Every entrepreneur in the course of the evolution of his business reaches the level when the management of the capital on — the — fly, both within the country and abroad becomes of an utmost importance and he starts looking for answers to the following questions: whom, for what purpose and how much taxes do I pay?

Various means of the tax regulations are known all around the worlds. One of the most widely publicized is a tax — free or an offshore company. A big part of society has developed a perception that offshore companies operate through illegal means of doing business. That’s not true. Tax — free or offshore companies represent an effective and completely legal method of tax regulation. There are more than 50 countries worldwide where laws allow registered companies avoid declaration of the gained income and consequently, get an exemption from taxes in the country of registration. Though there is one condition — company under no circumstances is allowed to do business in the country of registration. This requirement could be explained by a simple desire to protect local businesses against unfair competition. In most cases sole observance of this precondition would get the company privileged taxation. Anyway, all the rest of the world is open for business ventures, more or less. Examples of using offshore companie are widely cited around the world.

For many businesspeople the issue of using or not using the advantages of an offshore company is more or less clear. What comes into mind more often is the question which of the countries is better for establishing this kind of a company. This question as well as a question on a use of an offshore company is a complex one. There might be many answers to this one, actually, as many as there are companies of this kind all around the world. Therefore, we think the fundamental question is — what is the main goal of setting up an offshore company, what is the benefit of using it.

Before we move over to the next question about the choice of the registration country it would be worth to remember about one quite significant nuance when dealing with offshore concept. Although offshore companies indeed have a status of companies which are exempt of taxation, this surely does not mean that such companies incur no costs of registration and maintenance. There is not a single country in the world that would not demand at least a small annual tax or a fixed duty, and would not require the presence of secretariats or registration agents for all companies (including the offshore ones), which are registered there. If you receive an offer to purchase a company with no further cost coming years after at all you are about to get loads of trouble along with equally dubious company.

According to many professionals there are two major criteria to consider when making a country choice. On one hand, simplicity and low registration cost. From the other — relative prestige of the given country. Actually these both criteria never come even close together in one jurisdiction.

Apart from the above — mentioned information it is paramount to take into account requirements of the legislation of the country where an offshore company will be used, and also the kind of economic activity the company is going to be involved into. Many countries, including Baltic States, CIS and other countries of the so — called soviet block now and then are passing new laws that limit use of the offshore companies by residents of their respective countries. So, Latvia, Lithuania, Russia and recently Byelorussia have produced lists of the offshore companies and territories. Methods of enforcement the regulation of cash flow and tax payments varies, but the main principle is always the same. Residents working in offshore companies are being subjected to laws that stipulate all kinds of new requirements of accounts, taxation at an increased rate or an abolition of previously agreed benefits.

Besides, it should be noted that documentation of any offshore company is prepared, based on laws and traditions of the registration country. There are several different corporative and tax legislation systems worldwide, so before the purchase of an offshore company one must find out whether the set of documents available is enough to launch a business venture in that country.

While considering all that’s been said before we see that a choice of the jurisdiction for the registration of an offshore company narrows to a few dozens. To make the process of choosing the right country for the jurisdiction of your offshore company, turn to Senda Pluss. Our consultants will provide you with a professional advice and up — to — date information on all jurisdictions, their individual advantages and procedure of incorporation.

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