offshore zones. What are offshore zones and their classification
What is offshore and is it possible to explain this concept in a simple way? plain language? Of course! There are too many rumors, conjectures and outright propaganda around offshore companies, offshore accounts and companies. That is why today we will break down for you the concept of "offshore" on the shelves. We will talk plain language about what offshores are and why they are needed, what it means to withdraw money offshore, why offshore accounts and companies are needed.
Below is a list of topics that we will cover in this article. You can immediately go to the section you are interested in or study the topic consistently and thoroughly. After reading the entire text, you will already clearly understand what offshore companies are and do not let yourself be misled.
What is offshore in simple terms?
The concept of offshore is ambiguous. This is due to the fact that this name is given to two things at once.
The first one is countries and jurisdictions. They are often mentioned in the context of "" or as countries with a favorable tax regime. In fact, the main reason for the close attention to offshore companies is precisely that they legally offer certain tax incentives businesses and individuals.
If you register a company in a classic offshore jurisdiction ( , ), then all income received by the company is not subject to corporate tax.
Something similar to offshore companies and the so-called midshores, for example, or, with the territorial principle of taxation: under certain conditions, you may not pay corporate income tax if income is received outside the country. On this basis of territorial taxation, it is also more of a midshore than a classic offshore.
In offshore jurisdictions, the legislation governing business activities is, on average, simpler and clearer than in other countries. This is one of the reasons why international business actively uses offshore companies: it is much easier to keep records and bookkeeping than in developed countries Oh.
At the same time, we immediately note that despite the prevailing myth about the absence of requirements for bookkeeping, in offshore zones or tax havens, as they are sometimes called, in without fail. It is not always required to submit it for verification or undergo an audit, but reporting should be.
The second thing that is called offshore, you guessed it, is directly the companies that are registered in the offshore zone. An offshore company is a company that is established and operates in accordance with the rules and laws of a classic offshore jurisdiction. In most cases, such companies are prohibited from conducting their activities on the territory of the jurisdiction itself - only outside it.
What are offshore companies in simple terms: the current state of affairs
Before continuing to analyze what offshore is, it is necessary to make an important remark. The fact is that thanks to a process called "deoffshorization", i.e. the fight against offshore companies, as well as the worldwide hunt for taxes by residents of developed and developing countries(within various initiatives), the concept of offshore becomes more political, emotional and propagandistic than a specific definition.
The fact is that in almost any country, including a large and developed one, there are laws that allow foreign investors and entrepreneurs to receive tax and business benefits. Singapore is not considered offshore - it is midshore. The usual high-tax jurisdiction that offers relief for international business under certain conditions.
The United States, even after the tax reform, is not the most favorable country in terms of universal control and regulation. However, international investors get the opportunity and tax savings, and, which is becoming a great rarity, some degree of anonymity for their investments. The United States almost does not exchange information with other states, so it is problematic to find out who invested how much and in what.
At the same time, those countries that are considered classic offshore, offer zero or close to that taxation, worked without registers of beneficiaries (true owners) or with closed registers, are now forced to comply with the harsh requirements of international law. Among other things, large countries require offshore companies to provide data on depositors of offshore banks as part of an automatic exchange (or on the basis of bilateral agreements); beneficiaries of companies, etc.
Not all offshore companies agreed to such conditions, but in general, today it can be said that there are practically no pure offshores and pure non-offshores (onshores) left in the world. The media quite often flash stories about another offshore, which in fact is not.
Therefore, the United States and Nevis, or any foreign jurisdiction and company in general, can be recognized as nominally offshore with an equal degree of probability.
What are offshore companies and why are they needed?
The next most important question that arises regarding offshore companies is why are they needed? If you believe the media and politicians, then the only purpose of using offshore companies is tax evasion and money laundering.
To put it bluntly, this is very far from the truth. Offshore is a tool that solves various problems. Like any tool, it can be used within the law, but some choose to use offshore outside of the law. The first is permissible, reasonable and promising, as evidenced by leaks of confidential data: which recently made a fuss, showed that almost all users of the offshore industry, including the Queen, Bono and Madonna, operate strictly within the existing law.
Illegal use of offshore companies is punishable. Hunt for such intruders in Lately intensified. tax services of the world are actively cooperating with each other and helping to find those who are hiding from justice and evading taxes.
Therefore, when we talk about the use of offshore companies, we are talking strictly about legal practices that help in optimizing a business, increasing business stability and protecting assets.
What are offshore companies and why are they needed? Here is a small list of possible uses for offshore companies:
- Offshore is a tool for protecting property rights to assets (companies, real estate, shares, etc.);
- Offshores are active business companies for conducting international activities, whether it is import-export operations, the provision of goods or services;
- Offshore companies are companies that receive licenses to conduct specific activities - insurance or even banking;
- Offshore helps ensure inheritance rights according to the rules that you want, not your legislation;
- Offshore companies help to optimize business processes, reduce the time for working with reports, gain access to new clients, and reduce the effective tax rate.
Offshore companies are needed in order for the business to work more efficiently and safely. In Russia, the most common reason for using offshore companies is the fear of losing business in the country. The Russian company is sold to an offshore company, and thus it becomes much more difficult to take it away.
