Offshore Companies - Functions
Privacy, Asset Protection and Tax Shelter.
Due to the ever increasing governmental pressure, a growing number of business and professional people are considering offshore options as an exclusive tax matter. This is a mistake.
By trading or investing through an offshore company clients not only can realise substantial tax, exchange control and reduction of overhead-cost advantages. Also, if correctly structured, assets held by such companies are normally protected from legal, confiscatory or other actions, which the beneficial owner may suffer in his country of residence.
Due to increased vigilance of tax authorities, more and more international tax planners are finding that the use of companies registered in offshore financial centres is becoming impractical for certain situations, particularly for receiving profit distributions from onshore territories which actively penalise payments made to defined tax haven entities. Nonetheless offshore companies remain beneficial for many purposes including at least some of the following:
- Consultancy, Professional Services, Agency.
Professionals, consultants, artists and many self-employed individuals can gain substantial advantages by working as employees or as external consultants of offshore companies, of which they may be the sole shareholders and, if they want to, the sole directors.
- Employment of Expatriate Staff.
Expatriates working overseas can frequently benefit from being employed through an offshore employment/consultancy company. This can avoid tax being deducted at source. By not remitting the full salary it can minimise tax and avoid exchange control difficulties in the country of temporary residence. This arrangement will be particularly attractive to expatriates working in politically unstable countries.
- Property Owning Companies.
There are often significant advantages in using an offshore holding company for the purpose of holding property. The advantages of such an arrangement include the avoidance of inheritance tax, capital gains tax and the ease of sale which can be achieved by transferring the property owned by the company and reduction of property purchase costs to the onward purchasers.
- Investment Companies.
Funds accumulated through investment companies set up in offshore areas can be invested or deposited throughout the world and whilst generally returns or interest payable in respect of these funds will be subject to local taxation, there are a number of offshore areas in which funds may be placed as bank deposits where the interest and/or the capital gains are paid and kept gross. To invest in global securities including mutual funds not available to "local" citizens. Offshore jurisdictions are typically less invasive allowing for aggressive and unrestrained Free Enterprise.
- Copyrights, Patents and Trademarks.
Offshore companies can purchase or be assigned the right to use copyright, patent or trademark. Royalties can then be accumulated offshore although often royalties may suffer withholding taxes at source. An interposing holding company in some cases may allow a reduction in the rate of tax withheld at source.
A high net-worth individual can save professional fees and unwanted publicity by owning property or other assets through an offshore company. ISG can provide a wide range of services in the field of privacy protection.
To file first position liens against assets and property closing the door to predatory litigation before it begins.
- To segregate high-risk investments from other more secure holdings.
- To protect retirement funds from possible bankruptcy.
- To provide for the transfer of assets for the next generation in an efficient and discreet fashion.
- Nominee directors and officers can allow you to conduct business transactions for your benefit while you remain anonymous.
- To access your funds with corporate debit or credit cards thereby maintaining absolute confidentiality.
- See RECOMMENDED OFFSHORE JURISDICTIONS.