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Friday, August 11, 2017

Offshore outsourcing & offshore incorporation

offshore meaning

The term Offshore Company is used to describe a company from at least one of the two conditions:
  1. A company or other type of legal entity established or registered in a financial center outside the borders of the country or in a tax haven
  2. A company or group of companies (or sometimes a part thereof) engaged in manufacturing or business services outside the borders of the country.
    The term can also be used in reference to companies that have oil and gas operations at sea.

Purpose of these companies

This registration is often done for the purpose of financial, legal and tax advantages. A company legally resorts abroad for the purpose of avoiding taxes or enjoying comfortable regulations. Foreign financial institutions can also be used for illicit purposes such as money laundering and tax evasion. Tax evasion is illegal because it allows a person or company to deliberately avoid paying taxes, In Fact ,the reasons for which these entities are formed:
  • Privacy
  • Asset Protection
  • Tax Savings (depending on your jurisdiction)
  • Lawsuit Protection
  • Flexible Business Laws
  • Business Expansion
  • International Financial Diversification
  • Confidentiality

Characteristics of companies outside borders

Although all companies outside the boundaries vary somewhat depending on the law of companies in the relevant jurisdiction, all companies abroad tend to enjoy some basic characteristics:
  • Are generally not subject to taxation in their jurisdiction.
  • The corporate system is designed to enhance business flexibility.
  • The organization of corporate activities is usually lighter than in a troubled country


the act of establishing certain portions of the business functions, such as manufacturing or call centers, in a nation other than the one in which the business most often does business. This is often done to take advantage of more favorable conditions in a foreign country, such as lower wage requirements or looser regulations, and can result in significant cost savings for the business.

Offshore banks

offshore banks or foreign banks are banks located outside the applicant's country of residence, often in countries with low taxes or financial institutions that are not subject to international control.Switzerland and Cayman Island are the powerhouses in Offshore Banking holding nearly 45% or about $10 trillion of all offshore accounts. These banks have advantages that include:

  • Further privacy is a principle found with the Swiss Banking Act 1934
  • Low or no taxes (ie tax havens)
  • Easy access to deposits (at least in terms of regulation)
  • Protection from political or financial instability
Foreign banking is often associated with the black market and organized crime through tax evasion and money laundering, but legally, foreign banking does not prevent assets from being subject to personal income tax on interest. With the exception of certain persons who meet somewhat complex requirements, the personal income tax of many countries does not distinguish between the interest earned in local banks and the interest earned from abroad. For example, persons subject to the US tax system must declare any foreign bank accounts they own - private or ordinary - or they may be subject to the penalty of perjury. Foreign banks may decide not to inform other tax interests, and do not have legal obligations to do so, because they are protected by the banking secrecy system. However, this secrecy does not make the income or tax evasion legal.

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