Offshore zones: classification, features and a complete list of offshore zones. What is offshore? Offshore zone
Features of offshore zones
Offshore:
- the process of registration of non-residents has been simplified and accelerated, in which a purely symbolic amount is paid (for example, in Panama it is not necessary to indicate the founders of the company, a small fee is paid also upon annual re-registration);
- at reduced rates non-residents pay taxes on profits and income tax from individuals;
- confidentiality of activity is guaranteed offshore companies, they are exempt from government foreign exchange controls.
In order to protect national business, offshore companies are prohibited from engaging in any business activity within the offshore zone. The main income of the offshore zone consists of fees for registration and re-registration, tax revenues, expenses of offshore companies for the maintenance in the zone of their permanent missions (secretarial offices). They include the following items: rent of premises, communications, electricity, payment of accommodation and meals, transport, leisure, treatment of office workers.
Many offshore companies require mandatory employment of local residents in a secretarial office, 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 companies in one offshore can reach several tens of thousands.
Background (RF)
Types of offshore zones
Today, there are several dozen countries in the world where they practice tax incentives for offshore companies. But, since the problem of capital flight has been recognized by most of the rich countries for a long time, the offshore has practically ceased to be a safe haven, a means to reduce taxes. In most developed countries, working through offshore companies leads to an increase in the tax burden and closer attention of regulatory authorities.
Informal classification
Countries with no taxes that do not require reporting
These are mainly small third world states. The most famous offshore zones of this type are: Bahamas, British Virgin Islands, Cayman Islands. Such offshore zones are characterized by a high degree of confidentiality for the owners of offshore companies and an almost complete lack of control by the authorities over the activities of such companies. That is why reputable companies and banks do not want to have with them financial relations... These states have a low level of economic development, but they are distinguished by a fairly high political stability.
Offshore zones of increased respectability
In such zones, offshore companies are required to report financial statements and provide them with tangible tax benefits. On the part of the government of these states, control is stricter than in countries of the first type, a register of directors and shareholders is maintained, but the prestige of companies is much higher. These are Ireland, Gibraltar, Isle of Man.
Countries that cannot be considered standard offshore zones
The third group includes countries that cannot be considered standard offshore zones, but which provide some tax benefits to non-resident companies registered in them that do not extract income from their territory. Among these countries is Russia (Kaliningrad region). The reporting requirement increases the credibility of such firms from business partners. In this group, Cyprus was the most popular (from January 1, 1977 to May 1, 2004 - the moment the Republic of Cyprus joined the EU).
Official classification of the CBR
- First group - no reservation required
- Second group - 25%
- Third group - 50%
List of offshore zones
The list of offshore zones is contained in Appendix No. 1 to Ordinance of the Central Bank of Russia dated August 7, 2003 No. 1317-U "On the procedure for establishing correspondent relations with non-resident banks registered in states and territories that provide 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 dated November 17, 2007, the following states were included in it:
1. England; 2. Principality of Andorra; 3. Antigua and Barbuda; 4. Aruba; 5. Commonwealth of the Bahamas; 6. Kingdom of Bahrain; 7. Belize; 8. Bermuda; 9. Brunei Darussalam; 10. Republic of Vanuatu; 11. British Virgin Islands; 12. Gibraltar; 13. Grenada; 14. Commonwealth of Dominica; 15. Republic of Cyprus; 16. People's Republic of China: - Hong Kong Special Administrative Region (Xianggang); - Macau Special Administrative Region (Macau); 17. Union of Comoros: - 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; 29. Niue; 30. United United Arab Emirates; 31. Cayman Islands; 32. Cook Islands; 33. Turks and Caicos Islands; 34. Republic of Palau; 35. Republic of Panama; 36. Republic of Samoa; 37. Republic of San Marino; 38. Saint Vincent and the Grenadines; 39. Saint Kitts and Nevis; 40. Saint Lucia; 41. Separate administrative units of the United Kingdom of Great Britain and Northern Ireland: - Isle of Man; - Channel Islands (Guernsey, Jersey, Sark, Alderney).
Material Topics
To all have a good day! Today we will talk about registering a company offshore, legal way to secure your business as much as possible, as well as save money by reducing the tax rate.
In this article, I will tell you in simple words about what offshore companies are and how to open them, the benefits of registering a legal entity abroad, the dangers of doing business in someone else's territory, as well as the offshore zones most demanded by Russians.
This information will be useful not only to the owners of large companies, but also to people running small and medium-sized businesses, since in a certain scenario, such registration of a legal entity promises them serious benefits.
Consider the term "offshore"
The word "Offshore" has an English-speaking origin, and in the adapted version it translates as "abroad".
An offshore company is a company that operates in one region and is officially registered in another state. For example, he works in Russia, but is registered in Switzerland and pays taxes to the Swiss treasury.
Primarily, this definition applicable to legal entities that operate on the territory of one state, and are officially registered in another. For example, the owner of a company registers a legal entity in Cyprus, and then opens a chain of alcoholic supermarkets in Russia. Offshore registration costs are usually minimal.