Not to mention that not all foreign partners are ready to work directly with Russian companies, especially after . An intermediary in the form of an offshore company allows you to increase the chance for successful cooperation, obtaining investments, and creating new innovative products.
As you can see, the list of ways to use offshore companies is quite wide. Interest in them is shown primarily by prudent businessmen, and not by criminals, as the authorities and the media want to show.
What does it mean to withdraw money offshore?
Another important topic that always follows next to the question “what are offshores” and which we try to reveal in simple terms: what does it mean to withdraw money offshore? Given all of the above, you can already draw your own conclusions.
The first of them is to bring the assets under the management of an offshore company. In a similar way, shares of companies are transferred to offshore companies (they are sold to an offshore company), real estate and movable property(record a house or a yacht for a company in Bermuda), send money.
The last point means that the company also has a bank account to which money can be sent. The same account can be not only corporate, but also personal. In this context, taking money offshore may mean transferring funds to an offshore or foreign bank.
By the way, a foreign account is one of the very first tools that you should get in order to protect your assets. Think about what is happening in Russia with the banking sector: banks are being revoked licenses, depositors are being deceived, the authorities are paying out insurance money in rubles, even if the deposit was in dollars or euros.
Plus, if we add sanctions, attempts to save the budget at the expense of savers, and a slowdown in the economy, we get a gloomy picture that can damage your budget.
That is why opening a foreign or offshore account is a smart move to protect assets. It will be needed not only for personal purposes, but also for an offshore company. We offer readers a portal for both personal and corporate purposes. Write about your desire to open an account to the address [email protected] and in the near future you will receive answers to such questions as: where to open an account? Which bank? How fast is an account opened? What account do I need for my company?
What is offshore in simple terms and how to register it?
When we talk about practical use offshore companies, then in most cases we are talking about the use of offshore companies. “Register offshore” in simple terms means “register a company in an offshore/foreign jurisdiction”.
They offer high standards of asset and owner information protection; flexible and thoughtful legislation; Nevis and Belize offer corporate tax in the amount of 0%; company data is not public; only decisions of local courts are accepted.
In order to register an offshore, you need to follow a few steps:
- Write to mail [email protected] and inform about your desire to register an offshore company;
- Arrive at the appointed time for an online consultation - you only need access to the Internet;
- Tell why you need an offshore and what you are going to use it for - this will help the specialist to select a specific service for you to achieve your chosen legal goals;
- Define List additional services: , opening a bank account;
- Provide copies of documents - most often, at the start, certified copies of your passport and a document confirming your place of residence (utility bill) are required;
- After checking the documents and confirming that nothing prevents you from opening an offshore, you pay for the service - the price depends on the place of registration of the company and the additional services you have chosen. You can pay Bank transaction, card, Paypal, WebMoney, Western Union;
- After the receipt of funds, the procedure for registering a company begins. Please note that it takes from 1 week, provided that we have received a complete package of documents without errors and a fee for the service;
- As soon as the company is registered, you will send the originals of some documents to us, and the original documents of the company will be sent to you. You will receive copies of the documents for starting the activity immediately after the end of registration.
What are offshores in simple terms: Features of using offshores
Finally, we want to draw your attention to a few points that every future offshore owner needs to know. It is important to understand this in order to defend your own interests and at the same time not violate the current legislation:
- Offshore is legal and no one has the right to forbid you from using them;
- Offshore is a tool for doing business and optimizing business processes;
- Offshore companies allow you to register companies remotely - you can open a company without leaving your office;
- Offshore companies are required to keep records! If you don’t want to yourself or don’t know how, contact the service “”;
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Any entrepreneur, choosing the place of registration of his business, always pays attention to such parameters as the tax burden, the procedure for registering a company, the frequency of inspections by state bodies. The most favorable regime in this regard is formed in offshore zones - individual territories or even entire states that offer extremely favorable conditions for occupation entrepreneurial activity.
Full list of offshore and onshore zones on https://gsl.org/en/offshore/offshore-zones/ in the form of a comparative table.
Offshore zone is in simple words, the territory of the state or part of it, within which non-resident companies have a special preferential regime of registration, licensing and taxation, as a rule, provided that their business activities are carried out outside this state. To designate offshore zones in different countries the terms "tax haven", "tax haven" or "tax haven" are also used.
The concept of "offshore zone" comes from the English word "offshore", which literally means "operating outside the borders." Such a definition is quite appropriate, since such a zone is understood as the whole state or its separate part, within which there is a special regime for registration, taxation and control of companies.
Offshore is a company registered in a country with preferential taxation, having a certain type of ownership and restrictions on conducting economic activity in the country of registration. Offshore allows you to conduct foreign economic activity, paying at the place of registration only a fixed annual fee.
Main features of offshore zones
In offshore zones, as a rule, the following conditions apply:
Preferential taxation;
Complete confidentiality of information regarding business owners and their transactions;
Simple and convenient business registration procedures;
Lack of activity checks and financial reporting from government departments.
The fact is that the legislative norms of individual countries allow the head offices of foreign companies to register on their territory. For this, foreign firms pay a small contribution to the treasury of the country in which the offshore zone operates, about 300-1100 dollars.
