Offshore Company Formation FAQ’s

17 Apr

offshore corporationIf you are interested in registering a company in a foreign location, gathering as much information as possible will help ensure smoother planning and execution of business plans. Engaging the services of a specialist corporate services firm will assist with the process but following are some frequently asked questions by entrepreneurs undertaking offshore company formation.

Why would anyone register an offshore company?

The main reasons are tax avoidance, asset protection and confidentiality. Note that there is a difference between the term “tax avoidance”, which is legally minimizing tax obligations, and the term “tax evasion”, which is illegal.

When is a location known as a tax haven?

The word ‘tax haven’ is not a legal term. It generally refers to a country that allows foreign businesses to register their company with tax-exemption or very low tax obligations. The process for registering a company, the time taken and costs are often significantly easier compared to their own jurisdiction. However, it should also be noted that the ‘tax haven’ term is being used less, as more jurisdictions implement international standards of the OECD.

Which country offers the best benefits for offshore company registration?

There is no single answer to this question. It depends on various factors, such as the country of residence of the registrant, the type of business and the reasons why he wants to register an offshore company. Language could also play a role. However, jurisdictions such as Dubai, Singapore, and Hong Kong appeal to many entrepreneurs setting up an offshore company due to competitive tax systems, infrastructure and reputation as business hubs.

Why would a government allow offshore companies to be registered inside its borders?

The reason is centered on inflow of foreign money. Company registration and other forms of offshore investment provide a substantial foreign income for these governments. The capital that gets invested by these companies in local banks and investments houses creates significant inflow of foreign investment into these economies. This foreign investment contributes to aspects such as creating jobs and development of infrastructure in the country concerned.

Are offshore companies used by criminals and terrorists?

Although much may be written about illegal activities of individuals, or companies, involved in offshore investing, this is not necessarily the truth. Both onshore and offshore companies can of course be used for illegal activities, but the fact is that the majority business conducted by offshore companies is legitimate. Governments implement due diligence requirements and offshore company registration procedures have systems in place to detect illegal activities such as money laundering.

Is it illegal to own an offshore company?

It is certainly not illegal to own a company in another country. There is in fact no difference between owning shares in a local company and owning shares in one in an offshore location. Some governments tax transfers from local companies to certain offshore locations, so you should discuss this with your tax adviser before choosing an offshore location.

Are there different types of offshore companies?

These companies are known by various names. In the Seychelles, for example, they are known as International Business Companies. In other locations they are known as non-resident companies, business companies or special license companies. They all have one thing in common though: They are legal entities in their own right, allowed to have assets and receive income.

About the Author:

Healy Consultants is a leading corporate services firm that assists entrepreneurs and investors with offshore company formation all over the world, including Singapore and Hong Kong. More information on company incorporation can be found by visiting

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2 Responses to “Offshore Company Formation FAQ’s”

  1. May 15, 2011 at 4:31 pm #

    I’m interesting for the incorporation of offshore companies in Cyprus. Can you give me some guides?I know that there is a number of company activities which are best suited to be operated through an offshore company in cyprus. I found some info in the above url.

  2. September 26, 2011 at 9:50 am #

    Now, for example, in Latvia, if company shareholder is offshore company, then must disclose information about real owner of offshore company…

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