An offshore company is in simple words. Offshore zone
In connection with the fight against tax evasion, which has been recently covered by the media, many have learned about the existence of offshore companies, offshore countries and zones. Moreover, specific information about “What are offshore countries?” Is sorely lacking. Today we look at what offshore countries are, where offshore countries are and why business needs them.
Thanks to this article, you will understand the following topics:
What are offshore countries?
Offshore countries are those countries that offer special conditions for business. To be correct to the end, the term “offshore countries” is inaccurate. The term “offshore jurisdictions” is more suitable. That's because offshore can be called not only the whole state, say, but also part of the state - a state in the USA.
Another definition of an offshore country is the inclusion of a state or jurisdiction in the list of offshore companies of an international organization or another country. For example, Russia considers Liechtenstein offshore, but the EU does not.
Offshore countries and jurisdictions offer special conditions for doing business for foreign entrepreneurs and investors. The most common advantages of offshore countries that are prescribed in the legislation are the following:
- Simple and quick procedure for registering a new company;
- Simplified reporting system;
- No need for an audit;
- Reduced taxes;
- Additional protection against creditors, scammers and competitors;
- Flexible legislation that allows you to customize your company for specific tasks;
- Increased protection of personal information of owners and directors;
- Access to new markets and financial instruments;
- Much more.
Offshore business and offshore company
An offshore company is considered if it is registered in an offshore country according to the rules for offshore (international, non-resident) companies.
An offshore company may have owners, holders of shares, directors, secretaries and other managers. This is determined by the laws of the particular jurisdiction and the type of company chosen: IBC, LLC.
Any modern offshore company in order to benefit its owner, as well as not to attract unnecessary risks, must meet several criteria:
- Registered and legally registered;
- Has a real presence: office, employees, or at least a working site, server, etc. at the place of registration.
Real presence orsubstance is an extremely important point in the modern world. “Paper” offshore companies that existed only on paper are considered today as a method of fraud and a method of tax evasion. Only if the company can prove its real activity, it can be used in the international structure and asset protection.
- Leads required by law;
- It is engaged in legal activities and has the necessary licenses for this.
It is important to understand: an offshore company is not a magic box that will hide dirty deeds and help to launder money or deceive a client. The times when this was possible have passed or are rapidly passing. Companies, their accounts and activities are closely monitored by law enforcement agencies in the world.
Old schemes that allowed you to evade taxes or hide the face of the true owner no longer work. The new schemes are aimed at ensuring security, protection, and reputation, but not at all to deceive the authorities.
Why, then, need offshore companies in offshore countries?
Why do we need an offshore company?
An offshore company is a tool that solves certain problems. The list of tasks is up to you and your business. At the same time, any offshore country has its own nuances, its own characteristics. In other words, there is not one single offshore company that will solve any kind of problem.
If you want to open a bank, then you need a jurisdiction that issues banking licenses, for example,. If you plan to do online gambling, then pay attention to and.
If your task is to protect assets from fraudsters and competitors, look at companies and - these two states practically do not leave a chance for those who are used to taking other people's assets, including through the courts. The legislation of these countries is spelled out in such a way that decisions of foreign courts are not accepted here, and in order to start clerical work in Belize or Nevis, you first need to pay $ 25,000 to the cashier.
If you are looking for a place to register a ship, plane or helicopter, then there is a choice:, and others.
If you are interested in a good reputation, in access to a skilled workforce and the European market, create companies in, on.
Also, pay attention to how and where you are going to accept payments. In other words, where should you have a bank account. As practice shows, opening a bank account is many times more difficult than opening an offshore company. We recommend that before buying an offshore, sign up for and find out if you can open an account in the right bank with the planned offshore company: [email protected].
List of Offshore Countries
The list of offshore countries is an ambiguous thing. The point is how to determine the offshore. In fact, today almost all states have in their laws offshore elements for foreign investors. The United States is in many ways a much more important and major offshore than St. Kitts and Nevis, and the United Kingdom is generally the head of half of the world's offshore companies, which are called “British offshore”.
Therefore, the list of offshore companies is usually either international organizations or regulatory authorities responsible for taxes or business. In Russia, the “list of offshores” is compiled by the Federal Tax Service and currently has 107 countries and 18 territories.
The OECD has its own list, as does the IMF.
