Uses of Offshore Companies
An offshore company is a very flexible corporate entity. As such it can be integrated into a wide variety of business arrangements. Reduced tax and increased confidentiality are just two of the main benefits which can be achieved by a proper application of the offshore company. However, it would be erroneous to believe that an offshore company incorporated in a no-tax jurisdiction "flies above" all the complicated tax regulations in force in the high-tax jurisdictions. Contrary to a popular belief, having an offshore company in itself does not relieve its owner from all personal tax liabilities in his home country. A clever use of an offshore company, however, can reduce, defer or completely eliminate some tax that would otherwise be payable by his business. The ability to accumulate revenues in a tax-free and hassle-free environment of an offshore jurisdiction are especially helpful to start-up businesses, allowing them to grow faster be more competitive.
Nevertheless, the practical implementation of an offshore strategy will almost always have to confront some of the anti-avoidance laws that may be in force in the country where the beneficial owner resides or where he does his business. For this reason we recommend that anyone, who considers an offshore incorporation, starts by taking some advice from an accountant or tax advisor located in the clients` country of domicile and in the country where the proposed business operations are due to take place. In case with offshore companies, the laws in the offshore jurisdiction will often have to be considered in conjunction with the laws and regulations of other countries, in particular the countries where the offshore company will have its sales, contracts and assets.
Private funds pooled through an offshore investment company can be put into investment instruments throughout the world, accumulating the returns and capital gains in a tax-free environment. Using a private offshore investment company would provide additional confidentiality for the investors and tax benefits for the investment returns. While investments in many high tax countries would be subject to withholding tax at source or a capital gains, there are still plenty of investment instruments where no such taxation would be applicable. Returns accumulated in a tax-free area would add flexibility to their distribution and re-investment.