An offshore company is an international business company incorporated under the laws of a jurisdiction (country), exempted of any corporate tax and with no rights to carry business within this jurisdiction.
Offshore financial centres were formed for offshore company formation, such as the juridictions of the British Virgin Islands (BVI), Bahamas, Belize, Panama, Gibraltar, Seychelles, Delaware, Hong Kong and recently Ras Al Khaimah in the United Arab Emirates.
Although the characteristics of offshore companies can differ from one jurisdiction to another, they will always have in common:
Exemption from corporate taxes
Preservation of the Privacy of the owners of the company
Large power to engage in various activities and Affairs
No obligation, either very limited, to maintain and produce an accounting
Power to issue registered or bearer shares
No obligation to appoint a local Director
A Local Registered Agent, like us, must represent the company to the juridiction
The privileged tax environment is seen as a fierce competition by some countries applying a tax on corporations. Indeed, offshore companies are used to optimize the business taxation and represent therefore a loss of profits in incomes for states applying corporate taxes. To this end, the OECD ( Organization for the Economic Cooperation and Development) puts huge pressures on these juridictions so that they change their policy on offshore companies.
Some jurisdictions (not all) sometimes give on some issues such as for example “the issuance of shares to bearer”. But obviously they resist these pressures, because for most of them, this specialty of offshore financial centre is their principal activity and source of income.
THE LEGAL ENTITY OF THE OFFSHORE COMPANY
An offshore company is a legal entity incorporated in what some people calls a ‘tax haven’, i.e. a country (or jurisdiction) with a zero or reduced taxation. Only a few flat-rate and very low fees are due by the company at the time of the creation and for annual renewal.
Commonly, the offshore company is used for operations of offshore banking , within the framework of international trade,investment activities, management and protection of financial and property assets. The offshore company cannot trade inside its country of incorporation.
The offshore company can therefore buy and sell goods and services, have a bank account, manage and control other companies.
The offshore company can be the owner of real estate properties , franchise , license , intellectual property.
The offshore company can hold and maintain assets in a safe and secure financial centre. The owner of the offshore company can therefore keep a 100% control on its assets. This is extremely confidential. In these jurisdictions, we are not looking for tax ID to allow the opening of a bank account for the offshore company. The revelation by the banker of a link between you and the bank account of the offshore company is a crime severely punished by the law of the concerned juridiction. Furthermore, there is no public registry of offshore companies to check the owner of any offshore company.