OFFSHORE COMPANY
offshore solutions since 1988
▪ Offshore And The Law
▪ Fraudulent Transfer
▪ Movement Of Funds
▪ U.S. Citizens And Offshore Companies/Accounts
▪ What Is An Offshore Company?
▪ International Business Company (IBC)
▪ Tax Base
▪ ''To Offshore Or Not To Offshore''
▪ Which Offshore Jurisdiction?
▪ Forming An Offshore Company
▪ The Incorporation Process
Offshore and the Law
Although
most countries have a carefree approach to their resident wishing to
protect their asset elsewhere rather than in their home country. There
are, however, a number of countries such as the United States that requires
it citizens disclose detail of all their financial affair whether they
be in their home country or not. It is therefore important that you,
consult a lawyer in your country to confirm the legalities. Remember,
you are doing nothing illegal by establishing an offshore company or
trust. Individuals and other entities are forming companies or opening
bank accounts all over the world. All you are going to do is form a
company/trust in a country that promises not to charge you any taxes.
Each country has it's own policy and requirements relating to it residence
going offshore. Taking professional advice will ensure that you stay
well within the law no matter how harsh they may seem to be. Remember
that Tax Evasion is illegal Tax Avoidance is not.
It is absolutely essential that an individual understand the difference
between "Tax Avoidance" and "Tax Evasion". "Tax Evasion" involves being
taken to court and charged with a criminal offence. With "Tax Avoidance"
the worst case scenario is the government disagrees with you on a tax
issue and they make a strong enough case that you have to pay the tax.
The best case is you don't pay any tax.
There are many Federal and State Regulations regarding steps you make to discourage creditors.
Before starting any asset protection plan, you must understand the legal
restrictions on transfers of assets, which impairs the rights of a creditor.
For years people have made attempts to conceal their ownership of property
in order to avert the claims of their creditors. Camouflaging or concealing
assets may be by physically hiding them, or making a "contractual gift"
to friendly parties or relatives which is accompanied by private non-disclosed
agreements to return the property after the annoyance has passed. If
you are tied up in a case where your assets may be seized and are considering
hiding your assets by moving them offshore to avoid your creditor then
spear of few thoughts to the Uniform Fraudulent Conveyance Act and the
Uniform Fraudulent Transfer Act and their consequences. English speaking
courts have made an effort to protect creditors from this endless game,
invalidate transfers made by a person with the intent to defraud his
creditors. Commonly known as a fraudulent transfer (this occurs when
your property is transferred in an effort to prevent a legitimate creditor
from seizing the asset, in order to realise the debt.), such action
is considered to be a criminal offence and your offshore jurisdiction
will not protect you. As a matter of fact the law grants that the shield
of secrecy be removed in such cases and any transfer of property which
is proved to be a "fraudulent conveyance" may be set-aside by a court.
The transfer will be ignored under these circumstances, and the property
will be treated as if still owned by the debtor. That means that the
judgment creditor can seize the property.
You must not do
anything that is considered illegal such a fraudulent transfer. By having
yourself declare solvent before the intending transfer, you can avoid
the transaction being viewed as fraudulence. The ideal time to create
an asset protection plan is before there are any potential creditors.
This way, transfers of assets to an IBC or Trust should not fall within
the fraudulent conveyance statutes.
Movement Of Funds
Many countries have some sort of exchange control regulation to discourage
the movement of large sums of funds across their borders When transferring
funds to and from an offshore jurisdiction you must take into consideration
the laws of the onshore jurisdiction. For instance in the United States
and United Kingdom any transaction amount in excess of $10,000 and £10,000
respectively will automatically be reported by the financial institutions.
This is just a reporting requirement not a preventive measure for the
movement of funds. Although the U.S. government does frown on anyone
taking their money offshore, there is not and will never be a law to
prevent funds from being transferred outside of it's borders. As the
country depends on international trade its economy would be severely
damaged. Since most U.S. international trade is in U.S. dollars, there
would be no exports or imports, due to the fact that the United States
would not be able to buy and sell goods.
Transferring legally
obtain funds to an offshore jurisdiction providing taxes have been paid
to the relevant authorities should not cause reasons for concern. This
is entirely legal and you are free to transfer your money anywhere you
choose. For those who wish to keep a low profile move your funds in
small amounts you should avoid such exposure.The movement
of funds to the mainland by an individual may be a little more difficult
since it could appear as earned income and liable for personal tax unless
you take certain precautions. Your managers should be able to secure
International Money Orders for small amounts, which will allow you to
pay your suppliers etc. You could have the company pay for a number
of high priced items.The most popular and successful method
for the repatriation of funds to the mainland is through the use of
a secured offshore credit card in your company's name. Such as Visa,
MasterCard or Amex. This will enable to access funds through ATMs worldwide.