Legal entities are registered abroad for two reasons. The first is the desire to avoid taxes, and the second is the desire to secure your business. The latter is especially true when entrepreneurial activity balances on the brink of legality, or is generally prohibited in the state where it is carried out. For example, in Russia it is impossible to open a company whose main activity is "gambling", respectively, the legal entity is registered in the state where such a business is allowed, but at the same time it "works" in Russia.
Where there is less need to share with the state, it is more profitable to register your company. But why doesn't everyone do this?
Preferential taxation is also a strong motive for starting offshore. By correctly choosing “ legal address»Of his commercial structure, the owner will be able to significantly save on deductions of interest from income to the state treasury.
What is deoffshorization and why is it needed?
The Russian government is not interested in expanding the offshoring of domestic companies. A special place in the development of the country's economy is occupied by deoffshorization, a process designed to reduce the number of enterprises leaving “abroad”. As a rule, work in this direction is expressed in the provision of various benefits and concessions to large companies operating in the markets of the regions of the Russian Federation. Often this practice works for entrepreneurs engaged in production or scientific research.
Even in ancient times, on the territory of various villages and cities, local elders established the amount of tribute that they demanded from local artisans, merchants, peasants ... In general, from all residents selling the products of their labor.
Even then, people were looking for ways to "get away" from treasury fees, and began to arrange purchase and sale transactions outside the settlements, on neutral territory. Such "bargaining" could not impose a tribute, since formally none of the elders had the right to a percentage of the proceeds, because the purchase and sale was not made in his village.
As for the holding of fair days, the peasants already in the 13-14 century came up with the idea to come to trade in large bazaars in those villages where the elders collected minimum fees from the sellers. And the merchants did not even "look" into the settlements at all, where high taxes were demanded from the merchants.
In the process of the development of the capitalist system, the work of collecting taxes became more civilized, however, as well as the ways of avoiding them by entrepreneurs. In modern reality, the opening of offshore companies is nothing more than the search for a “village” where the “merchants” are charged a minimum “tax”.
Most popular offshore countries
World map of profitable areas to discover offshore-company is very extensive. First of all, these are Cyprus, Asian countries, the Caribbean, Switzerland, etc.
Each of these countries is attractive in its own way and opening a business there has its advantages.
For example, states located off the coast of the Caribbean Sea (Mexico, Venezuela, Colombia, Panama ...) for the most part do not require entrepreneurs to surrender financial statements, and also do not disclose information about their activities. True, this fact is well known, and many reputable companies prefer not to have joint interests with legal entities registered in these states.
Opening an offshore in Cyprus will be more expensive, besides, here you will have to undergo an audit and pay a percentage of the income to the state budget, but at the same time there will be no problems with finding partners. Cyprus companies are considered reliable and reputable enough.
Opening an offshore company "in practice"
To open offshore companies, Russian citizens, as a rule, use the services of specialized agencies. Of course, you will have to pay for such cooperation, but by choosing the right partner, you can avoid many negative consequences.
Specialists, in accordance with your goals, will select the most suitable state and register your legal entity properly.
Here you may be offered to purchase a ready-made offshore company that best suits your needs.
You can open an "import" legal entity yourself. But keep in mind that only a legally and financially literate person can understand this issue.
How can you use an offshore company?
- An offshore company can be extremely beneficial for an entrepreneur whose activity is based on the export and import of products. But here you need a thorough study of the legislation in relation to the pricing policy that regulates the import and export of goods. In the case of illiterate actions of an entrepreneur, the benefits of opening such an offshore company can be very doubtful.
- Often, an offshore company is not an independent unit, but a part of a holding, when the legal entity itself is registered in another state, and its subsidiary is in Russia. On the one hand, this will increase the degree of confidence in the company, and on the other hand, it will provide all the advantages of an offshore, that is, a foreign legal entity will be able to finance a subsidiary structure, and at the same time not pay a percentage of the allocated investments to the state treasury.
- Offshore offers special benefits to companies whose activities are related to cargo transportation by water transport. In some cases, it is much more profitable to have a ship that sails, for example, under the Swiss flag and due to this receives a number of advantages in entering the port, crossing state borders, etc.
- It is also beneficial to use offshores for “playing” on the stock exchange, registering intellectual property rights and for registering companies conducting “relatively legitimate” business on the Internet, for example, owners of virtual casinos. Finding them in this case is extremely difficult.
Pros and pitfalls of working offshore
At first glance, the registration of a company on the territory of another state seems extremely profitable: preferential taxation, the availability of funds in foreign bank, a wide range of business schemes and minimal risks.
The latter is a significant plus of opening an offshore, since in case of problems, your funds will be protected from the encroachments of third parties, which is extremely important for companies mired in unpaid debts and went bankrupt. The same scheme will be beneficial if the owner of the legal entity will have a divorce, and, consequently, the division of property.
At the same time, all information about the activities of your company will be strictly confidential, and it will be possible to obtain it only by a court decision. That is why offshore companies are often set up by entrepreneurs who, for example, want to hide that they own a large amount of real estate.