List of offshore FTS
1. Angola |
2. Andorra |
3. Antigua and Barbuda |
4. Afghanistan |
5. The Bahamas |
6. Bangladesh |
7. Barbados |
8. Bahrain |
9. Belize |
10. Benin |
11. Bolivia, Plurinational State of |
12. Bosnia and Herzegovina |
13. Brazil |
14. Brunei - Darussalam |
15. Burkina Faso |
16. Burundi |
17. Bhutan |
18. Vanuatu |
19. Gabon |
20. Haiti |
21. Guyana |
22. The Gambia |
23. Ghana |
24. Guatemala |
25. Guinea |
26. Guinea-Bissau |
27. Honduras |
28. Grenada |
29. Djibouti |
30. Dominica |
31. Dominican Republic |
32. Zambia |
33. Zimbabwe |
34. Jordan |
35. Iraq |
36. Yemen |
37. Cape Verde |
38. Cambodia |
39. Cameroon |
40. Kenya |
41. Kiribati |
42. Colombia |
43. Comoros |
44. Congo |
45. Costa Rica |
46. \u200b\u200bCote d’Ivoire |
47. Lao People's Democratic Republic |
48. Lesotho |
49. Liberia |
50. Liechtenstein |
51. Mauritania |
52. Madagascar |
53. Malawi |
54. Maldives |
55. Marshall Islands |
56. Micronesia, Federated States of |
57. Mozambique |
58. Monaco |
59. Myanmar |
60. Nauru |
61. Nepal |
62. Niger |
63. Nigeria |
64. Nicaragua |
65. United Arab Emirates |
66. Oman |
67. Pakistan |
68. Palau |
69. Palestine, State |
70. Panama |
71. Papua New Guinea |
72. Paraguay |
73. Peru |
74. Rwanda |
75. Samoa |
76. San Marino |
77. Sao Tome and Principe |
78. Swaziland |
79. Seychelles |
80. Senegal |
81. Saint Vincent and the Grenadines |
82. Saint Kitts and Nevis |
83. Saint Lucia |
84. Solomon Islands |
85. Somalia |
86. Sudan |
87. Suriname |
88. Sierra Leone |
89. Tanzania, United Republic |
90. Timor-Leste |
91. Togo |
92. Tonga |
93. Trinidad and Tobago |
94. Tuvalu |
95. Tunisia |
96. Uganda |
97. Uruguay |
98. Fiji |
99. Central African Republic |
100. Chad |
101. Ecuador |
102. Equatorial Guinea |
103. El Salvador |
104. Eritrea |
105. Ethiopia |
106. South Sudan |
107. Jamaica |
TERRITORIES |
1. Anguilla |
2. Virgin Islands, USA |
3. Gibraltar |
4. Greenland |
5. Guam |
6. Macau |
7. Comoros: Anjouan Island |
8. Malaysia: Labuan Island |
9. Montserrat |
10. Curacao |
11. Niue |
12. Puerto Rico |
13. Cook Islands |
14. Turks and Caicos Islands |
15. Separate administrative units of the United Kingdom of Great Britain and Northern Ireland: Isle of Man and Channel Islands (Guernsey, Jersey, Sark, Alderney) |
16. Saint-Martin (Dutch part) |
17. Taiwan (China) |
18. Faroe Islands |
Only 6 countries remain in the black list of EU offshores: Guam, Namibia, American Samoa, Samoa, Palau, as well as Trinidad and Tobago. A few dozen more in gray - this means that they have a chance to get into the “white”, so in the black list, depending on compliance with EU requirements.
It is worth noting the following: blacklisting does not mean “forbidden”. This means that transactions with this state are considered with a little more thoroughness. In addition, the lists are constantly changing in connection with new bilateral agreements.
How to open a company in an offshore country
In order to open a company in an offshore country, we recommend that you adhere to the following algorithm:
- The first thing to understand is what you want to achieve with the help of a company in an offshore country: asset protection, search for new clients, agreements with a foreign partner, tax benefits;
- Then you should seek advice from the specialists of our portal [email protected] and sign up for a free consultation on selecting a bank account (especially if you plan to conduct an active business or any activity where payment is required);
- Depending on your goals and location of clients, we will advise you where to open an account and which offshore jurisdiction is right for you;
- Determine the necessary additional services (open an account, hire a nominee service or);
- Prepare documents:
- Translated and certified copies of passports of the beneficiary and directors;
- Proof of address of residence (utility bill);
- If the documents are in order, then pay for the company registration services using a card, bank transfer, WebMoney, WesternUnion, etc.
