What is offshore in simple words?
Having understood what offshore is, we will present the main features of such zones.
Offshore zones are usually countries with low economic development. Their main goal is to attract money from large investors. To do this, they offer to register companies in their country, and in return they promise them zero or low taxes and strict confidentiality of their activities.
Registered companies conduct business outside the zone, which actually exempts them from taxation.
In contrast to offshore zones - states where the usual system of taxation without benefits operates, companies registered offshore do not pay income tax in whole or in part. Instead, companies pay the country's government a fixed fee for registration and an annual membership fee.
Various services used by the registered company bring additional income to the country:
communication services;
rent of premises;
services of transport and secretarial organizations.
Another mandatory condition for company registration, characteristic of many territories with a simplified taxation system, is the provision of jobs for citizens of an offshore country. This usually concerns the field of secretarial, information and administrative services.
It is important to note that not all offshore companies offer the same conditions for doing business with foreign companies. They can differ in a number of parameters:
taxation system;
bank anonymity;
financial regulation;
development of communications;
confidentiality;
access to world financial markets.
How advise https://offshorecompanyregister.com/ bank anonymity guarantees the client complete or partial confidentiality of his accounts. The same can be said about the usual confidentiality, which guarantees that information about the owner of the company will not fall into the hands of third parties.
Financial regulation is the degree of intervention of foreign states in the activities of a company registered offshore. If some offshore companies can hand over information about the company and its owners to law enforcement agencies, if they provide evidence of financial fraud committed by this company, then others can flatly refuse to do so even in the presence of clear evidence.
Access to financial markets also plays a significant role and is an important condition for enterprises with large cash turnover.
What does offshore mean from a legal point of view?
As a rule, companies operating in the banking, insurance, financial, manufacturing and other areas of business, implying large revenues, are registered offshore.
Many people mistakenly believe that activities in offshore zones are illegal. In fact, if the company is legally registered in the zone, complies with the current legislation of this country and does not violate the laws of the state in which it operates, there is nothing illegal about it.
Nevertheless, the budget of the country in which the company registered offshore is operating suffers greatly. In order to at least somehow control the activities of such enterprises and the offshore zones themselves, the international community created several international regulators. The most famous of them are FATF and OECD.
The specificity of the first structure is the development of financial measures to combat money laundering. FATF develops and improves international standards in the field of combating money laundering, as well as combating the financing of terrorist organizations.
FATF decisions have a recommendatory and explanatory nature. The policy of the structure is aimed at tightening the activity of zones with a simplified system of conducting business activities.
FATF constantly introduces initiatives to disclose the names of the real owners of enterprises, strict control over the issue of shares, etc.
One of the most important clarifications of the organization concerns the fact that banks have the right to arrest the capital of offshore companies if they are suspected of financial fraud.
In turn, the OECD studies issues of international economic development and joint work. The regulator collects statistical data on territories that provide foreign companies with preferential programs for paying taxes and conducting business activities, as well as on countries that do not publish tax and financial reports. In relation to these countries, OECD members adopt economic sanctions.
The most famous territories with a simplified tax system and their classification
Now, when we talked in detail about what offshore is, it's time to talk about the most famous and sensational territories that provide incognito to the owners of large companies registered there.
Before naming the most popular offshore companies, a few words should be said about their classification. Thus, territories with a simplified tax system are conditionally divided into:
Classical;
Prestigious;
Other
Classic ones can be characterized by the complete absence of levied taxes, the need to submit reports and control from the state, a high degree of protection of personal data of the owners and key figures of the company.
Classic zones have their drawbacks, namely:
a high degree of mistrust of the international community;
inconvenient territorial location;
low level of development of state registrars.
Unlike classic ones, prestigious ones have two advantages:
trust and prestige of the international community;
the possibility of cooperation with serious partners.
There are also two disadvantages here:
the need to submit financial statements;
partial exemption from taxes.
Other zones have the following characteristics:
the possibility of minimizing taxes;
the need to publish reporting;
not beneficial for all areas of business.
The top ten countries with simplified taxation systems include:
Seychelles - complete absence of taxes and reporting, strict confidentiality policy, simplified registration system;
British Virgin Islands - similar conditions to Seychelles;
The Cook Islands - located in the South Pacific Ocean, are considered a prestigious territory for business registration;
The Cayman Islands are another prestigious area;
Panama is a fairly developed offshore;
Belize is a country in Central America;
The Dominican Republic is a popular offshore not far from Haiti;
Saint Kitts and Nevis - a territory in the Caribbean Sea;
Anguilla is also located in the Caribbean region;
The Bahamas is a zone with a huge number of registered companies.
Offshores should not be biased. There are facts of financial fraud and money laundering by corrupt politicians. Of course, this is a minus. On the other hand, offshore is the best springboard for conducting honest business and registering a large company, if the outdated and predatory tax system of the home state does not allow it to develop normally and earn money when registering a family.