Cons of offshore
Naturally, after listing all the advantages of offshore, any person has a question, why then the majority of Russian companies are registered in their home state? The answer is simple - every coin has two sides, and offshore opening is no exception.
The first disadvantage of the offshore is the complete dependence on the beneficiary - a person who "de jure" is considered the owner of the business and is geographically located in the state where your company is registered. Basically, the services of such "managers" are resorted to when the real owner does not want his name to be associated with this legal entity. This practice is very common when opening offshore companies, and in such a situation, the financial fate of the company and its owner is completely in the hands of a third party.
The "pitfalls" of offshore companies include a special interest in them on the part of subjects of international law and various power structures.
In addition, "imported" legal entities often cause mistrust among potential partners. For example, such a company is unlikely to be able to get a serious loan from a bank. Let's say an entrepreneur with a Cypriot offshore wants to get a loan. Russian banks will refuse to cooperate with him, because his accounts are outside the jurisdiction of Russian legislation, and the Cypriot ones will not issue a loan, because he operates on the territory of the Russian Federation, and at any time he can transfer his funds to his homeland.
Thus, it turns out that Russian entrepreneurs do not have any difficulties in registering a company offshore. The main question here is how beneficial it will be for you and your business.
The situation is such that by registering an offshore, you, while reducing some risks, acquire others. That is why the issue of transferring a legal entity “abroad” is extremely difficult, controversial and requires serious analysis and study.
That's all! I wish you financial prosperity! And do not forget that risk in business is only good when it is weighed, thought out and justified!
Evgeny Smirnov
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Business nuances
The most popular offshore companies in 2018-2019
The most reliable offshore zones include the Cayman Islands, Hong Kong, Singapore, Taiwan, Guernsey, Cyprus, the Isle of Man, Panama.
Navigating the article
- Extended interpretation
- Special economic zones
- Offshore jurisdictions of the world
- Are there offshore companies in Russia?
- conclusions
Economic terminology is rapidly following economic practice, which sometimes leads to discrepancies in some concepts. More recently, offshore was understood as a territory within which it is convenient to hide illegally acquired capital.
Now it turns out that these are not only poor island states with exotic names that have created a "tax haven", but also quite ordinary European countries or parts of them. Moreover, there is an opinion that Russia has its own offshore companies.
Is this so, or just the interpretation of the term has become broader? What is called offshore today? How many are there on the planet? These and other issues are covered in the article.
Extended interpretation
The idea of avoiding taxation by registering a subject economic activity rather old in a territory with a milder fiscal climate. It has been used by traders and industrialists since ancient times, and formally the term "offshore" was introduced into circulation in the 50s by American newspapers.
The concept of offshore was finally formed after the collapse of the largest country in the world - the British Empire (which should not be confused with England and the United Kingdom). Until 1947, the sun never set over the kingdom. Many colonies, having achieved independence, did not begin to live richer: the lack of managerial personnel affected, and there were other reasons.
After a while, the idea arose that to replenish the poor state budgets it is possible by registering on the territory of the enterprise, simultaneously exempting them from taxes and annoying attention of national fiscal authorities. Such an attractive tax and legal climate immediately attracted many entrepreneurs, both law-abiding and not so.
Since then, the opinion has been formed that, in the classical sense, offshore zones are islands in the equatorial belt of the planet, where they do not ask where the money came from businessmen. And where they are physically, these entrepreneurs, also the local authorities are not interested. It was only required to comply with local legislation, and it was very liberal.
Definition: offshore - a country or part of it, within which registered enterprises with foreign capital are offered special preferential conditions.
Initially, special conditions were understood to be four signs:
- The best tax system for business, that is, in fact, its absence. It is enough for a businessman to pay the registration fee.
- Fast and extremely simple processing of legal documents for business.
- Simplified reporting or the absence of requirements for its mandatory maintenance.
- A guarantee of secrecy about the founders, their partners and the transactions carried out by their banks.
Despite the obvious harm done by offshore companies to national budgets, everyone has come to terms with their presence on the world economic map. the developed countries... It is possible that there were no formal reasons to put pressure on the young independent "banana republics". However, history knows more than one example when very strict (up to intervention) measures were applied to states that were militarily weak and for less serious reasons.
Be that as it may, classic offshore companies have been successfully operating for several decades. The schemes for working with them are simple to the point of being primitive. The method of selling goods to an offshore company with a minimum profit is widespread: a reduced tax is paid in the exporting country. Then the same product is sold at the market price, and no tax is paid at all, because the intermediary company is registered offshore. Moreover, both "partners" belong to the same owner. But no one knows about this, because the offshore keeps the secret of the identity of the beneficiary.
Businessmen and corrupt officials argued only about which island states are the most popular among them and for what reasons. However, this situation could not persist indefinitely.
Special economic zones
Nowadays, opening a business in a classic offshore has become unofficially considered a sign of dishonesty. Of course, this fact itself could theoretically be hidden, but only until the first issued invoice or concluded contract - these documents indicate payment and other details. If the company's registration address is the Virgin Islands or Bermuda, this is alarming in itself.