- Wait for the documents on registration of the company, send the originals of the documents indicated by us;
- Start using the company in an offshore country.
Offshore (also offshore or offshore company ) Is a certain territory of a country, or a country as a whole with favorable conditions for doing business 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 in which you can open a company or conduct business without paying any taxes or fees.
Among these favorable conditions, low or missing tax rates, simplified reporting and document management, the ability to hide the owners of a particular company can be distinguished. Therefore, offshore companies can also be used by scammers, including to transfer money, which subsequently will be simply impossible to find.
History of occurrence
The very first offshore in history was seen in the United States 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 this term only with the geographical location of a company in relation to the place of residence of the owner, others with the economic and financial side (in terms of favorable financial and economic conditions for the company).
It is impossible to say that offshore is a modern phenomenon. Its roots go back to ancient Greece. There, the export and import tax was first introduced. In order not to pay these taxes, merchants searched for nearby territories and smuggled their goods there.
This phenomenon came to Russia in the 90s. The first offshore company in Russia was then a Swiss company.
Offshore zone concept
Offshore zone - this is the territory of a separate state or part of the state, within which foreign companies are provided with special conditions for registration and conduct of 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 situation.
Companies in the modern world can and are able to invest 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 investment 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
Offshore is otherwise called jurisdiction.
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 of tax payments, the possible absence of any financial statements, and 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. Island offshore attracts investors by all possible means, since there is basically no domestic production there.
European offshore
Companies with a very high and prestigious status are registered there, they are very popular. European offshore is distinguished by the fact that there you need to pay taxes, but there are certain benefits for certain types of activities, you need to keep records of both tax and financial, the names of the owners are also not kept secret. It is impossible to say unequivocally that these territories are offshore, however, this practice is observed quite often.
Offshore with special tax treatment
Basically, they include territories located in the United States. In Russia, there are also such territories, for example, the Republic of Kalmykia or Altai.
When a company transfers to offshore, the state loses all payments that are obligatory for the company to the country's budget. The owner saves on payments, thereby increasing his profits. 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 been transferred to the state budget comes into the pocket of owners in the form of net profit.
In the Russian Federation, owners of firms can be recognized by annual reporting. It reflects all the persons of the company who have at their disposal more than 5% of the company’s shares, in offshore it is almost impossible to recognize them. This is a great way to own a company and hide it.
In Russia, the registration of a legal entity can take quite a long time and spend a certain amount of money on it, in offshore you can buy a ready-made business right away, or register for a week. But the biggest advantage is the ability to not keep any accounting documentation, that is, not to disclose the company's revenue.
Offshore companies
An enterprise can be attributed to offshore if:
- the owner is a resident of another country;
- the company is registered in one country, and is active and receives revenue in another;
- the company is registered in a simplified manner and in a short time;
- information about the owner of the enterprise or company is missing;
- there is no control over the activities of the company by financial institutions;
- no records are kept and there is no other mandatory reporting;
- lack of payment 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 system of conducting business, they attract at least some capital in their economy.
Offshore company registration
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 in this and do everything without your participation. They will help you choose the offshore specifically for your activity.
A corresponding analysis of all offshore companies is carried out and the most advantageous offshore company 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 purchase an existing one.
But all this costs certain costs. If you are not ready for the extra expense, you can try to register a company yourself.
To do this, you still need to conduct an analysis of all countries, and choose the most suitable for your type of activity. To get your company a legal address, you will have to rent a room in an offshore country and hire a person who will represent the interests of your company in the early stages.
If the owner wants to be kept secret, experienced businessmen attract local residents who are willing to become nominal owners of your company for a small fee. Then you need to pay for the registration of the company, the so-called registration fee. It is an annual event. Possible payment of an additional annual fee. It is this fact that discourages lower and middle-level entrepreneurs, since their arrival will be minimal after paying fees.
Pros and cons of opening an offshore company
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 financial transactions of the company;
- withdraw money illegally earned from the country;
- hide the net profit of the owner;
- avoid control by various financial institutions of the country.
