal or no taxes.
The world is becoming smaller in terms of communication and travel, and with a ubiquitous online presence, it is making offshore incorporation easy, quick and inexpensive. Registering for an offshore company makes investing your assets highly profitable because you do not carry the heavy tax burden you would in your business’s country of origin.
THE STORY BEHIND OFFSHORE COMPANIES
Setting up an offshore company is a legal, effective way to protect your income from very high tax laws in a particular country.
For example, Apple, Google, Microsoft, Starbucks—these businesses use offshore corporations to save a lot of money and grow their businesses on their own terms. Saving money with low tax rates means more money to reinvest in your business.
What’s more, your company does not have to make billions of dollars/pounds in order for you to apply the same principles to your business and receive the same low tax rates. There are legitimate strategies that international business owners and investors can use to reduce taxes and grow their businesses.
The most important part of these strategies is that it is 100% legal. You just need the right advice, from the right experts. At iPayTotal, we use our extensive experience and expertise to offer such advice as well as to help set up your offshore account registration.
PROTECTING ASSETS FROM IMPENDING LITIGATION
It is not uncommon for business owners to experience various threats against their assets; indeed, many business owners are sued or are threatened by ungrounded reasons, often by people who simply want their money. Setting up an offshore company can provide increased protection for your assets against such threats to your business and assets.
SHIFTING THE TAX BURDEN IMPOSED UPON THE COMPANY
Think of profit taxation as an expense that can be reduced. The global tax market is the lawful system you can use to reduce taxes. Every nation has different policies and budget requirements. This means you can find much lower tax rates offshore than what you currently pay in the country in which you operate – usually Western countries.
To clarify: legally reducing your taxes through an offshore corporation is not the same as trying to evade taxes. The former is legal, the latter is not.
What could you do for your business with the money you would save if your tax rate legally went from a steep 40% to a low tax rate such as 5%? If you could greatly reduce taxes on your business this year, what would that mean for the future growth of your business?
PROTECTING THE COMPANY FROM POLITICAL UNREST
Political unrest, inflation, hyperinflation—you cannot control any of these occurrences. However, you can insulate yourself against them. Forming an offshore corporation can act as a safeguard against any potential turmoil in your home country.
WHAT TYPE OF OFFSHORE COMPANY SHOULD YOU SET UP?
Low taxes, secure business assets, and insulation against political unrest at home are excellent reasons to start an offshore corporation.
Still, starting an offshore corporation is not as easy as going online and signing up. Speaking with an expert will help you figure out which type of offshore corporation strategy will work best for you.
Perhaps a Limited Company in Hong Kong, for example, is the right move for your offshore corporation; foreign profits are not taxed, and local Hong Kong profits are only taxed at 16.5%.
A private limited company in the UK or Australia might make sense for you or even an offshore PLC in Singapore (it would not help you achieve 0% tax, but it will reduce taxes). Each type of offshore company and each jurisdiction have their own unique strengths and appropriate uses. — For this reason, it is imperative to receive the right advice from experts in this field. For registration of your offshore business account, contact the experts – contact iPayTotal today.
While the process of forming an offshore corporation is straightforward (and can be done in a matter of minutes, in some countries) laying the proper groundwork before and after the official process is the important part.
You need to consult with a provider who understands the rules and regulations in your home country. An expert with particular expertise in setting up an offshore company is necessary to acquire before moving forward.
The best thing you can do is choose the right representative. Overpaying a little up front is a no-brainer when it comes to your peace of mind down the line. iPayTotal has partnerships with agents across the world to secure you the best offshore solutions customised for your business.
iPaytotal can help you form legal entities in
- Anguilla, Offshore Company
- Belize, Offshore Company
- British Virgin Islands (BVI), Offshore Company
- Cyprus, Offshore Company
- Dominica, Offshore Company
- Dubai (RAK), Offshore Company
- Gambia, Offshore Company
- Gibraltar, Offshore Company
- Hong Kong, Offshore Company
- Latvia, SIA
- Liberia, Offshore Company
- Liechtenstein, AG
- Marshall Islands, Offshore Company
- Panama, Offshore Company
If you decide that starting an offshore company is the right move for your business, then you will need an experienced firm to help you set up the organisation properly. iPayTotal has years of experience working with clients from all over the world. We offer a range of offshore services that can help you establish your company quickly so that you can start taking advantage of the benefits as soon as possible. We go the extra mile to ensure that your offshore company can also help you save money. Offshore companies typically pay lower taxes than those that are incorporated within their home countries. Paying lower taxes means that you can reinvest your company’s earnings or keep a larger profit.
A perfect offshore location offers:
- Political stability
- Internationally recognized reputation
- High data security standard
- Non-bureaucratic business law
- White listed by OCED
- Recognized jurisdiction
- Modern banking and financial services
- Access to modern IT and communication means
- Easy Access with regard to authorities and institutions
- Good infrastructure
Which country offers the ideal structure for my offshore company or foundation?
This is a common question entrepreneurs ask as soon as they become involved in the process of founding an offshore company or foundation, usually with the purpose of asset protection or inheritance planning in mind.
Foreign countries and British Overseas Territories as well as low-tax countries and tax havens offer the chance to establish an offshore company. Some offer better conditions than others.
Countries such as the Cayman Islands, Anguilla, British Virgin Islands, Gibraltar and the Channel Islands (Jersey, Guernsey and Isle of Man) have signed international treaties, which are based on the US-Foreign Account Tax Compliance Act (FATCA) and which make the automatic exchange of information possible. This exchange normally refers to a private account and not a corporate or trust account. In our view, nevertheless, such countries are not ideal for persons seeking for high-level privacy—that’s why it is important to discuss your reasons with iPayTotal for wanting to set up an offshore company account so that you can have a bespoke solution to your particular needs.