The first offshore zones appeared in the world back in the days of ancient greece. Then the Phoenician merchants carried out the main trading operations on the desert islands of the Mediterranean in order to avoid taxation. This tradition continued into the Middle Ages.
At the same time, Switzerland became the very first offshore zone in the modern sense of the word. It was followed by the Netherlands and many former British colonies.
In order to protect national business, offshore companies are prohibited from engaging in any business activity within the offshore zone itself. The main income of the offshore zone consists of fees for registration and re-registration, tax revenues, expenses of offshore companies for maintaining their permanent representative offices (secretary offices) in the zone. They include the following items: rent of premises, communications, electricity, payment for accommodation and meals, transport, leisure, wage and some social compensations and payments (for example, payment for treatment, etc.) to bureau employees.
In many offshores, mandatory employment of local residents in the secretarial office is required, thereby solving the problem of employment. Equipment, cars, materials imported for the needs of companies are not subject to customs duties. The number of registered non-resident firms in one offshore can reach several tens of thousands.
Companies in offshore zones are mainly representatives of medium or large businesses. It is too expensive for small businesses to register and maintain offshore companies, so it is more profitable for them to organize activities in their own country.
Classification of offshore zones
In order to understand the variety of offshore zones and choose the most suitable one for registering a business, it is advisable to single them out certain types.
The main reason why numerous entrepreneurs register their business offshore every year is the phenomenon low level taxes. In some zones, there are no mandatory payments to the treasury at all. This allows you to expect higher profits.
Nevertheless, tax benefits in all offshore zones are different, which allows us to distinguish five main types of territories loyal to entrepreneurship:
1) Zones with zero taxation (classic zones). Countries that have such offshore companies in their territories do not require foreign entrepreneurs to pay taxes. They charge them only a small one-time fee once a year. Examples of such territories are the Virginia, Cayman, Seychelles, Marshall Islands, Belize, Nevis, Panama and Dominica.
2) Zones that take into account the territorial sign in taxation. In such territories, as a rule, the tax is levied only on the profit that was received within its framework. For companies that register only their head offices in such zones, there are no significant differences between the first and second types of offshore companies. States with such a regime include Algeria, Malta, Brazil, Malaysia, Singapore, Uruguay and Costa Rica.
3) Zones exempting certain types of activities. Offshore companies operating on such conditions provide entrepreneurs with a complete list of activities that are not subject to taxation. Offshore companies in Bulgaria, Latvia, Poland, Switzerland and some other countries work on such conditions.
4) Zones that tax individual legal entities. Cyprus is now considered such a zone. Here, the issue of full or partial exemption from taxes is decided on an individual basis.
5) Zones with low taxation. Offshores of this type do not provide for the abolition of taxes. However, the latter within their framework are so low that they sometimes turn out to be lower than the one-time collection of zones of other species. Currently, such a regime operates in certain territories of Ireland, Estonia, Montenegro, Portugal and Malaysia.
Despite the fact that offshore zones are a subsystem of service zones of special economic zones, classical offshore zones, unlike classical SEZs, have differences:
In the SEZ, it is possible to conduct activities on the territory of the zone, but not in offshore zones;
In SEZs, they receive a resident status, but not in offshore ones.
In addition, in offshore it is enough to pay an annual fee, regardless of the scale of activity, but in the SEZ they still pay all taxes and fees, that is, there is a relationship between economic indicators companies and taxes paid.
The difference between countries with moderate taxation and classic offshores is that:
Countries with moderate taxation are often more open than classic offshores (the latter are focused on confidentiality, pay less attention to violations of financial violations, etc.);
Countries with moderate taxation often sign bilateral agreements to avoid double taxation, while classical offshore companies are not.
Allocate:
Countries with moderate taxation, this is the practice of a number of developed countries, in which, along with high taxes, there are preferential tax regimes for a number of activities (the so-called onshore-offshore countries), but the attraction is political, economic stability, as well as many agreements on avoidance of double taxation and other aspects.
Tax havens - that is, classic offshore. Preferential taxation for foreign non-resident companies. Companies must conduct their activities outside the offshore (a distinctive characteristic of classic offshore)
Tax havens are like internal offshores within the country. Preferential treatment for registered companies that must operate outside this territory. The difference from tax havens is that the action is only on the territory of the oasis, and not throughout the country. Often used by companies in the same country as the tax haven to optimize taxes.
By registering their business in the territory of other states, companies accept the business conditions prescribed in the laws of these countries.
In particular, we are talking on the process of registration of firms and inspections of their activities by specialized state structures. The legislative environment provides for the distribution of offshore zones into three major classifications.
According to the procedure for registering a business, offshore companies are divided into:
1) free, within which you can register a company by preparing an application and copies of constituent documents for English language(almost all zones);
2) formal, when, in addition to the constituent documents, a number of additional papers from the country of the main activity of the Zone, located on the territory of the EU, will be required.
The nature of audits of financial statements.
There are jurisdictions that do not require the maintenance and submission of their financial statements to government bodies (Vanuatu, Liberia, Maldives, Andorra, Costa Rica, Mauritius).