Nevertheless, the most popular condition is the fact of concealment of sales transactions by this company. Some countries prohibit certain economic activities. Creating an offshore company, the owner performs any actions permitted by the offshore country, and the name of this person will be kept secret.
Such actions are beneficial for people with a definitely high status in their country, for example, deputies. They can run the company offshore, make a profit, but not reflect it in their income statement. Almost all securities transactions 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 located in another country in relation to the country where the owner of the company resides.
Such accounts are more secure in their use and taxes are paid in minimal 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 that directly depend on the goals that the owner pursued when they were opened, namely: corporate, private, settlement, current, deposit, savings, security, transit, operational.
Consider these accounts in more detail.
Private accounts
Such accounts are opened by an individual who manages it or has an authorized person. No commercial operations are allowed on this account.
Basically, such accounts are long-term in nature, that is, they bring 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 are no longer entitled to be discovered by individuals, but by individual entrepreneurs and various legal entities that engage in activities that bring profit to its owner.
These accounts allow you to conduct cashless payments with suppliers and customers. This account is mainly managed by persons with a power of attorney. On this account, you can also store the profits received by the company. 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, as there is Internet banking, you can receive additional charges on account balances, conduct various operations, and you can issue a checkbook. Card account involves the issuance of a plastic card, which will be tied to your bank account.
Deposit accounts
They involve storing money in the account for a certain period of time and receiving additional interest for it. The more you choose the period of storage of funds in this bank, the higher the interest rate.
The disadvantage is the fact that during the entire period of storage of funds in a deposit account, you do not have the right to cash them. 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 to open such an account, it is possible to foresee the possibility of cash flow, but the interest rate will be significantly lower.
Operating accounts
The opposite of deposit accounts are operating accounts. These accounts are designed specifically to conduct the maximum number of operations on your account. The bank may present requirements for 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 applied if the owner wants to further secure all his operations and conduct them in strict confidentiality.
Security Accounts
Open for specific purposes, for example, obtaining a loan, in some countries to obtain 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. At banks, additional fees and various fees may apply.
If you do not have an idea of \u200b\u200bthe banks working with these accounts, it is better to use the services of a specialized company that will help you open a truly profitable account for you. However, you need to be careful when choosing this specialized company. If you want all information on the account to be confidential, choose a specialized company according to reviews and recommendations of other people.
Countries for opening an account
It is important to choose the right country to open an account.
- For example, on Seychelles the account is completely exempted from various tax rates, financial statements are also not kept, there is no control.
- On the Cyprus there is a minimum tax burden, but reporting is mandatory, and accounts are controlled 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 the account holder on the day it is opened at the bank, for others - an authorized representative is enough, others can send a bank representative to you and conclude an agreement on opening an account. Some require reference letters from your business partners.
The cost of opening an account also differs from the country of opening the account. 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 on their customers' accounts, 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 conducting 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 subsequently can bring you a lot of inconvenience and problems.
In conclusion, I would like to note that offshore zones help businesses reach the international level, push them to maximize profits, simplify all possible business processes, and ensure security and complete confidentiality to their investors.
Good day! This article will discuss what “offshore” and “offshore companies” are, as well as analyze their advantages and disadvantages. Today, the budget of each country is built according to its own established scheme. So countries in which industry is more developed thrive due to taxes on production profits, countries with developed tourism exist from deductions from the income of tourism companies, etc.! But in this whole chain there are countries that are trying, and today survive at the expense of foreign entrepreneurs! Such countries are called “Offshore”. Let's see what this concept means.
Offshore - This is a financial zone (country) in which a citizen of another state registers his business on favorable terms (i.e. with a minimum tax rate) in the so-called offshore companies! Based on this, an offshore company is a company officially registered outside the country where the business is located. The ability to withdraw their financial assets to a country with high economic stability and a proven level of bank secrecy gives entrepreneurs hope that their financial assets will be safe.
For example, a business owner who is registered in the Russian Federation is required to pay a monthly tax of 20% of his income. If he makes his company offshore, he will pay 5% to the country in which his business is registered. This is especially beneficial of course for island states, where there is no fully developed industry of their own, and it is precisely such countries that survive at the expense of Offshores !!! Such countries are divided into three categories, lists:
- The white list is as close as possible to the global tax standard.
- The gray list is the countries in which they are only going to bring the percentage of taxation closer to the world standard.