At the same time, the so-called free (or special) economic zones began to develop, which in some respects correspond to the concept of offshore, but not fully. Their differences are that, firstly, taxes are paid there, although relatively low, and secondly, the identity of the beneficiary can be found out.
In other words, of the four criteria for a territory to be offshore, only two remain: simplified registration and preferential taxation.
In addition, a special economic zone can only be part of a state - it usually does not occupy its entire territory.
The Hong Kong SEZ can serve as a vivid illustration. When Hong Kong came under Chinese jurisdiction, many analysts assumed that the PRC authorities would extend the laws common to the country to it. This did not happen for several reasons, in particular because there is an agreement on this topic with Great Britain. Hong Kong has a special economic zone that promotes high business activity. In the classical sense, this is not an offshore, but this unusual city is often called it.
Special zones began to appear in different countries, including the most economically powerful ones. The main goal pursued by states in their creation is to stimulate the development of territories or sectors of the national economy, as well as to attract investment, both internal and external. This factor also points to the difference with a classic offshore.
The terminology has changed. Now, in fact, the SEZ is called an offshore. A hybrid concept of offshore zones and their division on the basis of the privilege that an entrepreneur receives by registering an enterprise there also arose:
- Low tax areas. Usually firms (they are also often called offshore, although this is not entirely correct) are obliged to pay a registration fee and a single annual fee at a fiscal rate of 0%.
- Conditional offshore. On their territories, you can register an international company and at the same time you cannot carry out direct commercial activities.
It is also useful to understand the reason for the interest of states that open on their territory zones with special conditions for doing business. By providing incentives, they lose some budget revenues, but in return require compliance with certain conditions. - Business transparency. The entrepreneur is obliged to keep accounting records and at the same time he cannot be guaranteed to defend himself incognito. If the state of which he is a resident sends a request to the offshore, it will receive a response about the identity of the beneficiary and other data of interest to law enforcement and tax authorities.
The enterprise must provide employment to the local population within the established boundaries, for example, hire a secretary, accountant or lawyer - according to the capabilities and scale of the business.
These conditions (especially the first of them) significantly reduce the attractiveness of non-classical offshore companies in the eyes of those who want to do business secretly. However, such procedures also have a big plus: they increase the credibility of the company. After all, in itself, the desire to reduce the tax burden is natural. If the entrepreneur does not do anything illegal, then why does he not take advantage of this opportunity?
A list of the most reliable countries and a list of the best offshore companies operating in them is compiled annually. More on this later.
Offshore jurisdictions of the world
Every entrepreneur is looking for the best offshore company in the world based on their goals.
Switzerland can be considered as such very conditionally, but certain signs are present. These are very low fiscal rates in some cantons, exclusion agreements with many states double taxation and the maximum possible confidentiality of business information. However, if there are good reasons for suspicion of illegal activity, it will still be provided. Maintaining accounting statements necessarily. A company registered in Switzerland is unlikely to be suspected of being used for money laundering.
Other European states have created such offshore companies on their territory: the Netherlands, Ireland, Luxembourg, Liechtenstein, Denmark, Malta, Estonia, etc. Great Britain leaves the EU, but this country also has privileged zones. Orders in different states differ: tax rates range from 1 to 12%. At the same time, the authorities attract businessmen not only by them, but also by the general comfortable conditions created for entrepreneurial activity.
The Cayman Islands are considered a classic "double" offshore. Foreign firms do not pay taxes here, business opacity is protected by legislative level... The company is registered in a maximum of a day. Result - 100 thousand business entities, five hundred banks, 8 hundred insurance companies and 5,000 shares investment funds... The problems of the small country have been solved, at least in terms of employment - everyone can find a job if they wish.
The Marshall Islands, the Seychelles and the South American country of Belize use approximately similar laws. An offshore company registered here allows you to develop a business, in particular a banking one. Belize law prohibits the disclosure of trade secrets, including about beneficiaries.
"Panama scandals" not so long ago glorified the country, previously known better thanks to the famous canal dug between two oceans. The state has not concluded an international agreement on combating financial fraud with the FATF and OECD organizations. It is difficult to judge how much this fact contributes to the popularity of Panama in world rankings, but there are obviously enough people who want to register their company there.
Cypriot banks were hit hard during the massive crisis. Since early 2013, the Greek part of the island has been excluded The Central Bank Russia from the number of offshore companies. From the privileges remained a reduced income tax rate and a simplified notification procedure for registration. The end is in the dispute over whether Cyprus is an offshore zone or not.
Andorra is also unlikely to be classified as offshore today. The main advantage of this country is the right granted to foreign businessmen to fully own local enterprises. The taxes are attractive, but the rates are not zero: on profit 10%, VAT - 4%.
A relatively respectable offshore company established in Curacao, an island in the Caribbean. Profits are taxed at only 2%. The obligation to undergo annual audit and reporting has been established.