U.S. Citizens And Offshore Companies/Accounts
The United States of America has one of the most severe tax systems
in the world. U.S. citizens are required to pay U.S. taxes on their
worldwide income and capital gains regardless of where they may
reside and filing tax returns. Citizens of United States are
required by law to state whether they hold controlling interest or
similar influence on an offshore company. If it is declared that
there is a controlling interest, then profits and/or interest will
be liable for Federal tax. They are also required to notify the
Department of Treasury if they have an overseas bank account that
holds over US$10,000 and report any income from offshore investments
for the purpose of taxation.
Although some individual are quite comfortable with the idea of not
making such a declaration, since no detail of Directors, Shareholder
or Bank Accounts can be obtained by outside agencies, it may be
considered as "Tax Evasion" if discovered and be deeming illegal.
Although to our knowledge, no such appeal has been made to date in
an offshore jurisdiction. For those of you that wish to stay on the
right side of the law there are a number of legal ways to overcome
this requirement. The most popular and effective is not to have a
controlling interest of the company or account. You must have great
confidence in your offshore Management Team. For your peace of mind
you can stipulate that two signatures be required when signing on
the accounts, yours being one. Seeing that each signature is in
actual fact worthless on its own, it can be argued whether you have
a controlling interest. A less practicable option to avoid all taxes
is to give up your citizenship.
For the self-employed you can form an offshore management company
and employ yourself, pay yourself a modest salary and declare it to
the taxman. Your salary should reflect your lifestyle. Naturally all
the companies profit go offshore since payment for your services are
made to the offshore company tax-free. For a solution to your
particular circumstances it would be best to seek advice from an
attorney. When obtaining such advice bear in mind that tax
consultants do not have the same client/Attorney relationship when
it comes to confidentiality and are therefore more like targets
during an investigation.
Remember when going offshore you should above all, keep a low
profile, don't provoke the taxman, pay some tax and avoid disclosing
your Offshore Status.
What is an Offshore Company?
An "offshore" company is any company which is formed in any of the
so-called tax favored or "tax haven" jurisdictions. In the past few
years, among the most commonly-used countries are the British Virgin
Islands, the Cayman Islands, Nevis and the Bahamas and Barbados. The
more traditional and longer-established havens include the Isle of
Man, Jersey, Guernsey, Gibraltar, Panama and Liberia.
What these countries have in common is the fact that they generally
impose no (or an extremely low) tax on companies which are formed
there but which do not do any business in that country. The type of
the entity formed differs country by country but they usually have
most of the characteristics of a US corporation or Limited Liability
Company. International Business Companies (IBCs) and Limited
Companies are probably the most common. These companies can be
formed for various reasons - to hold investment property such as
real estate and financial portfolios or to engage in international
business transactions.
If you are a citizen of a country that does not tax income earned
outside of its borders, an offshore company can be most advantageous
- your money can grow tax-free (and therefore a lot faster!) until
it is repatriated. Some countries have tax systems like the US -
"global" taxation where all income is taxed regardless of where it
is earned. If this is the case, you must declare any income earned
when you file your return so there are few tax advantages.
However, many US citizens find another legitimate advantage to
offshore companies - asset protection. In our increasingly-litigious
society, many people keep their nestegg offshore. It's much more
private (the confidentiality laws of these jurisdictions are usually
very strong) and it's much harder for potential creditors in a
frivolous lawsuit to get at your money. It's best to begin this
planning as early as possible. Many courts can seek to set aside
such a transfer of funds as fraudulent if it's within a certain
period of time (generally 3 years) of a lawsuit or "in
contemplation" of litigation.
Offshore company – the most common definition describing an entity
incorporated in a jurisdiction with low level of taxation and no
exchange control. There are about 50 states that have reduced taxes.
One of the main advantages of incorporation of a company in a
jurisdiction with low taxation is comparatively low cost of
registration – around $1000 and almost the same price annually for a
registered address. Thus some states stimulate budget revenues from
registration and annuals fees. Companies incorporated in such tax
havens are as a rule either Corporations or partnerships and have
the status of the International Business Company (IBC).
