Offshore company

The term "offshore company" or "offshore corporation" is used in at least two distinct and different ways. An offshore company may be a reference to:

The former use (companies formed in offshore jurisdictions) is probably the more common usage of the term. In isolated instances, the term can also be used in reference to companies with offshore oil and gas operations.

a company, group or sometimes a division thereof, which engages in offshoring business processes.[1]
International business companies (IBC) or other types of legal entities, which are incorporated under the laws of a jurisdiction, that prohibit local economic activities.[2]

Companies from offshore jurisdictions

In relation to companies and similar entities which are incorporated in offshore jurisdictions, the use of both the words "offshore" and "company" can be varied in application.

The extent to which a jurisdiction is regarded as offshore is often a question of perception and degree.[3] Classic tax haven countries such as Bermuda, British Virgin Islands and the Cayman Islands are quintessentially offshore jurisdictions, and companies incorporated in those jurisdictions are invariably labelled as offshore companies. Thereafter, there are certain small intermediate countries or areas such as Hong Kong, Singapore and Mauritius (sometimes referred to as "mid-shore" jurisdictions) which, whilst having oversized financial centres, are not zero tax regimes. Finally, there are classes of industrialised economies which can be used as part of tax mitigation structures, including countries like Ireland, the Netherlands and particularly the United Kingdom, in commentary relating to corporate inversion and the use of British Overseas Territories for this purpose. Furthermore, in Federal systems, states which operate like a classic offshore centre can result in corporations formed there being labelled as offshore, even if they form part of the largest economy in the world (for example, Delaware in the United States).

Classifying offshore companies

External links

Global Forum on Transparency and Exchange of Information for Tax Purposes, OECD

References

Definition: offshore Investopedia, retrieved 6 September 2014^
T.J. van Koningsveld, 2016. De Offshore Wereld Ontmaskerd. Kerckebosch.^
Identifying tax havens and offshore financial centres Tax Justice Network, retrieved 6 September 2014^

Characteristics of offshore companies

Although all offshore companies differ to a degree depending upon the corporate law in the relevant jurisdiction, all offshore companies tend to enjoy certain core characteristics:

The absence of taxation or regulation in the home jurisdiction does not exempt the relevant company from taxation or regulation abroad. For example, Michael Kors Holdings Limited is incorporated in the British Virgin Islands, but is listed on the New York Stock Exchange, where it is subject both the U.S. taxation and to financial regulation by the U.S. Securities and Exchange Commission.

Another common characteristic of offshore companies is the limited amount of information available to the public. This varies from jurisdiction to jurisdiction. At one end of the scale, in the Cayman Islands and Delaware, there is virtually no publicly available information. But at the other end of the scale, in Hong Kong companies file annual returns with particulars of directors, shareholders and annual accounts. However, even in jurisdictions where there is relatively little information available to the public as of right, most jurisdictions have laws which permit law enforcement authorities (either locally or from overseas) to have access to relevant information,[8] and in some cases, private individuals.[9]

In relation to flexible corporate law, most offshore jurisdictions will normally remove corporate fetters such as thin capitalisation rules, financial assistance rules, and limitations on corporate capacity and corporate benefit. A number have also removed or watered down rules relating to maintenance of capital or restrictions on payment of dividends. Beyond the common themes, a number of jurisdictions have also enacted special corporate provisions to try to attract business through offering corporate mechanisms that allow complex business transactions or reorganisations to occur more smoothly.[10]

They are broadly not subject to taxation in their home jurisdiction.(UAE)

The corporate regime will be designed to promote business flexibility.

Regulation of corporate activities will normally be lighter than in a developed country.[7]

Companies from offshore jurisdictions

Classifying offshore companies

See also

External links

References

Characteristics of offshore companies

Uses of offshore companies

Popularity of offshore company jurisdictions