- Black list, probably the most preferred to date, a list of companies that do not think about implementing world standards
There are many Offshore countries that are actively used by businessmen, but you can’t classify them according to their parameters - better, worse, everyone has its pros and cons!
A few principles of the operation of such a tax system
A deeper look at the advantages and disadvantages of various types of offshore zones. We will divide them into three types:
- Classic :
- Advantages:
- lack of taxes;
- lack of control by the state;
- no need to provide reporting;
- the highest degree of confidentiality.
- Disadvantages:
- distrust from serious international firms;
- the territorial location is not always convenient, because “Distant” companies increase management costs.
2. Prestigious:
- Advantages:
- the prestige of companies created in such areas is significantly increased;
- The opportunity to cooperate with serious partners.
- disadvantages :
The need to provide financial statements;
- incomplete tax exemption.
3.Other :
- Advantages:
- with a properly built scheme, taxes can be effectively minimized;
- in fact, these zones are not offshore, so there is no bias towards them.
- Disadvantages:
- profitable not for all enterprises;
- reporting is required.
Today, offshore companies are very popular among owners of large and medium-sized businesses, for them it is very profitable. The main advantage of transferring a business to offshore zones is that the company gets the opportunity to many times increase the net profit from its activities by legally reducing taxes.
Consider the positive and negative sides of offshore for the owners of offshore organizations.
Advantages of offshore companies:
- Gaining the status of a foreign company.
- Tax optimization.
- Storing capital in a country with a stable economy
- Lack of currency control.
- Confidentiality.
- The ability to freely manage funds, making payments with companies of all countries.
Disadvantages of offshore companies:
- Negative image.
- The inability to obtain large loans
- Particular attention to offshore companies by representatives of international law.
- Considerable risks.
In conclusion, I would like to consolidate the topic of the article by formulating in detail the concept of “Offshore zone” - this is a financial zone with favorable tax conditions where foreign capital is attracted. The economies of countries that receive less money, suffer very much from this! An outflow of money will be observed until all countries have equal tax conditions. And this is unlikely!
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As a rule, all that an average Russian citizen knows about offshore is that the oligarchs with the help of this tool hide money from tax authorities. This is not entirely true. Anyone who is not connected with the financial sector, but on whom the whole economy of the country is built and supported, is obliged to know what this term really means, and is everything illegal that is connected with it. This article will help unenlightened, but irreplaceable units of society that support the country's economy to understand the issues of good and evil of the offshore world.
Offshore abroad
Offshore companies are certain foreign countries or their states with favorable business conditions for foreigners in relation to that country. If it’s simpler, these are states where you can open a company or conduct business without paying taxes and fees. Another plus of the offshore zones is that in addition to a sparing tax regime, they can secretly keep records and hide the real owner of the company. Most of these “tax-free countries” do not disclose information on financial transactions. This is what attracts scammers: to run illegal schemes for withdrawing funds, to muddle traces of "criminal capital", to evade taxes from sales and purchase transactions. According to statistics, part of the taxes received by the state where the company was located before the transfer of rights settles in the pocket of the owner of the business. Analysts believe that it was the offshore zones that influenced the global financial crisis, since today in offshore structures, excluding valuable real estate and shares, a third of the general condition of millionaires in the world is hidden, this is somewhere around 11.5 trillion dollars, that is one tenth of all money on Earth.
The history of the emergence and development of offshore zones
The first mention of offshore (from the English offshore - “offshore”, “off borders”) was noticed in the middle of the last century in the United States, despite the fact that offshore schemes owe their appearance to the Greeks. From the history of Athens, it is known that the cunning Phoenicians circled the city with high taxes and transported their goods to other islands, where they knew nothing about the duty. But already in America in 1950 there was a major scandal related to tax fraud. One of the companies, in order to avoid tax payments, registered its activity in another country with less taxation.
Where did the offshore originate?
In Russia, the first offshore company was a Swiss company in the 90s. At the same time, the novelty began to gain popularity. It seemed that highly developed states simply could not influence the development of offshore companies. And this lack of control is explained by the fact that the most influential people in the world began to actively use similar services to increase their capital. And underdeveloped countries with predominantly agrarian economies, the countries found their benefit in this and decided to become the so-called tax haven for businessmen. Since then, the sale of tax benefits has become a major source of income for small states with a low population.
