Why Incorporate Offshore?

Offshore companies offer numerous benefits in comparison to companies registered in non-offshore jurisdictions.

One of the main benefits is low taxation. In fact, most offshore companies pay a single annual fee to the local government. This fee is $300 in BVI, $100 in Seychelles and Belize. In non-offshore jurisdictions, the fee is often calculated percentage of net income. Therefore, the higher the profits of an offshore company, the bigger the savings are.

Another benefit is relevant anonymity. The transactions are carried out in the name of a private company. The names of the directors / shareholders / beneficiaries are usually not required to be on registrar with a government, offering virtual anonymity to the principals. Nominee directors and shareholders are often used for further protection. At the same time, the registered agent is required by law to keep on records the information about the principals of the company in line with anti-money-laundering legislatures enacted in most offshore zones.

Offshore companies are also created for the reasons of simplicity of compliance and reporting. Most offshore jurisdictions do not require disclosure of financial records and transactions. Thus it becomes much less expensive to maintain the accounting records of the company. Many multi-national corporations choose to set up companies offshore because of this particular benefit.

Asset protection is often cited as another reason to incorporate offshore. Favourable corporate laws of the jurisdiction of incorporation often apply when a company is being sued, thus protecting the principals of the company. This often becomes important when principal's country laws are below adequate standards. To avoid expropriation, offshore vehicles become essential for the protection of company's assets.

Thin Capitalization is another important benefit of having an offshore company. Only a minimum equity investment is required to incorporate. Owners of offshore companies often choose to issue 1 share of $1 or 1 share of no par value to establish control of their company.

Furthermore, operating costs are often lower since an offshore company does not need another office, in addition to the registered office, it already has. Therefore, business owners may decide to avoid the unnecessary office costs and instead use a virtual office in the country of company's formation.

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