The governments of the majority countries seek to fill the state treasury in order to lead a more successful foreign and domestic policy. The main source of funding is tax revenue, which come to the budget from legal entities and individuals. Sometimes the tax burden for business becomes too heavy and companies are forced to look for ways to optimize their costs for improve business results. One of the most effective ways of optimization is the opening of an enterprise (an offshore company) in the country where there is a preferential taxation.
Offshore is an ability to pay a minimum tax in another country where business is conducted. In such states, the tax is replaced by a fixed duty, which does not depend on the profit, turnover or other financial indicators of the enterprise.
Registration areas of the offshore companies are the territories of developing countries, which strive to attract foreign capital. This is not so large amount of taxes according to global standards, but for local budgets it is a constant source of funding, which creates jobs and revenues to the treasury.
The requirements for filing tax reports in offshore states are extremely simplified. It can be said that they are not exist at all. Local authorities can request reporting in the most reduced form, because a fixed fee is all, that local tax structures need. Large centers of profit of international holdings are created within offshore zones, because the amount of tax does not depend on the company’s turnover. The following states have won the glory of the most popular for conducting offshore business:
The processes of globalization are gradually helping to reduce the number of countries with preferential taxation, but this doesn’t stop businessmen, they continue to use tax oasis.
It is enough to follow the scheme of purchase and sale in order to understand the benefits of working in offshore. For example, the company is going to pay for imported goods. A controlled offshore company is used as a supplier. With the help of such company, it is possible to underestimate the cost of imports to reduce the import duty. The payment is transferred to an offshore account opened in one of the oasis state. Thus, the funds come to the safe zone.
The whole scheme has to be accompanied with customs legislation. A reasonable price is required for some list of goods in many countries. Moreover, there are restrictions on the volume of supplies of goods / services from offshore territories. Therefore, it is necessary to know the price corridor at which the customs service will let the delivery pass through and it will be possible to save on tax deductions.
Thus, an offshore company allows to create expenses to related companies for those countries where there is a high tax rate on profits. This scheme is very flexible and different roles in the conduct of business (investment, construction, consulting, etc.) are reserved for offshore companies.
A huge advantage of preferential zones is an opportunity to open your own enterprise quickly. At the same time, the owner of the company and its property has the full right for confidentiality. A secretarial bureau is the founder of the firm. To open an offshore company and start operations, it is necessary to fulfill the following conditions:
You can contact firms that specialize in registration and sale of an offshore company to get a ready-made one.
Perhaps the impossibility of doing commercial activities on the territory of a tax oasis (international operations only) is the main limitation of offshore. In such way, countries insure themselves against the international expansion of large companies.
Today, the massive agiotage around the creation of offshore companies has somewhat subsided, that is connected with tightening of currency controls and the race for transparent capital flow in many countries. However, this doesn’t prevent the offshore business to be the most effective way to withdraw money from own country. Offshore accounts are a convenient way to tie corporate customers’ cards, which actually are co-owners of business, as well as members of their families. This allows to remove and to spend money without a permission and control of the native state. It is also worth to note the following advantages:
The offshore also allows to use the law “On avoidance of double taxation”. Lawyers analyze bilateral agreements between countries for the avoidance of double taxation. As a result, the company’s activities can be bound to the jurisdiction of the state where the tax policy is softer. Thus, the most favorable scheme of work for each separate case is selected.