Offshore topics are of interest to many businessmen. There are a lot of rumors and other information on the Internet that does not give a clear definition of the term, and also does not reveal the meaning of this tool for business. Therefore, we took the liberty of giving a detailed explanation of the question “what are offshores”, what are they for, what are the known methods of withdrawing money to offshore zones, for which accounts are opened, and companies are registered in offshore territories.
Most people decipher the word offshore as the withdrawal of money abroad through the use of various frauds. Many experts believe that offshore no longer exists. However, reality shows the opposite, offshore companies not only exist, but also continue their work. True, over time they have changed slightly and adapted to modern realities.
Currently, offshore companies like here https://offshorecompanyregister.com/offshore-company-formation-in-seychelles/ are a tool with which you can optimize the tax burden and protect your own capital. What does offshore mean?
Offshore meaning has several interpretations. The meaning of the most common is that offshore is a country or territory where foreign companies have a preferential tax regime or there are no tax payments at all. Such countries are also called offshore zones, tax havens, etc.
In business and the media, the definition of "offshore" refers not only to companies, but also to assets that are located abroad. If you do not go into legal subtleties, then such a definition is not a mistake.
The level of "offshore" of the state is influenced by many factors, in particular, the perception of the country in the international arena. How to understand? For example, if you want to register a company in the Marshall Islands or Bermuda, then the corporate tax from international sources will be zero. The above jurisdictions are classic offshore. This means that in the territory of these jurisdictions it will be very easy to register a company, the cost of registration is available to a wide range of people.
In addition to offshores, there are midshores - Hong Kong and Singapore. These countries are popular with businessmen. Of course, the major Asian financial centers are not completely exempt from taxes, but they provide the opportunity to use favorable tax regimes, as well as provide access to the global banking system.
There is also a category of countries - onshore. This group includes states that have a developed economy, but do not provide non-residents with preferential terms in terms of taxation. This list includes such countries as Latvia, the USA and the Netherlands.
Classic offshore has the following features:
It should be noted that there is no single definition of offshore. For example, the IMF refers to offshore jurisdictions where the share of financial services provided to non-residents is higher than for residents.
According to Wikipedia, for the first time they started talking about offshore in the late 50s of the last century. At that time, the term was a characteristic of a financial institution that avoided the tax burden by moving its "work" to regions with a more favorable climate.
This method was used in ancient times, merchants "transported" their business to places where there were lower tax rates. In other words, offshore in the distant past made it possible to optimize taxation. Since the 50s of the 20th century, illegally derived capital was still hidden in these places. This decision is fully justified, since offshore companies guaranteed a high level of confidentiality.
In recent years, the situation has changed dramatically. Many countries have begun to use the principles of BEPS to combat tax schemes, as well as money laundering. The essence of the methods is that countries must at the legislative level approve a minimum of requirements that will help eliminate tax abuses.
Often, companies are registered in such places in order to receive certain tax benefits, while they do not carry out real business activities in the territory of the chosen jurisdiction. According to the innovations in the legislation, such companies must pass PPT, S-LOB testing. Based on the results, it will be possible to determine the main purpose of registering a company, as well as to prevent tax abuses.
The OECD introduced CRS in 2014, the participants of this standard assumed an obligation to annually exchange data provided by local financial institutions. Thus, the competent authorities have information about the accounts of tax residents that are opened in other jurisdictions.
