Many entrepreneurs are increasingly venturing in offshore company formation because there is a great reward derived from investing wealth overseas. Offshore investing is concerned with registering, managing, operating or conducting business in foreign countries often with legal, tax and financial benefits.
Therefore, offshore companies are organizations that are set up with the aim of operating in the nation of its registration and/or the location of the residence of its shareholders, directors and beneficial owners.
The legitimate uses of the offshore companies include asset protection, yacht registration, captive insurance, confidentiality (non-criminal), succession planning, protection of the intellectual property and international trading, where the owners do not have fixed residence. The illegitimate uses of these companies include activities that have become or are illegal. These include finance of terrorism, tax evasion, money laundering, fraud, protection from future or current creditors and irregular trading practices.
The practical uses of the offshore companies include
· Professional services, agency and consultancy- Professionals, artists, consultants and other self-employed people make the decision to incorporate businesses representing their services for purposes of gaining substantial benefits by working as the employees or external consultants of the offshore companies, which they are the sole shareholders.
· Property owning companies- There are significant benefits in utilizing offshore holding companies for purposes of holding property. The benefits of this arrangement include avoidance of capital gains tax, inheritance tax and ease of sales, which can be attained by transferring property owned by the organization and reducing property purchase costs for onward purchasers.
· Employment of the expatriate staff- Expatriates who work overseas benefit from paid employment through an offshore consultancy company or otherwise. By failing to remit the full salary, the company can avoid exchange control challenges and minimize the tax in the nation of temporary residence. Such an arrangement is encouraged particularly for expatriates who work in a politically unstable country.
· Investment companies- Funds accumulated through companies of investment that have been set in offshore locations can be deposited or invested throughout the world. Generally, the interest payable or returns of these funds are subject to the local taxation there are also several offshore locations where these funds can be placed in the form of bank deposits where capital gains and/or interest are paid up and kept gross. Offshore jurisdictions are less invasive because they allow for unrestrained and aggressive Free Enterprise.
The company formation procedure for these companies is similar to that of any other company. Therefore, a company can conduct the same type of business as the organization incorporated within the offshore areas. Like other companies, the shareholders liability is limited to the capital contributed in the company.
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