For several years, individuals and business corporations adopted a common practice of setting up offshore entities and move their assets with an objective of avoiding paying higher taxes on their capital gains. Today with the growth of globalization that has eliminated geographical boundaries; several small and medium-sized enterprises are using this route.
Is it legal to incorporate offshore company?
Most business owners who contemplate using this route first question the legality of this option. It is a commonly known fact that non-resident companies cannot do any business in the jurisdiction where these are incorporated. The primary objective is to take advantage of the favorable taxation laws of the country and avoid paying huge amounts of national tax liabilities. It is completely legal for businesses to adopt measures to reduce their tax burdens without moving out of the regulatory guidelines. Forming an offshore entity for this purpose is legal; however, withholding information related to the income of this company in the reports is illegal. If such information is withheld it is deemed to be an act of tax evasion and is subject to specific penalties.
Requirements for offshore company incorporation
When you want to incorporate offshore company, you will need to complete certain formalities. You will firstly need to provide the registered address of the entity within the jurisdiction where it is being formed. As a proof of existence, owners will need to produce a certificate of incorporation. Owners will also need to provide a list of directors and members to show names of those behind the company. You will also have to hire the services of a qualified and licensed company secretary who will be responsible for ensuring all the legal processes are adhered to strictly. The articles of association will have to be prepared to clearly outline the internal procedures of the company, rights of the members, and the objective/s. The company will also need to maintain and provide minutes of the meetings, which are available to the public and financial records must be audited at regular intervals. If there are any shadow directors controlling or holding majority stake in the company but not actively participating in the daily management, their details must also be made available. Finally, you will have to provide the details of the registered agent who will be responsible for incorporating the company in the chosen jurisdiction.
Other benefits of setting up companies in other countries
Besides the reduction of the tax liabilities, incorporating an entity offshore has several other benefits. This step is perceived as an intelligent method for businesses that want to enter the international trade or as an investment vehicle. Moreover, this procedure provides more anonymity to the shareholders and directors, which acts as an asset protection measure. In case of legal liabilities arising in the future, personal assets are not attached preventing directors and shareholders losing their wealth. As seen there are numerous benefits of using this option; however, before you make a final decision it is recommended to consult a professional expert for advice.
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Is it legal to incorporate offshore company?
Most business owners who contemplate using this route first question the legality of this option. It is a commonly known fact that non-resident companies cannot do any business in the jurisdiction where these are incorporated. The primary objective is to take advantage of the favorable taxation laws of the country and avoid paying huge amounts of national tax liabilities. It is completely legal for businesses to adopt measures to reduce their tax burdens without moving out of the regulatory guidelines. Forming an offshore entity for this purpose is legal; however, withholding information related to the income of this company in the reports is illegal. If such information is withheld it is deemed to be an act of tax evasion and is subject to specific penalties.
Requirements for offshore company incorporation
When you want to incorporate offshore company, you will need to complete certain formalities. You will firstly need to provide the registered address of the entity within the jurisdiction where it is being formed. As a proof of existence, owners will need to produce a certificate of incorporation. Owners will also need to provide a list of directors and members to show names of those behind the company. You will also have to hire the services of a qualified and licensed company secretary who will be responsible for ensuring all the legal processes are adhered to strictly. The articles of association will have to be prepared to clearly outline the internal procedures of the company, rights of the members, and the objective/s. The company will also need to maintain and provide minutes of the meetings, which are available to the public and financial records must be audited at regular intervals. If there are any shadow directors controlling or holding majority stake in the company but not actively participating in the daily management, their details must also be made available. Finally, you will have to provide the details of the registered agent who will be responsible for incorporating the company in the chosen jurisdiction.
Other benefits of setting up companies in other countries
Besides the reduction of the tax liabilities, incorporating an entity offshore has several other benefits. This step is perceived as an intelligent method for businesses that want to enter the international trade or as an investment vehicle. Moreover, this procedure provides more anonymity to the shareholders and directors, which acts as an asset protection measure. In case of legal liabilities arising in the future, personal assets are not attached preventing directors and shareholders losing their wealth. As seen there are numerous benefits of using this option; however, before you make a final decision it is recommended to consult a professional expert for advice.
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