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The tax advantages of opening an offshore company

Contributed by BridgeWest
21 June, 2018

The main goal of an offshore jurisdiction is to create a welcoming business environment and one that favors the taxation of a locally incorporated company. The tax advantages of opening an offshore company are the first that come in mind when thinking about owning an offshore business, but there is much more to this business form, depending on the chosen offshore location.

Minimum taxation

The main advantage of an offshore company is that it benefits from a preferential taxation regime. As they are sometimes called, tax havens, the offshore jurisdictions do offer important tax reductions, making it easy for investors to reduce their overall expenses with the company. A tax haven will levy little or no taxes at all on the profits of a company.

Investors who open a company in Belize benefit from their preferential business regime where the International Business Company (IBC) is not taxed on its corporate profits.

The IBC is a type of company that is also available for incorporation in the British Virgin Islands and maintains most of the characteristics. No taxation in the BVI is also applicable.

Low costs and administration requirements

Apart from having low personal and corporate taxes, offshore jurisdictions are also a haven in terms of company maintenance. An important advantage for investors who open a company in the Cayman Islands is that this jurisdiction has minimal requirements for annual reporting and filing. This means that the costs associated with having a full-time accountant or those related to outsourcing accounting services are reduced.

Seychelles is another offshore jurisdiction that offers these common tax advantages. Not only do investors need to worry about tax liabilities, but they also enjoy reduced company management costs and no mandatory minimum share capital.

Setting up a company in a tax haven can have important tax-related advantages for investors and it is an option worth considering by investors. Getting personalized help is recommended and investors can seek proper company formation counseling once they’ve selected their preferred offshore location.


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