It’s no secret that at present, it’s not difficult to move offshore companies between destinations and to take advantage of the fact that individual countries have started to create "competitive advantages" for companies that reside in them. In fact, it looks like some countries are targeting the creation of international agreements preventing double taxation of their residents, and others try tax optimisation to reduce taxation as much as possible. Guess in which countries entrepreneurs are the most successful?
The term "offshore" is used to describe a business in a country other than where management and employees are actually located. Sometimes, the term "offshore" is mistaken for "tax haven", but the majority population commonly uses this concept. Why can’t we put an equal between them? Because a tax haven can be also the country where business takes place - for example, even in your country there are manufacturing companies that have come here on the basis of incentives and virtually don’t pay any taxes. Even offshore destinations may, on the other hand, have higher taxation when it offers alternative benefits (such as higher ownership protection than guaranteed in the home country).
From the managerial planning point of view, the tax should be a cost as any other - as soon as we begin to look at taxation in this way, we can find a great deal of room to optimise and plan. Tax optimisation is perfectly legal and legitimate - which of course, is something quite different from tax avoidance, not paying taxes and tax dodging.
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Legal tax optimisation isn’t based on the fact that some countries "don’t talk" with each other and don’t currently pass on data about tax residents or deposit funds to a foreign bank that is supposed to keep banking secrecy and information about the fact that money is stored in it. What has just been described here are the typical examples of tax avoidance, which is illegal in most countries and is something that we definitely don’t recommend.
The objective of fair and effective tax planning is to find a solution whereby the advantages offered by individual countries are legitimately exploited. Therefore, we strongly advise you not to consider offshore optimisation unless you know international law in detail and are familiar with the laws and financial regulations in the destination you’re targeting.
If you're thinking about setting-up an offshore business, we'd like to share our experience and advise you which solution would be most suitable for your purposes.
Call us or write to us via the form on this page and we will be more than happy to discuss the details with you.
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