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?

Political and economic stability

An extremely important condition for those who want to establish their business or private interests in an offshore financial center is to choose a country that provides both political and economic stability, without a record or potential of any crisis.

Any offshore jurisdiction worth considering must not be subject to violent political swings or the likelihood of military coup, civil disturbances, war or invasion. Here, a particularly bad example was the African state of Liberia, whose well intentioned offshore legislation was ruined by an ongoing civil war and political turmoil.

A similarly important factor is economic stability. The ideal offshore jurisdiction should have a transparent economic system, a sound economic policy, a stable currency with no exchange and investment repatriation controls, low inflation and the main economic liberties strongly supported by the law and the judiciary.

Quite often, the most positive results in both political and economic stability are achieved by those countries, who have retained certain dependency on their former colonial powers, like Gibraltar (formally part of the UK), British Virgin Islands (also a British Crown dependency), Hong Kong (formerly part of UK, now an administrative region of China), Netherlands Antilles. At the same time, many of the offshore tax havens are completely independent democracies, with proven, good track records – like, for example Seychelles or Singapore.