The British Isles have different jurisdictions: Maine, Guernsey, Jersey, which are formally considered independent states that are part of the Commonwealth. The zones accepted for them are focused on specialization. For example, in Guernsey it is profitable to engage in electronic gambling business, in Maine it is convenient to register shipping companies, and Jersey is optimal for providing financial services.
England, Northern Ireland, Wales and Scotland have their own special economic zones.- parts of the United Kingdom. English offshore companies for LLP (Limited Liability Company - an approximate analogue of our LLC) are considered one of the most respectable, they combine legal transparency and tax flexibility.
As it is probably already clear, under the offshore zones these days we mean territories that provide benefits to foreign business. In the United States, these include Puerto Rico and the US Virgin Islands (states that America fully controls), as well as the states of Delaware and Wyoming. American taxation rules are very complex, but there are objective advantages in offshore.
Malaysia uses Labuan Island as a special territory. It can also be considered an offshore very roughly - it comes only about a favorable tax climate and a ban on disclosing the identities of business participants.
The reasons Singapore is sometimes referred to as an offshore are mainly due to the territorial principle of taxation. If a citizen of this country received income outside its borders and did not start it into his bank account, then he does not pay taxes.
Benefits exist and there are many of them. At the same time, Singapore has signed agreements on the automatic provision of information on beneficiaries with many countries, including Russia. Reporting and bookkeeping are required. Singapore is not an offshore, it is just a country where it is profitable to do business.
A separate line is the United Arab Emirates, which are a state with a federal structure and general government. There are no taxes on individuals as such in the UAE, which gives some reason to equate this country with an offshore. Numerous benefits also support this opinion.
In the Emirates, there are zones with special economic conditions: Dubai and Ras Al Khaimah. The main advantages of registering enterprises here are political stability, developed infrastructure and an efficient banking sector. The movement of capital is practically unlimited.
There are also disadvantages. Very high cost of the registration procedure, difficulties in registration of ownership of real estate and strict licensing. There are also complaints about some other bureaucratic problems in the UAE. The reviews are generally positive, but local customs are not always clear to Europeans.
In the classical sense, the Emirates cannot be considered an offshore. It is impossible to launder or hide money in the country.
Zones of preferential taxation have also been created in post-Soviet countries. Against the background of a constant struggle against investment leakage, in the Russian Federation, the Republic of Belarus and other former republics of the USSR, legislative acts preventing the outflow of capital to uncontrolled territories. As for the SEZs, which were opened by Kazakhstan, Armenia, Azerbaijan and some other countries, they do not correspond to most of the signs of an offshore.
The purpose of special economic zones is the development of individual regions and industries. For example, a targeted industrial, tourist or IT offshore company is being created. Georgia took this path, while simultaneously liberating foreign companies from taxes (including on property) and allowing you to change the profile of activities within the limits of legality.
Are there offshore companies in Russia?
In the original understanding of the term, there are no offshore companies in Russia. The country has special administrative regions (SAR). The rules established in them provide for benefits for enterprises registered on their territory.
According to Russian legislation, local authorities the authorities are given the right to establish their own taxes and fees. If the legal entity does not conduct economic activity within the boundaries of the administrative unit that created the internal "offshore zone", it is exempted from the fiscal burden. In 2019, the list of "offshore companies" in Russia contains 25 names, divided according to their focus.
In addition to the CAP, on the basis of the Decree of March 14, 2004 in the Republic of Kalmykia for some categories of entrepreneurs the income tax rate has been reduced to 5%.
Striving to develop Far East and to attract foreign capital to this region is expressed in the adoption by the State Duma and approval by the Federation Council of a bill on the creation of special administrative regions on Russky Island and in Kaliningrad, positioned mainly for foreign investors.
About the same legal basis provide tax benefits to other internal territories of the Russian Federation. However, even today, many entrepreneurs prefer to work with foreign special economic zones (especially if it is an IT offshore), registering their companies in them, located, for example, in Yekaterinburg.
In the Russian SAR, businessmen who have registered their enterprises on their territory are provided, in addition to reduced rate income tax, additional benefits:
- Decrease in transport fees.
- Exemption from taxes on land resources and property (for up to 10 years), if it was purchased for economic and production activities.
- The right to use accelerated depreciation fixed assets.
- Reduced coefficients for calculating insurance premiums (until 2019).
conclusions
Registration of a company in a classic offshore nowadays leads to a certain "toxicity" of the business and a decrease in the level of trust.
The most popular are economic zones (free, special, special administrative regions, etc.). They differ from offshore companies in limited opportunities for anonymity, and in terms of reducing the tax burden, they are similar to them.
What are offshore companies and can this concept be explained in simple understandable language? Of course! There are too many rumors, speculations and outright propaganda around offshore companies, offshore accounts and companies. That is why today we will sort out the concept of "offshore" for you. We will talk simple language about what offshores are and why they are needed, what it means to withdraw money to offshore, why offshore accounts and companies are needed.
Below is a list of topics that we will cover in this article. You can go directly to the section that interests you or study the topic consistently and thoroughly. After reading the entire text, you will already clearly understand what offshores are and will not let you be fooled.
What are offshore companies in simple terms?