Now, small financial centers are welded not on a set of deductions, but on account of contributions from company registrations. And this is enough to ensure a high standard of living in their own country. At the expense of non-residents transferring their income and firms, citizens of offshore zones create new jobs. In general, the offshore zone includes 27 territories of the world. The most common of them are the countries of Latin America and Asia. It is in them that a favorable investment climate prevails, and highly qualified investment professionals work. Today in the world there are up to 70 financial offshore centers. In addition, about 100 more countries would agree to become such.
Many states against offshore zones
The governments of developed countries, no matter how they wish to ban citizens from using the services of offshore zones, try to protect this environment only systematically, which is completely unsuccessful. Attempts to introduce restrictions are futile, because during their existence, offshore centers have built a full-fledged legislative framework that can protect the rights of their clients. In addition, the emergence of the global web has exacerbated the situation. The Internet makes it possible to remotely manage and conduct business, which is what residents of highly developed states use.
Any entrepreneur, choosing the place of registration of his business, always pays attention to such parameters as the tax burden, the order of registration of the company, the frequency of inspections of state bodies. The most favorable regime in this regard is formed in offshore zones - individual territories or even entire states, offering extremely favorable conditions for doing business.
Full list of offshore and onshore zones in https://gsl.org/en/offshore/offshore-zones/ in the form of a comparative table.
An offshore zone is, in simple words, the territory of a state or part of it within which a special preferential regime for registration, licensing and taxation is applied to non-resident companies, as a rule, provided that their entrepreneurial activity is carried out outside the borders of this state. The terms “tax haven”, “tax haven” (English “tax haven”) or “tax haven” are also used to denote offshore zones in different countries.
The concept of “offshore zone” comes from the English word “offshore”, which literally means “acting outside the borders”. Such a definition is quite appropriate, since such a zone is understood to mean the entire state or its separate part, within which a special regime of registration, taxation and control of the activities of companies operates.
Offshore is a company registered in a country with preferential taxation, having a certain type of form of ownership and restrictions on conducting business in the territory of 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, conditions such as:
Preferential taxation;
Complete confidentiality of information regarding business owners and their transactions;
Simple and convenient business registration procedures;
Lack of audits of activities and financial reporting by government departments.
The fact is that the legislative norms of individual countries allow the head offices of foreign companies to register neither their territory. For this, foreign firms pay a small contribution to the treasury of the country within which the offshore zone operates, about 300-1100 dollars.
The first offshore zones appeared in the world back in ancient Greece. Then the Phoenician merchants carried out the main trading operations on the deserted 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 colonies of Great Britain.
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 to maintain in the zone of their permanent missions (secretary bureaus). They include the following articles: rental of premises, communications, electricity, payment of accommodation and meals, transportation, leisure, wages and some social compensations and payments (for example, payment of treatment, etc.) to the employees of the bureau.
Many offshore companies require compulsory employment of local residents in the secretary bureau, 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 areas are mainly representatives of medium or large businesses. The registration and maintenance of offshore companies is too expensive for small businesses, so it is more profitable for them to organize activities in their country.
Offshore Classification
In order to understand the variety of offshore zones and choose from them the most suitable for business registration, it is advisable to highlight their individual types.
The main reason that many entrepreneurs annually register their business in offshore phenomena is the low level of taxes. In certain zones, mandatory payments to the treasury are completely absent. This allows you to count on higher profits.
Nevertheless, tax incentives are different in all offshore zones, which makes it possible to identify five main types of territories loyal to entrepreneurship:
1) Zero-tax zones (classic zones). Countries that have such offshore 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 Virgin, Cayman, Seychelles, Marshall Islands, Belize, Nevis, Panama and Dominica.
2) Zones that take into account the territorial attribute in taxation. In such territories, as a rule, 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 under such conditions provide entrepreneurs with a complete list of activities that are not taxable. Offshore companies in Bulgaria, Latvia, Poland, Switzerland and some other countries work under such conditions.
4) Zones taxing certain legal entities. Cyprus is now considered such a zone. Here the issue of full or partial tax exemption is decided on an individual basis.
5) Low tax areas. Offshore companies of this type do not provide for the abolition of taxes. However, the latter in their framework are so low that sometimes they are 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, you can conduct activities in the zone, but in offshore - no;
In the SEZ receive a resident status, but not in offshore.
