Offshore company laws provide tax havens for many businesses and individuals.
Offshore company laws make up the guidelines individuals and companies must follow when operating companies outside the boundaries of their countries. Many companies and individuals place their commercial and personal assets in offshore entities to avail themselves of the low taxes or fixed annual tax rate offered by some countries. These companies consist of corporations, trusts, limited liability corporations and other entities. The benefits range from asset protection to secrecy for principals.
Considerations
The offshore company incorporation process depends on the legal statutes for the country of incorporation. Each jurisdiction has its own laws for forming an offshore company. Generally, a licensed company must file the required documents with the government office as outlined in the countries' regulations. Most municipalities require all offshore companies to have a registered agent in the country.
One of the primary considerations for individuals or companies when choosing an offshore destination concerns whether the country has a tax information exchange agreement (TIEA) with the resident nation. With TIEAs, the requesting company does not need to present "probable cause," such as criminal activities or tax violations for requesting the information.
Business Companies Act
The British Virgin Island (BVI) introduced offshore company regulations in 1984 with the International Business Companies Ordinance. This regulation provides privacy of asset ownership, exemption from local taxes and stamp duties. In addition, individuals may transfer their residency to BVI. In January 2005, the British Virgin Island (BVI) implemented a new law called the BVI Business Companies Act. This regulation removes the distinction between domestic companies and international or offshore companies. The new legislation created just one type of entity - a BVI Business Company. These companies maintain the same advantages as offshore companies.
General Corporation Law - 1927
Panama's location, joining North and South America and the Panama Canal, and the lack of an information exchange agreement make this country an attractive offshore destination. The General Corporation Law, 1927, allows two or more individuals to file articles of incorporation. Panamanian laws allow offshore companies to acquire and hold personal properties, make contracts, borrow money and do "all things" legal. Panama does not have tax information exchange agreements in place with other nations.
International Business Company
Many people and businesses choose the Bahamas as their offshore haven. They must incorporate under the regulation referred to as the International Business Company, 2000. This law allows the confidentiality of beneficial owners and shareholders of the company so public records do not contain there identities. The law allows a minimum of one corporate director and permits nonresident directors. Companies can meet anywhere, and the rules do not require annual filings. Only companies or persons licensed under the Banks and Trust Companies Regulation Act or the Financial and Corporate Service Provider Act can incorporate an International Business Company.