International Business Company (IBC)
An International
Business Company is a corporate vehicle having limited liability, which,
provided it has no business activities in the jurisdiction of registration,
is wholly exempt from taxation on its income and from inheritance or
estate tax on its shares. Only a nominal annual fee is payable to the
Government.The IBC is a very flexible and well tried corporate vehicle
suitable for a wide range of trading, investment and asset protection
activities and solutions. IBCs can be formed in a day and with a minimum
of formality.
An IBC can have
bank accounts in any jurisdiction, deal with lawyers, accountants, trust
companies and other professionals locally, hold company meetings and
keep its accounting books and records in the same jurisdiction without
breaching this restriction.
Tax base
There are popular
fallacies that persons or entities pay taxes only in the country of
their residence. In most countries taxes are levied from everyone who
stays there for 6 months or more. For example, one who stayed in Great
Britain for six months and then moved to USA and stayed there for another
six months can be treated as a taxpayer in both countries. Thankfully
there is an Agreement about avoidance of double taxation between those
two countries but the person in our example would pay taxes on
the highest rates applicable in the both countries.
A similar situation
may arise for companies as well. Most of the countries treat as taxpayer
a company that is managed or controlled from their territory. The company
is considered as managed from the country's territory if the company's
directors reside in that country. So if a company is incorporated in
the USA and it's directors reside in UK the company will have to pay
taxes in both countries. That is why British taxes are levied on all
offshore companies that are managed and controlled from British territory.
''To Offshore Or Not To Offshore''
Many of the people who have established offshore companies have felt their governments
has far too much control over their destiny.
One
of the first thoughts that comes to mind when the phrase "offshore investing"
is mention to an individual, is tax savings, but consider this. In today's
ever changing society the respect for an individual's or corporation's
right to privacy has been lost completely. All personal and corporate
transactions are carefully watched and in some cases if you deposit
more than a certain sum of cash it is reported to various government
agencies. Besides that, the financial institutes are all too willing
and ready to disclose the detail of your personal private records to
different agencies, such as credit bureaus when asked for.
If you reside
in an onshore country, there is no privacy when incorporating a local
company. Information relating to the names of past and current shareholders,
directors, officers and financial records are easily obtained through
the corporate registry and are available to anyone for a small fee.
Fortunately offshore companies are not under such regulatory disclosure
requirements and benefit from more extremely flexible legislation and
no direct taxation.
It must be said that you are doing nothing illegal. Individuals and
other entities are forming companies or opening bank accounts all over
the world. All you are going to do is form a company/trust in a country
that promises not to charge you any taxes.
There are a variety
of reasons why someone would choose to conduct their financial affairs
offshore, here are a few reasons:
1. To achieve financial
privacy
Within the next two years western governments will be able to have
immediate access to the details of your bank accounts. The US government
is currently setting up a new multimillion-dollar system that will enable
them to have access all your banking details, this system will rapidly
spread worldwide. Already fifty-six thousand investigations have taken
place in the past few years within the U.S. alone. Thousands of innocent
citizens have already been convicted for trying to protect their hard-earned
cash. With the current advances of the U.S. government this number will
rise tenfold.
With offshore jurisdictions it is possible for you to conduct your financial
affairs in private, away for the intrusive eye of the authorities.
It is a criminal offence, punishable by fine or imprisonment for the
Company's Trustee(s), Management Company or Bank to reveal the personal
details of their clients or his financial affairs without the express
written permission from the client. However, there is an exception to
this rule. If the principal has been convicted of a criminal offence
relating to the conduct of the business in his home country and that
same offence was also committed and considered a criminal offence in
the jurisdiction of incorporation, the affairs of the Company can be
disclosed under the instructions of a court order;
2.
To avoid taxes in
your resident country
For anyone wishing to invest without the burden of taxes on their
returns, there are substantial tax savings to be gain by conducting
their transactions in an offshore environment.
Due to the low costs of setting up an offshore company or trust, many
smaller entrepreneurs and investors have been able to form offshore
companies and/or trusts and enjoy the benefits of having made that decision.
They have either reduced or eliminated the amount of tax they pay within
the first year.
Laws state that we must pay taxes on our Worldwide Income. They are
correct in that respect, but the important word here is Income.
Income: Say you invested US$50,000.00 in your home
country which yields 10% interest per annum, the US$5,000.00 earned
must be declared as Income which is taxable. If you
are placed in the 50% tax bracket then you only have US$2,500.00 to
re-invest.