According to the degree of confidentiality, all offshore companies can be divided into:
Open registry zones that require full disclosure from business owners (Hong Kong, Luxembourg, Switzerland, Singapore).
Zones with a moderate register that oblige entrepreneurs to publicly post information about their largest shareholders and their shares (Belize, Barbados, Lebanon, Malaysia, UAE).
Zones with a closed registry that provide businesses with complete anonymity (Nauru, Liberia, Vanuatu, Mauritius, Liechtenstein).
Entrepreneurs are looking for the most loyal conditions: no taxes, a simplified business registration process, etc. However, growing up in big firm, you have to take care that the chosen territory has a good reputation. Here it is already necessary to make concessions and agree with more stringent requirements.
So, according to the degree of loyalty to the subjects, all offshore companies can be divided into the following categories.
1) Classic offshore territories have the following main advantages:
There are no taxes in such zones, and the governments of the respective states are limited to collecting from entrepreneurs an annual fee of 200-400 dollars.
The authorities do not interfere in the activities of the business and do not check it.
Maintenance and reporting is optional.
The entrepreneur and his company are provided with complete anonymity and confidentiality.
These territories include the Bahamas, Panama and the British Virgin Islands. Despite their high attractiveness, they often become a haven for illegal financial transactions and illegal capital transactions. That is why business partners at the international level are distrustful of companies registered in these offshore zones.
2) Prestigious offshore zones. They do not differ in such loyal conditions, but are highly valued by businessmen from all over the world. Their advantages include:
The presence of low tax rates;
High degree of trust from foreign major partners;
Location in convenient transport accessibility.
At the same time, in such offshore zones, companies are required to submit financial statements to special government bodies, as well as disclose information about the owners of the business and the nature of the transactions.
A similar regime is currently in effect in such states as Cyprus, the Netherlands, Hungary, Luxembourg, and Switzerland.
3) Onshore zones. Formally, they are not offshore, but they provide foreign companies tax incentives, a simplified business registration regime, and some privacy.
In this regard, they acquired the status of "onshore territories".
It should be noted that in some zones of this type there is a much more loyal taxation regime than in prestigious offshores.
In this regard, they occupy a middle position within this classification. Examples of territories with a similar regime are England, France, and the United States.
List of offshore zones for Russia
There is no single list of offshore zones; both the International Monetary Fund (IMF) and central banks various countries of the world.
In Russia, the list of states and territories providing preferential tax regime and (or) not providing for the disclosure and provision of information during the financial transactions(offshore) is published central bank Russia.
The list of offshore zones is contained in Appendix No. 1 to the Directive of the Central Bank of August 7, 2003 No. 1317-U “On the Procedure for Establishing Correspondent Relations with Non-Resident Banks Registered in States and Territories Providing a Preferential Tax Regime and (or) not providing for the disclosure and provision of information when conducting financial transactions (offshore zones)” (as amended on December 27, 2006)
The list of offshore zones for tax purposes was approved by order of the Ministry of Finance of Russia No. 108n dated November 13, 2007, the following states were included in it:
1) Anguilla
2) Andorra
3) Antigua and Barbuda
5) Commonwealth of the Bahamas
6) Kingdom of Bahrain
8) Bermuda
9) Brunei Darussalam
10) Republic of Vanuatu
11) British Virgin Islands
12) Gibraltar
13) Grenada
14) Commonwealth of Dominica
15) The Republic of Cyprus (excluded from the list from January 1, 2013 by Order of the Ministry of Finance of the Russian Federation of August 21, 2012 No. 115n)
16) People's Republic of China: Hong Kong Special Administrative Region (Xianggang) and Macao Special Administrative Region (Maomen)
17) Comoros Union: Anjouan Island
18) Republic of Liberia
19) Principality of Liechtenstein
20) Republic of Mauritius
21) Malaysia: Labuan Island
22) Republic of Maldives
23) Republic of Malta
24) Republic of the Marshall Islands
25) Principality of Monaco
26) Montserrat
27) Republic of Nauru
28) Netherlands Antilles
30) United Arab Emirates
31) Cayman Islands
32) Cook Islands
33) Turks and Caicos Islands
34) Republic of Palau
35) Republic of Panama
37) Republic of San Marino
41) Separate crown possessions of the British crown: Isle of Man and the Channel Islands (Guernsey, Jersey, Sark, Alderney)
Today, the concept of "offshore" is becoming more and more popular every day, its widespread use, of course, is of interest. If experts from the field of economics and jurisprudence are very familiar with it, then for an ordinary citizen the meaning of this word is not always clear.
So, according to the definition, offshore is some Finance center, which constantly attracts capital from abroad by providing special incentives and tax privileges to various kinds of companies. Offshore zones of the world are widely scattered geographically: Gibraltar, Dominican Republic, Seychelles and even Russia. However, in our country, such an economic arena has a slightly different name, namely, the “Preferential Taxation Zone”.
Offshore zone. concept
An offshore zone is a country or part of it where, subject to certain conditions, it is possible not to pay taxes. Also, you do not need to submit quarterly financial statements. An offshore zone, as a rule, is characterized by a number of privileges, among which are the following: a diverse tax regime, financial development, economic stability, etc. Experienced entrepreneurs always pay special attention to her choice, taking into account all of the above factors. To register each specific company, you should choose the most favorable conditions for cooperation.
