What is Offshore?

Businessmen having a professional discussion

What is offshore?

The phenomenon of offshore has become very common in today’s world. It allows companies and foreign business to get its own representative offices in other countries and use this scheme of doing business in order to reduce their own taxes. What does the term “offshore”? Offshore financial center that attracts foreign capital companies registered in the country of location of the financial center by providing special tax and other privileges. Using offshore in business – is one of the most effective methods of tax planning companies. However, despite the simplicity of this scheme business, lawyers and jurists is still no consensus about what can be called offshore. At the same time, this method of tax planning is a very common practice: assessment of the world economy today about $ 18.5 trillion of total assets located in the offshore. Through this corporation all over the world to save about $ 225 billion a year (according to the consulting firm Tax Justice Network).

What is offshore?

The term “offshore” (translated to English – “beyond borders, beyond the shore”) first entered the lexicon, appeared on the pages of a newspaper, in the 50s of the last century in America, when one financial firm moved its operations to the territory with a favourable tax climate by geographic selectivity. It was a company that wanted to avoid a strict control on the part of the US government. From ancient times there was an indisputable truth that capital goes to where it is better and more profitable. For example, many small and undeveloped in terms of economy of the state, such as Hong Kong and Singapore, have reached their unprecedented economic boom thanks to the introduction of this practice in the business as an offshore. Thus, the concept of offshore includes not only a legal concept, but rather – economic and geographical.

What is offshore?

But American companies were the pioneers of this method of doing business. Such a scheme as “offshore” has been used in ancient Athens, when trading was introduced a 2% tax on imports and exports. Therefore, Greek and Phoenician merchants began to go around the side of Athens, as well as the use of tax havens nearby small islands from Athens, where imported and smuggled goods without paying duties. He picked up the baton to the creation of offshore companies in the XV century Flanders, which in comparison with England were significantly lower taxes and trade restrictions, which allowed British traders profitable to sell the wool is not in England, and in Flanders. Tax evasion via offshore companies started in the United States from the XVIII century, when traders moved their activities in Latin America. The prototype of the modern version of the creation of offshore companies was Switzerland, which were developed by the Institute of Fiscal secrecy to attract foreign capital into the economy of Switzerland.

In recent years, many countries have laws similar to the Swiss and began to pursue an active policy of attracting foreign capital their economies by enhancing competition in this scheme of doing business. For many countries that do not have natural resources for economic recovery, namely the introduction of offshore was the only means of income

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