Offshore is a special economic zone where a specific type of business can operate. In this zone, companies are completely exempt from taxation. An offshore company is an organization registered offshore and having its own business characteristics.
What is "offshore"?
Offshore is such an economic zone where foreign organizations can register and work, applying a special taxation regime (preferential). But these companies, nevertheless, must operate under the specially created rules of the state under whose jurisdiction they are.
The idea of doing business in offshore zones originated in the 19th century, borrowing the judicial precedents of Britain. These cases raised questions about the taxation of non-residents of the country. The first step in offshore implementation is the city of Campione, located between Italy and Switzerland. This was due to the fact that both countries did not want to establish tax jurisdiction on the specified city.
Offshore companies
An offshore company is the best option for owners in whose countries taxes eat up most of the profits. Offshore registration also allows you to vary the cost of imported products. There are many options for doing business for offshore organizations: some of them are publicly available, others are known only to a small circle of people.
Opening an offshore company enables its owner to appear on the international stage. The choice of zone will depend on the type of activity. Offshore companies do not have currency restrictions, there is no need to contribute authorized capital.
Opening Rules
Registration of offshore companies varies by territory. Registration rules are established by the leaders (governments) of those countries where the offshore zone is located.
But you can highlight the basic procedure for registering an offshore company. Almost all governments have established a requirement to open an organization through a registered agent who is licensed to carry out such activities. It can be either an individual or a legal entity. Enterprises wishing to register offshore are required to use certain words in their name (Incorporated, Limited, etc.). And must receive special permission to include certain words in the name (Bank, Trust, etc.).
The minimum amount of the authorized capital is limited by the requirements for the authorized capital.
A company will be registered if there is at least one member (it can be an individual orlegal entity). All names (names) of shareholders are entered into a special register maintained by the state.
Some countries establish citizenship requirements for the management of an offshore company: at least one of them must be a citizen of the country in the offshore zone of which the organization is registered.
Opening an offshore company is relatively easy. The standard offshore requirements are as follows:
- indicate information about the beneficiary, shareholders;
- provide financial statements, tax returns;
- maintain accounting documentation, but there is no requirement to provide it;
- conduct an audit and provide an opinion on it.
An offshore company is the use of offshore jurisdiction classification principles:
- by privacy level;
- by level of taxation;
- by the existence of an agreement on the absence of double taxation;
- as required for annual reporting.
Advantages and disadvantages of offshore activities
The activities of offshore companies carry a large number of advantages:
- the operation of an offshore company is an easy way to transfer finances abroad;
- large businessmen, having registered an offshore company, save significant amounts on tax deductions;
- offshore companies are either exempt from filing financial statements or have the opportunity to keep it in a simplified version;
- missingduties on imported equipment for opening an office of an offshore company;
- registering a company in an offshore zone automatically implies the confidentiality of data about its founders.
Despite all the advantages, there are also disadvantages of working offshore. Despite the fact that an offshore company is conducting its activities on legal grounds established by the country under whose jurisdiction it is located, its verification is carried out with great care. Because of this, an offshore company with positive reviews is not suitable for those who plan to do business "in a black way".
Also, even when doing business in accordance with all the rules and laws, officials can accuse the organization of dishonesty in doing business. Here you need to pay attention to the limitations of offshore companies.
Cyprus can be called the optimal offshore zone for the Russian Federation. Accounting conditions for such enterprises:
- all organizations opened in this zone are obliged to keep accounting records, according to which it will be possible to study economic activity;
- on the basis of this accounting, various kinds of reporting are generated.
Documents provided annually:
- a financial report on the activities of the company, the conclusion of an audit company, a tax declaration are submitted to the tax office;
- a financial report, an auditor's report, an annual report are submitted to the Registration Chamber.
Restrictions
There are several factors that put the work of offshore organizations incertain frames:
- the main limitation is the impossibility of carrying out activities in the state where such an organization is registered;
- very often the regulatory authorities force the owners of organizations to sign agreements under which offshore companies can operate with virtually no restrictions, but at the same time losing all the advantages of creating this company - the confidentiality of information relating to the owners.
Some jurisdictions have restrictions on certain licenses and the conduct of business under them, such as the sale of tobacco and tobacco-containing products, the sale of liquor, etc. Some areas have restrictions on the conduct of certain financial transactions when violation of which large fines are imposed on the company.
Russian offshore companies
In Russia, companies return their profits to the state, using the practice of offshore under the guise of foreign investment. But it is important not to forget that tax incentives are applied only where the company is registered, and only on those incomes that are received outside of it.
Foreign offshore companies have been operating on the territory of the Russian Federation since Soviet times. And the improvement of investment processes increases their number.