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 correlation between the economic indicators of companies and taxes paid.
The difference between countries with moderate taxation and classic offshore is that:
Countries with moderate taxation are often more open than classical offshore companies (the latter are aimed at confidentiality, pay less attention to violations of financial violations, etc.);
Countries with moderate taxation often sign bilateral double taxation treaties, while classic offshore companies do not.
Allocate:
Countries with moderate taxation, this is the practice of a number of developed countries in which, along with high taxes, preferential tax regimes are applied for a number of activities (so-called onshore-offshore countries), but the attractiveness 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 business outside offshore (a distinctive feature of classic offshore)
Tax oases like domestic offshore companies. 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. Companies of the same country as the tax haven are often used to optimize taxes.
By registering their business in other countries, companies accept the business conditions specified in the laws of these countries.
In particular, we are talking about the process of registration of firms and inspections of their activities by specialized government agencies. The legislative environment provides for the distribution of offshore zones into three large classifications.
Offshore business registration procedures are divided into:
1) free, within the framework of which it is possible to register a company by preparing an application and copies of constituent documents in English (almost all zones);
2) formal, in addition to the constituent documents, a number of additional securities from the country of the main activity of the Zone located in the EU are required.
By the nature of audits of financial statements.
Allocate jurisdictions that do not require maintaining and submitting financial statements to state bodies (Vanuatu, Liberia, Maldives, Andorra, Costa Rica, Mauritius).
By confidentiality, all offshore companies can be divided into:
Zones with an open registry that require full disclosure of information from business owners (Hong Kong, Luxembourg, Switzerland, Singapore).
Zones with a moderate register, requiring entrepreneurs to publicly publish information about their largest shareholders and their shares (Belize, Barbados, Lebanon, Malaysia, UAE).
Closed registry zones that provide businesses with complete anonymity (Nauru, Liberia, Vanuatu, Mauritius, Liechtenstein).
Entrepreneurs are looking for the most loyal conditions: no taxes, simplified business registration process, etc. However, growing into a large company, you have to take care that the selected territory has a good reputation. Here you already have to make concessions and agree with more stringent requirements.
So, by 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 only to charging an annual fee of $ 200-400 from entrepreneurs.
The authorities do not interfere in the business and do not check it.
Maintaining and reporting is optional.
Entrepreneur and his company are guaranteed complete anonymity and confidentiality.
These include the Bahamas, Panama, and the British Virgin Islands. For all their high attractiveness, it is they who often become a haven of 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 they are highly appreciated by businessmen from all over the world. Among their advantages include:
The presence of low tax rates;
A high degree of trust on the part of foreign large partners;
Location in convenient transport accessibility.
At the same time, in such offshore zones, companies are required to submit financial statements to special state bodies, as well as disclose information about business owners and the nature of transactions.
A similar regime now operates in such countries as Cyprus, the Netherlands, Hungary, Luxembourg, Switzerland.
3) Onshore zones. Formally, they are not offshore, but they provide foreign companies with tax incentives, a simplified business registration regime and some confidentiality.
In this regard, they acquired the status of “onshore territories”.
It is worth noting that in some areas of this type there is a much more loyal taxation regime than in prestigious offshore companies.
In this regard, they occupy a middle position in the framework of this classification. Examples of territories with a similar regime are England, France, and the USA.
List of offshore zones for Russia
There is no single list of offshore zones; both the International Monetary Fund (IMF) and the central banks of various countries of the world carry out work to control offshore zones.
In Russia, the list of states and territories that provide preferential tax treatment and (or) do not provide for the disclosure and provision of information during financial transactions (offshore zones) is published by the Central Bank of Russia.
The list of offshore zones is contained in Appendix No. 1 to the Central Bank Decree of August 7, 2003 No. 1317-U “On the Procedure for Establishing Correspondent Relations by Authorized Banks 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 during 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 of 11/13/2007, 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 (removed from the list on 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 (Hong Kong) and Macau Special Administrative Region (Macau)
17) Comoros Union: Anjouan Island
18) Republic of Liberia
19) Principality of Liechtenstein
20) Republic of Mauritius
21) Malaysia: Labuan Island
22) 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 Channel Islands (Guernsey, Jersey, Sark, Alderney)