Offshore zone. Classification
- Classic offshore zone (zero taxation). In this case, the company undertakes to pay a certain fee to the state every year, and it does not levy a tax and does not require accounting reports. This type includes following zones: Nevis, Belize, Panama.
- States with a territorial sign of taxation. In this case, the income that was received in the course of transactions with sources located in this jurisdiction is subject to taxation. Thanks to this kind of system, it is possible to export goods, on the one hand, and inflow of investments, on the other. List of states: Costa Rica, Malaysia, Brazil, Morocco, UAE, Algeria.
- Countries that provide tax exemption for certain activities. For example, when making a profit from real estate in the territory outside offshore zone(Denmark, Lithuania, Hungary, Bulgaria, Poland, Switzerland, Slovakia).
- Territories where there is no need to pay taxes to the state for a group of certain legal and even quasi-legal entities (Cyprus).
- Low level of taxation. In this case, the state sets sufficiently low tax rates in order to develop the country from an economic point of view and attract foreign investment(Cyprus, Estonia, Switzerland, Montenegro, Ireland, Portugal).
Development
At the moment, the list of offshores is constantly updated, now their number is just over 50. Indeed, as practice shows, such territories are very popular, including among Russian entrepreneurs, hence the expediency of their occurrence.
offshore(also offshore or offshore company ) is a certain territory of the country, or the country as a whole with favorable conditions conducting business activities for foreign citizens (non-residents) in relation to this country.
Description of offshore in simple words
In simple terms, these are foreign countries or their states where you can open a company or do business without paying any taxes and fees.
Among these favorable conditions are low or no tax rates, simplified reporting and document management, the ability to hide the owners of a particular company. Therefore, offshore companies can also be used by scammers, including for transferring money, which subsequently will be simply impossible to find.
History of occurrence
The very first offshore in history was seen in the US in the 1950s. Then one of the enterprises that the US government wanted to see on its territory and receive tax payments from it, the owners registered in another country with low tax rates.
Among economists there is no clear definition of offshore. Some associate the term with geographic location one or another company in relation to the place of residence of the owner, others - with the economic and financial side (in terms of profitable financial and economic conditions For the company).
We cannot say that offshore companies are a modern phenomenon. Its roots go back to ancient Greece. There was first introduced a tax on exports and imports. In order not to pay these taxes, merchants looked for nearby territories and smuggled their cargo there.
This phenomenon came to Russia already in the 90s. The Swiss company became the first offshore in Russia at that time.
The concept of an offshore zone
Offshore zone- this is the territory of a separate state or part of the state, within the boundaries of which foreign companies are provided with special conditions for registering and conducting their activities.
The presence of such zones causes indignation of some states, because due to low taxation, manufacturers transfer their capital to other countries, thereby avoiding paying taxes to the budget. Offshore zones are distinguished by their investment potential, legislation, level of infrastructure development, political environment.
Companies in modern world, can and are able to invest their investments not only in domestic companies, but also in offshore zones, which is basically a more profitable investment.
The most common offshore zones are the countries of Asia and Latin America. There are very highly qualified specialists in the field of investments and a favorable investment climate.
In Hong Kong, the tax rate is the same for everyone. This zone is recognized as the most profitable among all offshore zones.
The offshore zone as a whole includes 27 territories of the world.
Jurisdictions
Offshores are otherwise called jurisdictions.
There are several jurisdictions where you can register your business, for example:
Island offshore
These are small islands located in the oceans. They differ mainly in the complete absence tax payments, the possible lack of any financial reporting, the confidentiality of information about the owners of firms.
But there is a possibility that when registering your company in an island offshore, it will not be popular with large manufacturers and suppliers, since rather dubious companies are registered in this offshore. The island offshore attracts investors with all possible ways, since there is basically no own production there.
European offshores
Companies with a very high and prestigious status are registered there, they are very popular. A European offshore is different in that you need to pay taxes there, but there are certain benefits for certain types of activities, you need to keep both tax and financial records, the names of the owners are also not kept secret. It cannot be unequivocally said that these territories are offshore, but this practice is observed quite often.
Offshores with a special special taxation regime
Mostly they include territories located in the United States. Russia also has such territories, for example, the Republic of Kalmykia or Altai.
When a company goes offshore, the state loses all mandatory payments to the country's budget for this company. The owner saves on payments, thereby increasing his profit. In various sales or purchase transactions, mandatory payments are also not paid, the owners of these companies are hiding.
There is an opinion that it is precisely because of the presence of such offshore zones that global economic crises arise, since the money that should have gone to the state budget goes into the pocket of the owners in the form of net profit.
V Russian Federation business owners can be found by annual accounts. It reflects all the persons of the company, having at their disposal more than 5% of the shares of the company, offshore - it is almost impossible to recognize them. This is a great way to be the owner of a company and hide it.
Registration in Russia legal entity can take quite a long time and spend a certain amount Money For this, in offshore companies you can buy a ready-made business right away, or register for a week. But the biggest advantage is the ability not to maintain any reporting documentation, that is, not to disclose the company's revenue.
