An offshore company is a company registered in a country in which it does not primarily
operate its business. It is often assumed an offshore company is located in a
financial centre, however this is not correct. Following are some of the reasons for registering an
offshore company and benefits to be obtained from doing so.
One of the primary reasons why you might choose to incorporate
an offshore company is because of taxation. In many countries the level of
taxation of a company that is seen as non-resident is either tax-exempt, or has
very low taxation obligations.
Corporate taxation can be a complicated aspect of operating a business,
as a company must also consider the tax obligations in the country of its
primary operations. Seeking the
professional advice of a corporate service provider, or taxation expert, is
beneficial in this regard.
Another reason is that the reporting requirements are often less than if you registered the company in the country of residence. In some countries, non-resident companies are not required to disclose all details of the company or its directors/shareholders, or publish financial information.
Asset protection is another reason for entrepreneurs setting up an offshore company. An offshore company can be used as an asset holding company, to hold property investments or intellectual property. It can also be suitable for traders, consultants and entrepreneurs whose business interests are international.
The amount of capital needed to register an offshore company is minimal and is likely to be lower than an onshore company. In some countries, such as the Marshall Islands, there is actually no minimal capital requirement.
The cost factor is another consideration. In many countries registering an offshore company is not only very quick and easy, but could also cost much less than in your country of residence. The maintenance fees of an offshore company can also be much lower than in an onshore location.
The cost of operation of an offshore company can also be much cheaper than running an onshore company. Aspects such as a physical office, accounting and other staff requirements are reduced and hence result in significant savings. Offshore companies often make use of virtual office services provided by company incorporation specialists. Virtual office services support entrepreneurs who undertake international incorporation.
If structured properly, registering an offshore company can be a tax efficient strategy for entrepreneurs operating international businesses. As more jurisdictions offer incentives to attract foreign investment there are a broad range of options for entrepreneurs considering setting up an offshore company. Singapore and Hong Kong are two good examples of jurisdictions that offer excellent reputations, investor friendly business environments and are economically and politically stable.