Why set up an Offshore Company?

Business owners choose offshore company formations primarily to take advantage of tax-saving incentives, as well as strict confidentiality laws that provide a level of security and anonymity not normally found in traditional “onshore” jurisdictions. Offshore financial centers also offer supportive corporate laws, protective legal systems and appropriate asset-sheltering structures.

Many businesses, entrepreneurs and investors opt for offshore company incorporations to:

• Mitigate unreasonable tax burdens imposed by their home jurisdictions
• Protect assets during complicated legal troubles and/or inheritance matters
• Safeguard wealth from the consequences of political and economic instability in one’s home jurisdiction

While there is no single standard offered by all offshore jurisdictions, there are a number of attributes and distinctions unique to financial centers considered offshore. These include ease of incorporation procedures, management flexibility, financial accounting discretion, and nominee services, to name a few. In the next section, we’ll discuss these in more detail.

There are no clear-cut boundaries, however, as offshore financial services can be found in traditional onshore jurisdictions. The US state of Delaware, for instance, is one of the most historically significant corporate havens. Its simple legal structure and favorable corporate tax laws were shaped in the early 20th century to make it attractive and easy to form and manage a corporation within the state. Today, around 60 percent of the companies on the Fortune 500 list are incorporated in Delaware.

Similarly, offshore companies often exist and conduct themselves just like any standard company. Panama’s corporate laws, originally modeled after Delaware’s in 1927, but blended with Spanish civil law, have evolved to include progressive business regulations from jurisdictions such as Lichtenstein. Corporations formed in Panama enjoy a unique legal climate, making this jurisdiction a popular destination for businesspeople choosing to set up companies offshore.