Offshore companies
An enterprise can be classified as offshore if:
- the owner is a resident of another country;
- the company is registered in one country, but is active and receives revenue in another;
- the company is registered in a simplified way and in a short time;
- there is no information about the owner of the enterprise or firm;
- there is no control over the activities of the company from the outside financial institutions;
- no accounting is kept and there is no other mandatory reporting;
- absence of taxes and other obligatory payments.
Island territories are most dependent on offshore, as they are very poorly developed and do not have their own companies. With low taxes and a simplified company system, they attract at least some capital into their economy.
Registration of a company in an offshore zone
In order to register a company in an offshore zone, it is not necessary to travel to this country. Now you can find a huge number of companies that are ready to help you with this and do everything without your participation. They will help you choose the right offshore for your activity.
An appropriate analysis of all offshores is carried out and the most profitable offshore from all sides is selected. And after 7 days you have the opportunity to get a company anywhere in the world without leaving your permanent place of residence. Such specialized companies can offer you both to register a new company and to acquire an existing one.
But all this comes at a cost. If you are not ready for additional expense, you can try to register a company yourself.
To do this, you still need to analyze all countries, and choose the most suitable for your type of activity. To obtain a legal address for your company, you will have to rent premises in an offshore country and hire a person who will represent the interests of your company in the first stages.
If the owner wants to be classified, experienced businessmen attract local residents who are willing to become the nominal owners of your company for a small fee. Then you need to pay the registration of the company, the so-called registration fee. It is annual. An additional annual fee may also apply. It is this fact that scares off the lower and middle-level entrepreneurs, since their arrival will be minimal after paying fees.
Pros and cons of opening a company in an offshore zone
The offshore zone is used by company owners in the following cases:
- reduce to a minimum the amount of taxes and fees of the company;
- hide the company's financial transactions;
- withdraw illegally earned money from the country;
- hide the net profit of the owner;
- avoid control by various financial structures of the country.
Nevertheless, the most popular condition is the fact of concealment of purchase and sale transactions by this enterprise. Some countries prohibit certain economic activities. By creating a company offshore, the owner performs any actions permitted by the offshore country, while the name of this person will be classified.
Such actions are beneficial to people with a certain high status in their country, for example, deputies. They can run a company offshore, make a profit, but at the same time not reflect it in their income tax return. Almost all operations with securities take place in offshore countries.
The only drawback is the fact that not all activities are permitted in a particular state.
Offshore accounts and banks
Offshore accounts- these are bank accounts that are located in a different country in relation to the country where the owner of the company lives.
Such accounts are more secure in their use and taxes are paid in minimum amounts. You can open such an account anywhere in the world. Before opening an account with one of the banks, it is necessary to study in detail all the tariffs and conditions necessary for opening and maintaining an account.
All offshore accounts can be divided into specific types, directly dependent on the goals pursued by the owner when they were opened, namely: corporate, private, settlement, current, deposit, savings, security, transit, operational.
Let's take a closer look at these accounts.
Private accounts
Such accounts are opened by an individual who manages it himself or has an authorized person to do so. commit commercial operations this account is not allowed.
Basically, such accounts are of a long-term nature, that is, it brings profit to the owner, for example, by investing money in various securities. In world practice, there are a number of banks, which necessarily include departments that specialize specifically in private investment.
Corporate accounts
They have the right to open no longer individuals, but individual entrepreneurs and various legal entities that are engaged in activities that bring profit to its owner.
These accounts allow you to non-cash payments with suppliers and customers. Such an account is mainly managed by persons with a power of attorney. On such an account, you can also store the profit received by the enterprise. The existence of such an account will reduce the tax burden on the company.
Current and expense accounts
Such accounts are used by offshore companies to move their money. Such an account can be managed remotely, since there is Internet banking, you can receive additional accruals on account balances, carry out various operations, and you can issue a checkbook. The card account involves the issuance plastic card to which your current account will be linked.
Deposit accounts
They involve keeping funds in the account for a certain period of time and receiving additional interest for this. The longer you choose the term of keeping funds in this bank, the higher interest rate.
The disadvantage is the fact that during the entire period of keeping funds in a deposit account, you do not have the right to cash them out. If, nevertheless, you decide to close your account or cash out part of the amount, be prepared to pay penalties. However, when concluding an agreement for opening such an account, it is possible to provide for the possibility of cash flow, but the interest rate will be much lower.
Operating accounts
Operating accounts are the opposite of deposit accounts. These accounts are designed specifically to carry out the maximum number of transactions on your account. The Bank may make claims to this account only in terms of the minimum allowable balance on the account or the minimum annual turnover on this account.
Transit accounts
They are used if the owner wishes to additionally secure all his transactions and conduct them in strict confidentiality.
Security accounts
They are opened for specific purposes, for example, obtaining a loan, in some countries for obtaining a visa. Then the money from this account can be used at your discretion.
Before opening such accounts, it is necessary to study all the advantages and disadvantages of these accounts and banks. Banks may charge additional fees and charges.
If you have no idea about how banks work with these accounts, it is better to use the services of a specialized company that will help you open a really profitable account for you. However, you need to be careful when choosing this specialized company. If you want all account information to be confidential, choose a specialized company based on reviews and recommendations from other people.