On the other hand if you have your offshore company or trust invest
the US$50,000.00 at 10% interest per annum then that US$5,000.00 earned
is only declared as Income if you pay yourself the
US$5,000.00. If you choose to leave that money in your company/trust,
which it exempt from paying any taxes, and continue to re-invest it,
the compounding effect of that money comes into effect very quickly.
The results can be very dramatic over time. This is known as tax avoidance
not tax evasion;
3.
To protect their
assets
High net-worth individuals or anyone who has assets which can be connected
to a possible lawsuit (for example doctors, surgeons and other professional)
can, by placing their assets in an offshore company and/or trust, makes
it a very costly, time consuming and difficult procedure for anyone
seeking to gain custody by a lawsuit, not withstanding the fact that
offshore jurisdiction have created a climate less favourable to the
harassment of individuals and trivial lawsuits, making the aggressor's
chances of success significantly slim;
4.
To conduct business
under more favourable legislation
Offshore jurisdictions are ideal should anyone wish to run a business
where regulations are not as restrictive as those in their own country
of residence;
5.
To avoid exchange
controls
With a number of Offshore Bank accounts worldwide held by an offshore
company, allows the movement of funds in any currency anywhere worldwide.
Note: exchange controls are not imposed in the domicile country;
6.
To protect property
against seizure during legal proceedings
Providing you act early and adequate steps has been taken, you can
protect your assets against all manners of claims.
7.
For the transfer
of ownership
As the majority
of Offshore Companies can issue bearer shares, the ownership or title
to all manner of things can be easily transferred by hand to a person,
corporation, trust, or other entity, anonymously and confidentially;
8.
To reduce the charges
on the sale and purchase of real estate
By placing real estate title into the hands of an International Business
Company, when the need arises to sell the property, on closing, the
registration fee, stamp duties and notary fees can all be avoided by
transferring the shares of corporation rather than the property title
itself;
9.
To raise capital
by sell its shares
Depending upon the jurisdictions involved the legislations are not as
strict for these types of transactions as in the onshore states.
Offshore legislations
have been created to provide a suitable vehicle for all the reasons
mentioned above and many more. The use of offshore companies and/or
trusts are only limited by the imagination of the individual, and new
ideas emerge day by day.
Offshore jurisdiction
by their very nature preserves the privacy of individuals, as well as
the integrity of their industry and it is absolutely legal to form an
International Business Company, establish an International Trust, open
an offshore bank account and conduct other business in an offshore tax
haven. However, you should consult a lawyer in your country to confirm
the legalities. Each country has it's own policy and requirements relating
to it residence going offshore. So as you can
see whatever the reasons for choosing to go offshore it is clear that
there are numerous advantages in doing so.
Which Offshore Jurisdiction?
The
question will always remain "Which is the best jurisdiction to establish
my offshore structure?" In actual fact the products offered by most
Tax Havens are virtually mirror images of each other. The decision will
largely depend on the quality of after sales service, objectives and
goals of the purposed corporation or trust and the Clients own personal
and business circumstances. There are however, a number of factors which
must be considered, these are the principal indicators which determines
the merits of a good tax shelter.
1. Stable political and economic climate - The offshore
jurisdictions should not be subject to violent political factions,
civil unrest, poor economic performance or the likelihood of
invasion or military coup.
2. Quality of Communication - Good telecommunications capabilities
is more important than the location of the Tax Haven. By using
state-of-the-art communications your chosen jurisdiction must be
able send and receive electronic transfers and your representative
must be able to receive instructions by letter, telephone, fax, or
telex or any other means.
3. Language - It is essential that you are able to have your
instructions understood by your representatives.
4. Legal System - Good legal foundation with modern corporation laws
is essential. Jurisdiction who base their legal system on English
common law with local modifications are very popular.
5. Confidentiality and Secrecy - Privacy is important and valuable
when conducting business offshore. The offshore centre must have the
ability to control and sanction unauthorised disclosure of
information relating to its offshore clientele and their financial
affairs.
6. The lack of exchange, currency and capital controls - It is
important that you can freely move your money in and out of the
country. The best situation is to bank in a country with no exchange
controls. Money that is restricted from movement can be easily
subject to possible seizure. Note: companies may open bank accounts
in jurisdictions other than the jurisdiction of the corporation.
