- 1 The Offshore and Territorial Tax Regime
The Offshore and non-offshore companies they can both be used for tax planning and international business structures:
Companies incorporated in offshore, where legislation for international business companies allows foreign companies to be full tax exempted if they do not conduct business activities on the jurisdiction of incorporation; and
Companies incorporated in a territorial tax regime, which offers both offshore and onshore options. Although not regarded as tax havens, they undoubtedly have a favorable tax regime which means, if properly structured, they can be used for international trade under full tax exemption, provided that profits are generated overseas – this is often referred to as “tax territorial scope”.
There is a number of benefits that you can take advantage of, whether you seek asset protection, confidentiality, privacy, tax savings (depending on your jurisdiction) or simply growing your business outside of the US or UK.
Registering an offshore company or incorporating offshore means you need to select a country; each jurisdiction has a slightly different value for international clientele and the benefits do vary, too. Some of the general benefits an offshore company can offer you, are anonymity, asset Protection, lawsuit Protection, taxation (varies depending on your jurisdiction), simplicity and financial Privacy.
On the other hand, doing business and conducting banking transactions in the name of a legal offshore entity provides significant privacy benefits – names of the company officers, directors and shareholders they can be omitted from the offshore company’s documentation in many jurisdictions. Most jurisdictions will not disclose who have formed the offshore companies, specifically the owner’s names, to any third party or foreign government unless, obviously, a criminal act or terrorism has been the case and is under investigation.
Territorial Tax Jurisdictions
A 0% tax can be achieved through a territorial tax regime. It means that corporate income tax does not apply if profits are not generated within the jurisdiction of incorporation.
Although foreign-sourced profit is exempt of tax, financial statements must be filed.
Annual fees and company maintenance requirements are required, and they vary, depending on local requirements.
Information on directors and shareholders (Members and/Partners) of the company is publicly accessible at Registers, with few exceptions, such as in UAE and the USA.
Corporate overseas Members and Partners can also usually be appointed, depending on each jurisdiction.
Tax treaties can be accessible, provided a tax residence certificate can be exhibited. They are used in tax planning to eliminate withholding tax on dividends, interests and royalties. Limited Liability Partnerships and similar corporate entities are not usually covered by DTT benefits, as they are considered tax transparent vehicles.