What is an offshore company

12 Mar 2014 - Posted by to Offshore Company

“Offshore company” Definition

Offshore company or International Business Company is an entity registered in tax havens or countries where such entity will be tax exempt or free from taxes at all. Actually, offshore company is a legal way to avoid taxes and it is often used by businessmen from developed countries where taxes are very high.

The most common type of an offshore company is called International Business Company or IBC. Such companies are normally required to do business with non-residents of the jurisdiction where they are registered. This way they will remain tax exempt. In some jurisdictions, a fixed tax is paid to government on a yearly basis.

What to use offshore company for?

A usual restriction to offshore companies is that they are not allowed to carry out any business with the country of incorporation. Apart from illegal activities such as money laundering, there are some restricted activities, such as banking, insurance and media.

Offshore companies are easy to incorporate and to run. There are no requirements of annual auditing or accounting. That is why many people choose offshore company as a way to protect their assets or to run business on a global scale.

Most of legitimate uses of offshore companies are: international trading, asset protection, holding company, captive insurance, yacht registration, legal tax avoidance, protection of intellectual property, succession planning or confidentiality.

Offshore jurisdictions

Many offshore jurisdictions are located on islands of the Pacific ocean, The Caribbean sea or The Indian ocean. It is cheap and easy to run an offshore company there, however the reputation of many such companies is not very good.

Another group of offshore jurisdictions is located in Europe: The Isle of Man, The Gibraltar, Andorra and others. The owners of offshore companies there do not enjoy full confidentiality or privacy, their details can be easily obtained.

As opposed to these two groups, UAE offshore company offer all the possible advantages such as simplicity of incorporation, easiness of running such company, absence of taxes, audit and accounting as well as 100% confidentiality and safety.

If you have questions offshore companies, you can ask them in comments below.

About Elena Ovchinnikova
Setup Business Expert.

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  • By Freedy Deon / 21 Sep 2014 / Reply

    Hi Elena,

    I would like to set up a free zone company in Dubai. Requesting your advice .


    • By Andew O. / 03 Oct 2014 / Reply

      We can help you to setup a Free Zone or International business company (offshore in UAE). Please, let me know what is the nature of your business and what are your requirements

  • By Helix / 22 Jan 2018 / Reply

    Dear Sir,
    Is UAE VAT applicable for RAK offshore companies.

    • By Andew O. / 22 Jan 2018 / Reply

      No, VAT is not applicable to UAE offshore companies. UAE offshore companies are not liable for VAT and do not have to register with Federal Tax Authority.

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