HOW TO CHOOSE THE RIGHT OFFSHORE JURISDICTION

There are about fifty countries in the world that offering various tax benefits to non-residents, thus promoting what is called offshore business. Some of those countries are extremely popular and widely perceived as offshore tax havens - like British Virgin Islands, Panama or Seychelles. At the same time interesting tax breaks to non-resident businesses are actually available in some places that are not at all recognized as "offshore" – for instance, UK, US, Denmark or Netherlands. And there are all sorts and types in between.

So, which is the best jurisdiction to incorporate an offshore company?

There is really no standard answer. The choice of the right offshore jurisdiction will depend on the intended use of the offshore company, the personal and business circumstances of its owner, and the actual regions of the world where this company intends to trade.

But, before going into the details, what is a tax haven, anyway?


Desirable corporate characteristics

Most offshore jurisdictions have ensured that their company law provides attractive features such as fast and easy incorporation, minimum information on public file, minimum or no obligation to file any returns or reports, availability of bearer shares, total non-disclosure of beneficial ownership, minimal number of directors, availability of corporate directors, ability to hold directors' meetings anywhere in the world or by electronic means, lack of requirement to file audited records, flexibility in regards the amount of authorised capital and minimum or no capitalisation requirements, etc. It is for you to decide if any of those special features (which will usually be clearly emphasised by the Registered Agent in any particular offshore jurisdiction) are of any particular interest for you.

All entities that are known as "offshore companies" in the narrow tax benefit sense will usually have the same distinct feature – no or minimal tax. Such company is essentially relieved of any obligation to pay corporation tax or income tax to the country where it is registered. Hence, there is also no requirement to prepare and file the financial declarations that are usually associated with income tax reporting. At the same time there are particular types of entities, subject to what is called 'designer taxation', which pay minimum rate of tax. An example of that is a Seychelles Special License Company, that pays between 1.5% and 5% of tax, and, consequently, is also supposed to file tax returns.