7. Banking and Professional Services - Selecting a bank for the
corporate account will be far more important than selecting the
jurisdiction for the incorporation. The jurisdiction should offer
superior and state-of-the-art banking in addition an excellent
professional service such as accounting, legal, management and trust
services should be readily available if required by the client.
8. Taxation - Jurisdictions that have tax-free environment and no
tax treaties with other countries are the best choice.
9. Restriction imposed on IBC's - You should be able to conduct your
legally without unnecessary restriction.
10. Cost of Formation, Annual Fees & Services.
11. Location - Although not of great importance in today's high-tech
world a personal visit may be in order for added privacy.
12. Clear and easy procedures for incorporation with minimum
corporate disclosure requirements.
13. Government Attitude - A government that welcomes offshore
business and possibly offers financial incentives sends a positive
message to offshore investors. Many jurisdictions actively promote
themselves as a tax haven and welcome offshore business and
investment capital, while others just tolerate it. A government that
does not completely support the activities of their offshore
industry can adversely change their policy overnight.
Forming An Offshore Company
Establishing
an International Business Company to suit your individual needs may
not be as difficult as you might of first thought, and with our assistance
the process is even simpler.
Whether you require the simple company formation or complete incorporation
package we can structure your company correctly. Closely working with
a selected group of top legal and financial experts we then create the
most appropriate corporate structure, ensuring that it is set up in
such a way as to comply with any legislation in your country regarding
the operation of offshore structures.
We will first assist in the selection of a jurisdiction based upon a
number of factors, ensuring that: legislation in the offshore jurisdiction
is compatible with your desired objectives; and tax treaties are effectively
used where applicable.
Most offshore companies are sold with limited advice and little or no
after sales service, the only communication being a once a year is a
demand for fees to cover statutory and nominee duties. Opting for the
cheaper basic services may leave you with no after sales support once
your company has been incorporated. If you intend to achieve your original
objectives then you will need all the help available, the additional
cost for the ongoing support is well worth considering and these cost
are rapidly recovered by the tax savings made.
By forming of your
Offshore Company we provision Registered Agent, Registered Office and
all relevant company documents including the company seal.
With special arrangements we could undertake the complete management and administration of your
offshore company including:
An International Business Company incorporated in your desired
jurisdiction, where total confidentiality is required by law. Your
company will feature in addition to strict confidentiality enforced
by law: Nominee Shareholders and Directors (as you might require.
The beneficial (legal) owner is not disclosed. Bearer shares are
issued and delivered to you or to whom you name.
Prepared Power of Attorney with minutes and resolution to allow
anyone authorised by you to act on behalf of the Company on all its
matters, including opening and operating brokerage and bank accounts
Registered Agent and Registered Office Facilities as required under
law for the first year are included.
A US Dollar Bank Account with Secured Credit Card allowing 24 hours
access to your funds through the use of ATM's worldwide.
On request we could
provision an administrative office for nominal fees based upon services
required. These services can include phone, fax, email and mailing address
(not P.O. box). Bookkeeping and
accounting, invoicing and fulfillment services are available.
The Incorporation Process
Requirements
for incorporation of an International Business Company have been kept
to a minimum. This makes for a cost effective, efficient and speedy
service.
The process is as follows::
a) You must first decide on the Company Name with appropriate
abbreviation (Inc., Limited, A.G., etc.). Please give 3 alternatives
in order of preference.
b) After careful consideration decide upon a suitable jurisdiction
that will meet your objectives.
c) Complete the application form email, fax, or print the form and
mail to us with the appropriate
remittance by wire transfer.
d) We will begin the incorporate process of your company once we
have received clear funds in our bank account.
Establishing
a bank account can be a time consuming exercise for the set up of an
offshore company structure. Should you require our assistance (for a
modest fee) opening an offshore corporate bank account, you must provide
the following documents:
1. Copy of Certificate of Incorporation and the Memorandum and Articles
of Association.
2. Notarised copy of passport, Birth Certificate or driver's licence
with photograph for each shareholder/director or authorised signature
to the account.
3. For each shareholder/director or authorised signature to the
account a letter of reference from their present bank or recognised
investment institute confirming their address, signature and that they
have held the account with the bank for three or more years.
4. A current utility or phone bill confirming residential address
for each shareholder/director or authorised signature to the account.
5. Funds to deposit in the account (US$ 1,000.00 minimum).
- We will supply
all the relevant documentation required and make the introduction to
the bank.
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