Offshore is a multi-valued concept. This is due to the fact that this name is given to two things at once.
The first is countries and jurisdictions. They are often referred to in the context of "" or as countries with beneficial tax regime... In fact, the main reason for the close attention to offshore companies is precisely because they legally offer certain tax benefits to 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.
They are somewhat similar to offshore companies and so-called mid-shores, for example, or, with the territorial principle of taxation: under certain conditions, you may not pay tax on corporate income if the income is received outside the country. On this basis, territorial taxation is also more of a midshore than a classic offshore.
In offshore jurisdictions, business regulation is, on average, simpler and clearer than in other countries. This is one of the reasons why international business actively uses offshore companies: accounting and bookkeeping is much easier than in developed countries.
At the same time, we immediately note that despite the prevailing myth about the absence of requirements for accounting, in offshore zones or tax havens, as they are sometimes called, in mandatory... It is not always required to submit it for verification or undergo an audit, but there should be reporting.
The second thing that is called offshore, as you might have guessed, is the companies that are registered in the offshore zone. An offshore company is a company that is established and operates according to the rules and laws of a classic offshore jurisdiction. In most cases, such companies are prohibited from conducting business in the territory of the jurisdiction itself - only outside of it.
What are offshores in simple terms: the current state of affairs
Before continuing to analyze what offshores are, it is necessary to make an important remark. The fact is that thanks to the process called "deoffshorization", i.e. the fight against offshore companies, as well as the worldwide hunt for taxes of residents of developed and developing countries(within the framework of various initiatives), the concept of offshore is becoming more political, emotional and propaganda 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 an offshore - it is a mid-shore. A common high-tax jurisdiction that offers concessions for international business on certain terms.
Even after the tax reform, the United States is not the most favorable country in terms of overall control and regulation. However, international investors get the opportunity to both tax savings and, which is becoming very rare, a certain amount of anonymity for their investments. The United States hardly ever exchanges information with other states, so it is problematic to find out who, how much and in what.
At the same time, those countries that are considered classic offshores, 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 stringent requirements of international legislation. Including 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 we can say that there are practically no pure offshore companies and pure non-offshore companies (onshores) left in the world. The media quite often flashes stories about the next offshore, which in fact is not.
Therefore, nominally an offshore with an equal degree of probability can be recognized as the United States and Nevis, or in general any foreign jurisdiction and company.
What are offshore companies and why are they needed?
The next most important question that arises regarding offshore companies is why are they needed? According to the media and politicians, the only purpose of using offshore is tax evasion and money laundering.
Frankly, this is very far from the truth. Offshore is a tool that solves various tasks. Like any tool, it can be used within the law, but some choose to use offshore companies outside of the law. The first is permissible, reasonable and promising, as evidenced by leaks of confidential data: which recently made a splash, showed that almost all users of the offshore industry, including the Queen, Bono and Madonna, act strictly within the framework of the existing law.
Illegal use of offshore companies is punishable. Hunt for similar intruders in Lately increased. Tax services world actively cooperate with each other and help find those who are hiding from justice and tax evaders.
Therefore, when we talk about the use of offshore companies, we are talking strictly about legal practices that help in business optimization, in increasing business stability and in 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.);
- Offshore companies are active business companies for conducting international activities, whether it be import-export operations, provision of goods or services;
- Offshore companies are companies that receive licenses to conduct specific types of activities - insurance or even banking;
- Offshore companies help ensure inheritance rights according to the rules that you want, not your legislation;
- Offshore companies help to optimize business processes, reduce reporting time, gain access to new clients, and reduce the effective tax rate.
Offshore companies are needed for business to work more efficiently and safer. 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, creating new innovative products.
As you can see, the list of ways to use offshore companies is quite wide. First of all, prudent businessmen show interest in them, and not 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 language: what does it mean to withdraw money to offshore? Considering all of the above, you can already draw your own conclusions.
The first of them is to transfer assets under the management of an offshore company. In a similar way, shares of companies are taken offshore (they are sold to an offshore company), real estate and movable property(register a house or 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 can mean transferring funds to an offshore or foreign bank.
By the way, a foreign account is one of the very first tools you should get to protect your assets. Think about what is happening in Russia to the banking sector: banks have their licenses revoked, depositors are deceived, and the authorities pay insurance money in rubles, even if the deposit was in dollars or euros.
Plus we add sanctions, attempts to save the budget at the expense of depositors and a slowdown in the economy - the result is a gloomy picture that can damage your budget.
This is why opening a foreign or offshore account is a smart move to protect your assets. You will need it not only for personal purposes, but also for an offshore company. We offer portal readers 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 questions such as: where to open an account? Which bank? How quickly do you open an account? What account do I need for my company?
What is an offshore company in simple terms and how to register it?
When we talk about practical use offshore, 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 protection and owner information; flexible and well-thought-out legislation; Nevis and Belize offer corporate tax at the rate of 0%; data about the company is not public; only decisions of local courts are accepted.
