You may have heard the term “offshore” in relation to doing business. Although the word conjures up images of an office built on a raft or a ship floating out at sea, it actually refers to the practice of taking all or part of your company’s activities to a location beyond the borders of your own country. For example, if your business concern was based in the USA, but your operations were actually taking place in Bermuda, you would be considered to be “offshore”, and thus under a different set of tax codes and regulations than you would face at home.
Although not always the case, these host countries are most usually island nations like Malta, Samoa, Mauritius, Singapore, and so on, which is probably where the “offshore” monicker originated. Businesses from other nations are invited by these nations to set up corporations and make investments there, and provide favorable conditions for doing so, allowing these foreign entities to avoid high taxation at home, receive greater asset protection, enjoy more relaxed regulations, and get a suntan.
If your business is interested in taking advantage of these perks, you should consult with Acclime Global Business ā Professional Offshore Services, their dedicated international commerce experts will be able to help you navigate the complexities of relocating all or a portion of your company offshore to reap the benefits such a move provides.
It is important to mention that in the past, offshore concerns have received some bad press, being accused of shady dealings and tax cheating, but this is absolutely not the case here, the offshore business practices we are talking about are completely legal! While every offshore hosting nation may have small differences in their regulatory standards and levels of transparency, as a whole they can offer you:
Offshore Offers
- Reduced risk
- Greater growth potential
- Confidentiality
- Favourable tax laws, often giving the nation the additional title of “tax haven”
- Savings on the cost of doing business
- Asset protection
- More relaxed regulations
The offshore world offers several different ways to make use of their services. We have already covered the basics of doing business offshore, so let’s examine the practices of offshore banking and investing:
Offshore Banking
This is the process of using the financial institutions of a foreign nation to secure assets that may be subject to limitations in the home country of the customer. One of the most famed examples is the legendary Swiss bank account, that exclusive elite method of keeping a very wealthy person’s money beyond the grasp of their home countryās government taxes and regulations.
These elusive offshore bank accounts enable companies and individuals to dodge various unfavorable consequences that might be associated with depositing their funds in a bank based in their home country. The most common reason to go these lengths is to avoid the oppressive taxation that their native nation inflicts. The financial holdings spirited away to offshore bank accounts are far more difficult for the home authorities to search and seize.
In the event of a company or individual employed in an international business capacity, being able to keep and have access to funds in a useful foreign currency for global dealings can be of great convenience. Rather than having to contend with volatile exchange rates, they can access their funds in the local currency with ease, which is of particular use when it’s time to pay the bar bill at the beach club.
Offshore Investing
This is the case wherein companies or individuals making investments reside outside the borders of the country they are investing in. It usually coincides with opening a bank account in the target country, which gives the investor a safe platform from which to perform their trading while taking advantage of the local asset protections, privacy laws, and tax benefits.
While particularly affluent individuals may utilize this practice on their own, the accompanying expenses can be too high to make it efficacious for the average investor. Therefore, most offshore investment accounts are opened under the auspices of a corporation, for example, an LLC (limited liability company) or a holding company in place of an individual. The main goal again is to make investments in a more Favourable tax climate.
There are some built-in downsides to offshore investing, such as the relatively high starting costs and the increased worldwide regulatory scrutiny these offshore jurisdictions and the accounts they host often have to contend with, making offshore investing beyond the reach of many would-be investors. Investors with offshore accounts can be sure their home country authorities will be watching them closely, their regulators and tax authorities are going to be very interested in making sure any taxes they might be owed are not being avoided by scurrilous means.
The United Nations offshoring systemĀ may be of interest to you. We wish you and your global concerns great success, and hope you enjoy the view from offshore!