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What Is an Offshore Company?

Views:7     Author:Site Editor     Publish Time: 2021-04-20      Origin:Site

What Is an Offshore Company?

The general meaning of an offshore company

Offshore company generally refers to the legal business established in a jurisdiction outside of the investors’ country according to the local company incorporation law. These local governments normally require no tax on such companies and only charge a small amount of annual management fees. At the same time, all major international banks recognize such companies and provide convenience for them to set up bank accounts and financial operations. It is characterized by high confidentiality, tax relief and free foreign exchange control.

 

Famous offshore financial centers in the world include Hong Kong, the British Virgin Islands, the Cayman Islands, the Marshall Islands, Seychelles, Samoa, and Malaysia. Some special loose economic areas have been developed and cultivated by legal means, allowing people throughout the globe to establish an international company in their territory, which are generally referred to an offshore jurisdiction.

These so-called offshore companies are generally registered and established in accordance with the offshore company law and can only be operated in the legal areas outside the company registration place.

 

What is called “offshore”?

"Offshore" means that the investor's company is registered in the offshore jurisdiction, but the investor does not need to visit the local place, and its business operation can be directly carried out anywhere in the world. For example, a trading company is registered in the Bahamas, but its trading business can be conducted between Europe and America. Many of the famous offshore jurisdictions are former British colonies, such as the Caymans, the British Virgin Islands and so on. Therefore, these areas retain the British legal system and judicial system on a large basis. The main difference between offshore company and general limited company is taxation.


The tax benefits

Unlike the usual practice of taxing by turnover or profit, the government of an offshore jurisdiction only levies an annual management fee on the offshore company, and normally no tax is levied on it. In addition to tax benefits, almost all offshore jurisdictions explicitly provide such benefits:

 

Confidentiality

The company's shareholders' information, equity ratio and income status shall enjoy the right of confidentiality. If the shareholders are unwilling to share their business information, they may not disclose them to the public.

 

Convenient Financial Operation

Another advantage is that almost all major international banks recognize such companies, such as Chase Bank of the United States, HSBC Bank of Hong Kong, Development Bank of Singapore, and Oriental Bank of France. Offshore companies can open accounts in banks, which is very convenient in financial operation.

 

Global Expansion

Generally, such "offshore" areas and countries have good trading relations with developed countries in the world. Therefore, offshore companies are the financial instruments used by many large multinational companies and individuals with high assets. Many companies that want to be listed abroad usually achieve their goals by setting up offshore companies.