Reasons to open an offshore company.
Reasons to open an offshore company. Offshore companies as well as other foreign structures are an effective tool for the international business development, increasing its tax and management efficiency. Opening an offshore company brings significant benefits and opportunities for your business. In today’s blog we will highlight five reasons for business owners and management companies – why you should register a company in an offshore zone or a foreign jurisdiction .
Reason 1 . An offshore company ensures the confidentiality of its business owners
At a time when there is an unfair and aggressive competition, businesses strive to protect their operations. Registration of an offshore company can be an effective solution in such situation because the information about the directors and shareholders in the offshore areas is confidential and not available to anyone other than the authorised persons.
Reason 2 . Join us abroad to preserve trade secrets about suppliers
If the exclusivity of suppliers is a competitive advantage of the company , the necessity to protect the information about them is of a major issue. For example, the registration of the company in Hong Kong can be an effective solution to conceal information about Chinese suppliers .
Reason 3 . Simplified exchange controls procedures
A business engaged in trade with other countries is familiar with the need to draw up a big set of documents to deal with the foreign supplier. When a company has a single supplier then the impact of foreign exchange control is not of an issue. However if a company has a wide range of products and dozens of suppliers, terms and conditions with each of them must be agreed on, separate contracts made, and as a result transaction passports drawn. Often these firms would have a whole department of employees performing such functions. In turn, the use of an offshore company can significantly facilitate this task.
For instance, a Russian company enters into a contract with an offshore company under its control that consolidates financial flows and distributes them among the suppliers.
Reason 4. A foreign company grants an access to international capital markets
It is well known that foreign banks could often offer better terms of business financing. Once a company is registered abroad, the business finds it easier to get attractive credit terms, if the foreign company has an account at a bank in the country of registration. Good financial performance observed by the bank will help the business to attract extra funding.
Reason 5. Reduction of the tax burden
Certainly one of the most important reasons for registering an offshore company – is the ability to optimise the costs of paying taxes. Classic offshore jurisdictions and favourable tax jurisdictions offer international businesses the benefit of an attractive tax systems, and often does frees a company from having to pay any taxes at all. When a company exports goods, the foreign jurisdictions are used to reduce income tax by decreasing the gross income of its resident company.
In the case when a business imports goods, offshore companies can be used to increase the gross expenditures, forming the main income from a trading company in the country with the lowest tax.