Offshore is the name given to organizations or bank accounts opened in foreign territory, apart from the country of operation or domicile of its members? The main objective for setting up an offshore is to take advantage of the tax benefits offered by certain countries. Next, you will understand more deeply what are the main characteristics of offshore, the main beneficiaries of its creation and the role played by tax havens. Finally, you will still be able to identify what are the factors that can lead an offshore to illegality. Prepared? From the offshore company formation in dubai you can have the best deals.
How does offshore work?
Theoretically, it is enough that a company or account is opened in another country, foreign to the one in which the owner truly resides, to be constituted an offshore. However, in practice, there are still other factors involved, such as choosing a tax haven to house it. Tax havens are countries that adopt a policy of reduced taxes or, even, total exemption from taxes in financial activities, in addition to preserving the identity of the true owners of the businesses. Its main objective is precise, by economy and confidentiality, to attract investors and entrepreneurs.
Among the tax havens with the highest volume of offshore services in the world are Switzerland, Hong Kong and the Cayman Islands. For a complete list of countries classified as tax havens, see Normative Instruction No. 1,037 of the Federal Revenue. In fact, the high rate of islands that adopt this position was the main responsible for the term offshore which, in free translation, means off the coast.
Who benefits from offshore organizations?
In general, the profile of beneficiaries varies between legal entities and individuals. Legal entities focus on carrying out maneuvers capable of increasing profit in foreign trade negotiations. For example: did you know that it is possible for a company to export products offshore at a wholesale price and then resell these items on the international market, as a mere commercial distributor?
In this case, the volume of taxes charged at resale is much less than that practiced in the country of origin it may even be null, depending on the country where the offshore is based. On the part of individuals, offshore organizations are excellent for asset management. Once a foundation is created, assets are transferred and managed by an instituted administrator. That way, the founder does not need to have his identity revealed, nor does he need to get involved in operations.
When the founder dies, the succession is made by transferring quotas from one member to another. Thus, the payment of taxes on inheritances and the like is avoided, which from 8% to 55% drops to practically 0% in tax havens.
What are the biggest advantages of creating an offshore organization or account?
In addition to the commercial and tax benefits already mentioned, an offshore also provides:
Freedom of exchange: It is possible to make deposits and investments in currencies other than that operating in the country. This is an important point for those who operate with stronger currencies, such as the euro and the dollar.
Stability: Tax havens are generally very stable countries, both politically and financially.
Low interest: In financing cases, the interest rates charged are lower than those of conventionally taxed regions.
The problem arises precisely from the difficulty in tracking the origin of capital in an offshore, due to all the secrecy and identity protection policies that tax havens adopt.