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WHY INCORPORATE OFFSHORE?
1. Low Taxation: Most offshore companies pay no local taxes on the income derived from offshore operations, i.e. from activities outside of the jurisdiction of company formation. These offshore companies include Belize IBC, Seychelles IBC, BVI BC and others. Companies in some on-shore jurisdictions, where we provide incorporation services as well, also have comparatively low taxation. For instance, a Hong Kong Company pays no taxes on profits from operations generated outside of Hong Kong. At the same time, onshore companies must comply with all relevant filing requirements, which are often costly.
2. Anonymity: Registrars in most offshore jurisdictions do not disclose information about directors, shareholders and beneficiaries of offshore IBC companies. Thus, the underlying principal may carry out all relevant transactions in the name of an offshore company while remaining anonymous. It is important to note that this applies to leglitimate operations only.
3. Asset protection: In the international business context, it is usually the laws of the jurisdiction of incorporation that are applied, rather than those, where the company is being sued. Many offshore jurisdictions are renown for their favourable asset protection laws. Complementing an offshore company with an offshore banking facilities, protects company’s assets even further.
4. Ease of Reporting: The compliance reporting requirements for offshore companies are limited, especially in comparison to companies, registered in onshore jurisdictions. Most offshore IBC companies are not required to file annual reports and accounts in the jurisdiction of the company formation. Instead, local authorities charge a flat annual licence fee, which is insignificant in comparison to reporting expenses and taxes in onshore jurisdictions.
5. Operating Costs and Fees: With limited reporting requirements, offshore companies generally have lower maintenance and operating fees. The cost of compliance, preparation of accounts and auditing in on-shore countries is often considerable while offshore companies save on these particular expenses.
Registered office fees are also significantly lower than buying or renting premises in onshore jurisdictions. A virtual office could be also set up at the registered address of the company to further lower the effective fees of running one's business.
There is nothing illegal about off shore companies.. like any other business there are certain risks which needs to be considered while deciding to incorporate. Law of the land is applicable so need to plan the operations accordingly.
With correct planning, offshore companies may be used for various purposes and can afford many significant and legal tax savings throughout the world which may not be available onshore, all the while reducing the administrative overhead burden and/or cost.
The benefits of offshore companies depend on a number of factors, including the owner's objectives, the owners' country of residence abd citizenship, as well as the countries in which the offshore company will do business.
Agree with Divyesh Patel and all other answers
I AGREE WITH MR MOHAMMAD IQBAL
Agree with Divyesh
Most small corporations should not be looking to incorporate offshore. First, if it is done for tax purposes, you are likely to substantially increase your odds of getting audited by the IRS since there are many offshore tax schemes that are not legitimate. If you are a US citizen and earn income from an offshore corporation, you are obligated to pay income tax in the US on that income. Trying to hide it in an offshore corporation will likely be viewed as tax evasion.
If you are looking to incorporate offshore for liability protection, there are several important considerations. First, in order to protect assets, you will need to transfer the assets into the offshore corporation, which will likely involve moving them to the offshore country or location. There are a lot of horror stories about people losing their assets in offshore companies. You need to be very careful about whom you trust and whom you do business with. Secondly, you will be dealing with laws from another (offshore) jurisdiction that may be considerably different than the local corporation laws or US laws that you are used to.
In most cases, the risk and effort in setting up an offshore corporation will outweigh any potential benefits you might receive.
Good feedback from others.
AGREE WITH MR / MOHAMMAD IQBAL abu baker
Thanks for the invite to answer this question. I could not see the response from Mohd Iqbal Abubakker, which was endorsed by all. Now I see the response from Vinod Jetley most descriptive.
The formation of offshore companies are legal, it is incorporated with the support of Business Development Consultants with a fees.
Please note that the names of the shareholders and ultimate beneficial owners (UBO) of an offshore entity is to be disclosed along with their passport copies when opening the account with any bank as per the KYC requirements.