In order to register an offshore, you need to follow several steps:
- Email [email protected] and inform about your desire to register an offshore company;
- Come at the appointed time for a consultation, which takes place online - you only need access to the Internet;
- Telling why you need an offshore company and what you are going to use it for - this will help a specialist to choose a specific service for you to achieve your chosen legitimate goals;
- Define a 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 full package of documents without errors and a service fee;
- As soon as the company is registered, you send the originals of some documents to us, and the originals of the documents to the company will be sent to you. You will receive copies of documents for launching activities immediately after the end of registration.
What are offshores in simple terms: Features of the use of offshore companies
Finally, we would like to draw your attention to a few points that every future owner of an offshore company 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:
- Offshores are legal and no one has the right to prohibit 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;
- In offshores, reporting is required! If you don’t want to yourself or don’t know how, apply for the service "";
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From the moment when, instead of natural exchange, commodity-money relations developed, there were always both those who wanted to make a profit, and those who wanted to share this fat with them. The first were represented by traders and merchants of various sizes, and on the other hand, the state or its ruling elite acted.
Also in Ancient Greece Attempts were made to introduce a tax on the import and export of products, as Athens did, which gave rise to the first offshore zones. These are nearby islands, where it was possible to import and export goods, as well as conduct trade operations without duty.
Taxes in the Ancient World
Attempts to conceal part of the income from the state or its rulers and to obtain any privileges to reduce taxes have been known for a long time. In all countries of the ancient world, there were one-time payments or, as they were called, sacrifices. The citizens of the country brought them in during critical periods for the country, for example, during the war. Later, payments became regular and were directed to the development of the state.
The emergence of the taxation system was caused by the formation of such institutions of power as the army, courts and officials of various levels. The collection of the victim in those days was more of a spontaneous nature, and the payment could be either part of the crop grown or the product produced, as well as personal services, for example, participation in a military campaign, service in the master's house, and others.
There were areas where taxes were either minimal or not levied at all. It is they who are now called the term "offshore zones". For example, the island of Apollo, whose main port is Delos in 146 BC. e. was declared free, where overseas merchants could trade duty-free. It was the first documented free zone in the world. The greatest development, both from the legal and from the financial side, offshore companies received in the 18-19 centuries.
The history of the emergence of preferential tax territories
Offshore zones- these are entire states or some part of them, where the legislation provides the opportunity to open companies with a preferential tax policy.
The root cause of its occurrence was the requirement by the French kings, who took out loans from Swiss bankers, to keep these facts secret. This was due to the fact that the royal persons, being Catholics, did not want publicity that they were borrowing money from Protestants.
Thus, the concept of the secrecy of loans and deposits arose, which led to the fact that in 1713 a bank secrecy law was passed in Geneva by the large city council. According to it, bankers had to keep records of their clients and their financial transactions without the right to disclose this information to third parties.
It was Switzerland that created the first model of financial secrecy for foreign capital and was the European center for the exchange of money. Until 1934, the main concern of bankers in this country was the preservation of confidentiality, which was guaranteed to clients on the basis of civil and labor laws.
Since 1934, new measures were taken, the main ones of which were the protection of personal data of customers and the introduction of numbered accounts. Thus, Switzerland is the first offshore zone, which, after the abolition of limits on the purchase of currency and the introduction of mutual convertibility monetary units of all countries, began to provide banks with the opportunity to conduct monetary transactions in the markets of other states. This allowed international firms and corporations to expand their activities, relying on loans that were not limited to national ties.
The laws adopted in this country make it possible to hide customer data even in front of the state. This rule was fixed and became the main one for offshore zones not only for individuals or legal entities, but also for their trusts, firms and foundations. It is almost impossible to find out who is the founder of a company opened in such a zone.
Development of offshore zones in the 20th century
Offshore economic zones have become one of the ways to attract foreign capital to countries with weak developed economies... For example, in the middle of the 20th century, part of the colonies of Great Britain gained independence, and part, remaining in the United Kingdom, was deprived of government subsidies to further support their economy. Therefore, these countries have passed laws allowing the registration of foreign offshore companies.
An example of such a company is the Liberian navy, which was the most numerous at the time.
The poor African country, by creating an offshore company on its territory and providing numerous foreign ships with the opportunity to register and fly the Liberian flag, was able to raise and develop its economy.
To date, such international offshore zones have been created by Panama, Malta, China, Hong Kong and Singapore. Due to the fact that paperwork is quick and easy, and the tax rate is kept to a minimum in these countries, they have the largest number of merchant ships in the world. Most of the ships belong to owners from other countries, but this does not prevent them from flying the flag of the state where the offshore zone is registered.
Separation of financial responsibility
Countries where the division of the company was legally carried out as legal entity and its owner - the subject of physical activity.
This allowed the manufacturer, if his company was declared bankrupt, to preserve his property, and the payment of debts had to be made by the company as a legal entity. In most countries, in the event of the ruin of a production or company, banks recovered damage from the owner, describing his personal property. At the same time, the person became a complete bankrupt.
In the UK, a law was passed according to which the country from which the business was managed was considered the seat of the company. At the same time, the company could be registered in another country, but since it did not produce anything there, and its owner was considered a non-resident, taxes were not paid at the place of registration.
