Offshore Companies

The prestigious weekly news magazine Fortune shows, following it's own research of over a thousand of the most larges companies in United States that they pay very low taxation or not at all. How come? They are not profitable? And what is the connection to the fact that about half, 500 companies and 40% of the companies registered on the New YorkStock Exchange are registered of the state of DELAWARE? Why 80% American companies in the research have changed their address to Delaware, a state with less than one million residents? Why companies such as Conoco, Du Pont, Behringer Mannheim, Exxon and Sears have their activity bases in countries with exotic names such as Antigua, Bermuda, Belize,Nauru or Vanuatu.

The answer is taxation climate. All the above mention names and many others are operating from those countries' so called taxation haven due to their fiscal and special rules that provides legal ways to increase company profits.

Some people may find it unethical or even unmoral. On the other hand, an honorable British judge said "No individual in our country has any obligation, moral or other, to conduct his business in such a way that he'll have to pay from his profits state taxes as much as possible ".

Many countries have adopted the offshore fiscal system, to mention just a few such as theBahamas, British Virgin Islands and Seychelles. The largest British investment companies are registered in Luxemburg, Gibraltar and Guernsey, outside the rich of her majesty tax system. Obviously from countries with a very low tax percentage such as Brazil with a barely 4% tax, offshore practice is unknown.

How does the offshore business work?

It looks like all the countries operating offshore system are all a like. They all offer tax and accounting benefits, secrecy, and so on. In practice, there are vital differences. Tax benefits can be most valuable yet some times a big difficult obstacle.

The very first consideration in choosing a country from where to operate from is ones company goals, that is to say what kind of future business the company intends to do.

Obviously there is no point in establishing a manufacturing business that wouldn't enjoy the fiscal benefits. On the other hand, businesses such as advisory or management can take full advantage of the fiscal benefits.

Experience shows that companies dealing in international Export/Import, counseling, Finance, investment, filmmaking industry, leasing, planning, funds management, banking services, seafaring, hotel management, are making maximum utilization of tax benefits.

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In the next articles we'll provide detailed information about each and every country providing offshore business opportunities.