Countries for opening an account
It is important to choose the right country for opening an account.
- For example, on Seychelles the account is completely exempt from various tax rates, financial statements also not conducted, there is no control.
- On the Cyprus there is a minimum tax burden, but at the same time, reporting is mandatory, and accounts are monitored and audited.
- The most prestigious for opening accounts are Switzerland and Austria.
Account opening procedure and service cost
The procedure for opening an account is also different in all banks. For some, a prerequisite is the presence of an account holder on the day it is opened at the bank, for others, an authorized representative is enough, and still others can send a bank representative to you and conclude an agreement to open an account. Some require letters of recommendation for you from your business partners.
The cost of opening an account also differs from the country in which the account is opened. In addition to this amount, additional fees and payments may be charged, which must be clarified at the stage of signing the contract.
Offshore banks have the right not to respond to requests from various judicial and law enforcement agencies regarding the accounts of their clients, if such an obligation is not documented. Offshore banks provide services only to non-residents and completely refuse to work with local residents.
Summing up the procedure for opening accounts in offshore zones, it should be said that such an account will allow you to reduce the tax burden, free you from maintaining various reports in whole or in part, reduce control, receive additional investments, and the ability to manage your account from anywhere in the world.
Among the shortcomings, it can be noted that in pursuit of favorable conditions, you can choose a bank with a bad reputation, which can subsequently bring you a lot of inconvenience and problems.
In conclusion, I would like to note that offshore zones help businesses to reach the international level, encourage them to maximize profits, simplify all possible business procedures, provide security and complete confidentiality to their investors.
In legal terminology, the definition of offshore began to be used in the 50s of the 20th century in the United States from the moment an article was published about a well-known company at that time that moved its head office to another country and thereby avoided increased attention from the US government.
In the article we will talk about what it is and about the principles of working with it.
Basic terms and definitions
Literally, the term offshore is translated from English as "out of the coast", that is, outside the country, so it has an economic and geographical character.
An offshore zone is a state or part of it - an area, a state on whose territory there are special conditions for registration and doing business by non-residents, that is, citizens of other countries.
The emergence of these zones is due to different approaches in the tax policy of states, the lack of unified international laws. An offshore zone for conducting business activities of a non-resident, in fact, can be any state whose tax policy compares favorably with the politics of his native country.
How economic phenomenon such schemes appeared in Ancient Rome when traders trying to lower their tax expenses, bypassed or circled territories with high duties, trading in neighboring islands.
Today, an offshore company is one that does not conduct its business activities in the country of actual registration, and its owner is a non-resident, that is, a citizen of another state. For example, an American who has registered his company in Cyprus, but who conducts his main activity in the USA, becomes the owner of the offshore.
Offshore business includes companies that are engaged in a variety of activities - trading, financial, construction, manufacturing. It is possible to single out the main characteristics that will classify the enterprise into this category:
- non-residency of the owner in relation to the country of registration;
- commercial activity is carried out outside the country of registration;
- simplified registration procedure;
- confidentiality and anonymity in relation to the owner of the company;
- the absence or significant simplification of the currency and financial control activities, accounting and audit;
- low taxation or replacing it with a single fixed fee.
Offshore zones
Offshore zones or, as they are more correctly called, jurisdictions, are a state or territory that has tax incentives for non-residents and simplified registration of a legal entity. They are conditionally divided into three categories:
- island territories - as a rule, small islands in the Caribbean, Indian and Pacific oceans;
- European states;
- administrative-territorial formations in the USA, Malaysia and some other countries. Some experts include Russian territories here - Kalmykia and the Altai Territory.
The emergence of offshore zones was historically and geographically determined. In the 1970s, the island colonies of Great Britain gained independence and became independent states. But at the same time they faced the problem of insufficient budget financing.
Since all these states are islands and often have a small territory, their economy and industry are underdeveloped, and the extraction of natural resources is very limited. As a colony, they received subsidized aid. Having lost it, governments had to think about alternative sources of filling the state treasury, an acceptable solution was the registration of companies offshore.
Many European countries also have similar problems of budget financing and, in order to attract foreign capital, they simplify the system of taxation and registration of enterprises.
They include Switzerland, Austria, Liechtenstein. Companies registered in these states have a positive reputation and a high level of customer confidence. However, these countries have more stringent tax systems, mandatory accounting and auditing compared to the islands.
The island areas are Seychelles, Bahamas, Virgin Islands, Bermuda, Cayman Islands, Cyprus, Panama, Trinidad and Tobago, Dominican Republic other. A feature of the island zones is the complete absence of income tax and dividends, a cheap and simple registration procedure, complete confidentiality of the owners, but at the same time the dubious reputation of the company.
Registration of a company offshore
As noted above, the opening of companies in free economic zones is very simple, for this it is not even necessary to stay in this country. Now these questions are hushed up by specialized firms that analyze such zones, make up comparative characteristic to simplify the choice of the country, are engaged in legal and financial matters- as a result, the client receives a ready-made enterprise in just a week. In such firms, you can purchase an existing offshore company with a history and "experience" of work.