The territories where such registrations were carried out are the offshore zones of the country. The beginning of this process was laid by Britain on its colonial islands, but today not only small and economically underdeveloped countries, but also large states are introducing a similar policy.
Free economic zone
In order for the country to begin an inflow of foreign investments, it is enough to create profitable terms for doing business in it and fix all this in legislation.
Free economic zone part of the country is called where preferential conditions for foreign capital are in effect in such matters:
- exchange rate regime - support exchange rate in accordance with its world indicators;
- taxation must be minimal;
- customs rates should be extremely low;
- labor legislation.
The country wins in many respects in the development of its own economy, creating free economic zones. Offshore zones have specific goals:
- mutual investments of countries in the development of any industry or production;
- familiarization with the latest foreign technologies and their application;
- attracting a large inflow of foreign exchange funds;
- introduction of new systems for organizing and conducting production;
- creation of new jobs and development of exports;
- bringing social, business and economic infrastructure to a new level of development.
All this leads to both improvement economic situation in the selected region and throughout the country as a whole.
FEZ classification
Due to the fact that many countries began to organize offshore zones on their territories, this led to the need to streamline and classify them. Nowadays, several SEZs are distinguished according to the characteristics that lie at their basis:
- Where the investment is directed - the development of the external or internal market.
- Economic motives - in some regions, where the economy is very weak, tax incentives are introduced for the growth of small and medium-sized businesses, which revives it, in others they create favorable conditions for foreign investment, which leads to an inflow of foreign capital.
- Development of a specific industry.
- The subjects of ownership are private, public or mixed companies.
This classification allows business owners to choose exactly where to start their business or where to invest their money.
The advantage of creating a SEZ
Today, opening or buying a ready-made offshore company is profitable for several reasons:
- Such a company is expected to receive minimal taxation.
- The safety of the businessman's assets is ensured.
- Complete confidentiality of information about the owner and shareholders of the company.
- Safety Money in reliable foreign banks ”.
- Economic stability of countries with offshore zones.
Under such favorable conditions, many businessmen prefer to open their firms in free economic regions.
List of FEZ countries
World offshore zones today can be represented both by the whole state, and by any of its parts or regions. In the United States, each state has its own jurisdiction, and some of them are free trade zones (for example, Delaware and Oregon). Also in Switzerland, a number of cantons provide benefits for doing business in the form of low tax rates.
Since there are many economically free zones in the world today, it is sometimes difficult to choose exactly where to open your enterprise so that it not only gets the maximum profit, but is also protected in the legal field. Therefore, one should take into account the political, economic and social stability in the state.
V full list offshore zones include 26 countries, on whose territory the most comfortable conditions for doing business have been created, including Andorra, Monaco, Liberia, Switzerland, Panama, New Zealand other. In some countries, FEZs are created in certain regions, for example, in Germany, Canada, the USA and other states.
Offshore registration
Before deciding where to register your company, you should know that a non-resident pays a meager percentage of business costs to maintain it abroad. To transfer a company to offshore zones, register them or buy a ready-made business, you need to take just a few steps:
- Choose a region with the most favorable conditions for the functioning of production. Non-resident activities include:
- insurance, banking and finance;
- export and import operations;
- mutual settlements between partner companies;
- asset allocation and tax optimization.
2. Based on the chosen business, choose an offshore company with the lowest tax rate, while you can register the main company in one FEZ, and the subsidiary in another.
3. Study the conditions of registration and work in the region.
There is a conditional division of non-resident jurisdictions in different countries of the world.
Low tax zones
Of the five types of non-resident jurisdictions, the most popular are FEZs with low tax rates... In these countries, foreign investors are provided with the most favorable conditions. These include Canada, Ireland, Scotland and the United Kingdom (for international trade), Cyprus and the Isle of Man (for banking and insurance).
Classic FEZ
There are countries that offer legal conditions to avoid paying taxes while maintaining complete confidentiality of customers' personal information and protecting their assets. At the same time, they are guaranteed financial integrity.
Such offshore zones are the BVI, Panama, Belize, Seychelles, Mauritius, Dominica, Saint Kitts and Nevis, the island of Anguilla. The supervision of the legality of the activities of these economically free regions is monitored by special institutions and the IMF.
European FEZs
In Europe, offshore zones are more tied to specific business niches. For example, Latvia has favorable conditions for the registration of IT companies, in the Netherlands and Switzerland - holding companies and banks, in the Czech Republic, Slovakia and Bulgaria there are significant benefits for the development of tourism and agriculture.
Opening such a company in a European country is prestigious, respectable and reliable, although accounting will have to be kept, since here is a classic type of offshore.
Offshore zones in Russia were abolished in 2004, after the decree on the abolition of income tax benefits came into force.
Asian FEZs
In Asia, the offshore company stands on "three pillars" - Hong Kong, Singapore and China. These countries are taxed only financial operations conducted directly at the place of registration. Otherwise, these are extremely favorable regions for conducting trade and intellectual business associated with innovation and research.