|
Offshore Incorporations
Incorporations offshore have increased as a result of the growing need to take advantage of the benefits of free trade, investment opportunities internationally and because of the growing consciousness of the importance of asset protection and better, easier access to services overseas thanks to the widespread use of availability of the internet.
In addition to these, underlying reason for offshore incorporations relate to the tax advantages and privileges that foreign investors obtain abroad as incentives to invest. Investment in the offshore sense would be closely linked with choosing one location over the other in a highly competitive environment for corporate financial and legal services to customers internationally. Offshore incorporations, if one were to refer to the formation of companies, for example, constitute one of the most significant income earners, followed by offshore banking and other support services that would be required for maintaining and managing the affairs of offshore companies while they operate. Offshore incorporations and formation services are provided for a wide range of legal entities with the objective of meeting the financial and individual needs of different customer bases. Consequently, offshore incorporations cover international business companies (IBC’s), family limited partnerships (FLP’s), limited liability partnerships (LLP’s), limited partnerships (LP’s), limited liability companies (LLC’s) and protected cell companies (PCC’s) or segregated portfolio vehicles (SPV’s).
Offshore incorporations of this wide range of legal offshore entities involve intentions which relate to tax considerations, company membership and setup, asset protection and the type of business that the company is to be used for. Every one of these entities has its own limitations and advantages, with one form having something that the other may not have or may have but may be more efficient in fulfilling.
For example, offshore incorporations involving LLC’s, which are equal to IBC’s in terms of asset protection capacity, are done by business owners who do not intend to have a very formal management setup. LLC’s do not have a board of directors and are managed by their members, while IBC’s must have directors and thus a board. Offshore incorporations of LLC’s would thus involve a ‘management’ consideration, rather than a tax or asset protection one, since both LLC’s and IBC’s are equally ideal for achieving both.
Put aside companies, offshore incorporations include that of offshore banks, insurance and offshore trust and investment/brokerage companies. Unlike offshore companies which are registered and incorporated in a jurisdiction to be managed and operate outside the jurisdiction, that is, offshore, offshore incorporations for banks, insurances and brokerages involve investors who are seeking to establish operations in the jurisdiction itself from where operations offshore will be carried on. These entities are equally exempt from direct taxes and as a result have much lower operating costs.
The very nature and purpose of offshore incorporations as a catalyst for international trade and investment, access to more markets, being able to expand sales and maximize profits as a result of tax incentives and exemptions are sufficient reason for why incorporations offshore are as popular as they are.
Back to top
|