Thrifty owners can also easily register a company on their own, for this you need:
- First, to analyze the countries and determine the most favorable tax conditions for their kind of activity.
- Secondly, to organize a secretarial bureau, which will play a representative role, and rent premises for it, thereby obtaining legal address enterprises. If the owner wants to remain completely in the shadows, he can attract local residents as shareholders of the company, who willingly agree for a small fee.
- Thirdly, it is necessary to pay the state registration fee, the amount of which in island zones varies from 50 to 800 US dollars, and in European countries it can reach several thousand.
A ready-made company can be purchased for $300, but the maximum price can exceed $10,000. The registration fee must be paid annually, in addition, in some countries a single flat tax system is applied. Therefore, there is no economic benefit for a mid-level entrepreneur to maintain an offshore company.
There are also certain restrictions on activities, among which one can single out a ban on conducting business activities within the country of registration. This provides some financial stability to the state and eliminates the risk of economic takeover by international companies.
Advantages and disadvantages of working offshore
Offshore companies are created to achieve certain goals:
- minimization of the amount of taxes and fees;
- concealment of a financial transaction;
- hiding the owners of the company;
- withdrawal of “criminal” capital from the country;
- concealment of the owner's real income;
- lack of currency and financial control.
The scheme for minimizing the amount of taxes paid is simple - suppose that in country X the amount of income tax is 20%. An enterprise in country X, carrying out trading activities, receives 1 million US dollars in net profit, of which it pays 200 thousand dollars to the state treasury.
The same enterprise can sell goods to an offshore company at a lower price, making a profit of 200 thousand dollars, and the offshore company, having resold the same products, receives the rest of the profit - 800 thousand dollars. Income tax in country X is paid in the amount of 40 thousand dollars, in offshore zones it zero. As a result, the enterprise saves 160 thousand dollars, which it can receive in the form of a loan from a foreign company.
The same schemes are used to evade the payment of value added tax, income tax With individuals, various duties and excises.
The insurance scheme can be considered on a real example of the well-known transnational corporation Phillips. Registered in Bermuda Insurance Company“Kingstone Captive Insurence”, the main activity of which was the insurance of the operations of “Phillips”.
The manufacturer of well-known equipment transferred to this company most of its profits as an insurance payment, thereby reducing its taxes, and Kingstone Captive Insurance annually credited Phillips for the same amount. Phillips is known to have saved over $18 million under this scheme.
The big advantage of offshore companies is secrecy of transactions and confidentiality of information about owners. In many countries, government officials are prohibited from engaging in entrepreneurial activities in order to avoid lobbying for dubious and unprofitable legislative projects for the country.
By registering a company in the Seychelles, a deputy or official receives a guarantee of complete anonymity and can safely promote their commercial activities, while avoiding taxes and declaring their income as an individual.
Experts estimate that more than 12 trillion dollars is stored in offshore bank accounts, which is about one third of the total wealth of all millionaires in the world.
Absence currency control allows profitable transactions in the market valuable papers and currency exchanges, approximately 80% of such transactions are carried out in offshore zones. Lack of accounting and mandatory audits leads to complete misinformation about the nature of the company's activities and prepares fertile ground for criminal operations and transactions. The disadvantages of doing business in offshore zones for companies come down to the restriction of such activities by the state.
Impact on onshore
Offshore activities have a negative impact on onshore states. Onshore is a company that is registered in the territory where the main part of its activities is concentrated. Here, open accounting is maintained according to the full tax scheme. This is the exact opposite of offshore. Such states suffer mainly from the shortfall in taxes and, accordingly, the underformation of the budget.
Many experts tend to argue that the world economic crisis emerged precisely because of the proliferation of offshore companies. Approximately 90% of Russian big business has been transferred to free economic zones.
With the increase in financial instability in the United States and the national budget deficit, the government took anti-crisis measures, which led to an increase in taxes. Large companies, in response to these measures, transferred their business to offshore zones, mainly to the British Virgin Islands, where more than 800,000 enterprises are registered.
Legality of working offshore
From the point of view of the company's activities within the offshore zone, one can say about the legality of its economic and financial operations. But from the point of view of the state from which this business has left, there is a complete opposite.
As described above, the state is losing huge amounts of unpaid taxes, in addition, there is a significant outflow of capital and real investment to other countries that does not support and develop the national economy.
Many offshore companies conduct illegal terrorist financing activities, due to the fact that in free jurisdictions there is no financial control of transactions and there is no mechanism for open contractual relations, all activities are in complete secrecy.
From this point of view, offshore companies pose a great threat to the entire society, therefore, special organizations have been created that develop measures to prevent the development of such a business:
- One such global organization is FATF. Its recommendations on the prevention of terrorist financing and money laundering have been adopted by most governments.
- OECD– organization economic development and cooperation - also maintains lists of countries and territories with a simplified tax system and non-transparent financial and economic laws.
States that support the recommendations of these organizations monitor more closely companies that cooperate in their economic and economic activities with companies from generally recognized offshore zones, limit the amount of their transactions, carry out a complete identification of enterprises and their owners, exercise control over product pricing in order to avoid unreasonable underestimation prices.
The plot of how to choose offshore
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