Sometimes entrepreneurs choose to set up their company in a country where laws and regulations are more relaxed compared to their own native country. The tax laws and legal formalities associated with the setting up offshore companies will definitely be simpler. These companies are also known as International Business Companies or Non Resident Companies.
The critical aspect here is that these companies can operate only outside the country of its incorporation. Another way to define it would be that it can only transact with another offshore company, i.e. with any other company incorporated outside the country where it exists. People set up offshore companies to serve various purposes. Take a look into the various reasons associated with the setting up of offshore companies.
Certain jurisdictions facilitate easy business reporting, auditing etc and the filing of financial records and balance sheets are kept to the minimum. This makes it highly conducive to business men who don’t want to be bothered by these aspects and utilize the time and the costs they save to build up more clientele.
There is decreased risk of liabilities and assets belonging to the entrepreneur also remain free from risk of seizure. It’s also possible to carry on the business maintaining a certain level of anonymity. The owner’s name can be kept away from most transactions carried on in the private offshore company.
Since business is not conducted in the country of incorporation, it will be possible to keep the profits earned away from tax jurisdictions prevalent in that country. Thus, there will be a significant increase in earnings of the company. There are certain island countries like Belize, Antigua etc which levy very little or no taxes at all on offshore companies. A lot of customs duty exemptions are also available. This is an example for escaping bureaucracy. The concerned governments are mostly fair on such company’s trade and practices and there will be no major interferences.
Anyone keen on setting up offshore company can obtain expert advice often available in the country of incorporation. Foreign exchange conversion charges will also be found reasonable in these countries. Most international banks have very good services and facilities they offer for offshore accounts.
Offshore companies usually specialize in trading. For some entrepreneurs this is a major investment. Others provide consultancy services. A lot of shipping and yacht manufacturing companies are incorporated as offshore entities.
While setting up an offshore company, it is always advisable to set up in a country where political stability prevails since this is detrimental to the uninterrupted functioning of the concern.