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Expanding Your Business Through Offshore Company Formation

Apr 17, 2008
Registering an offshore company is a widely used financial instrument in today's global economy. A quick search on Google will show you that this statement is true beyond a shadow of a doubt. The main benefits that forming an offshore company can provide include but are not limited to; asset protection, financial privacy, business tax mitigation and to operate the business cheaper.

There are a number of additional benefits to forming an offshore company but there are also several gotcha's that can derail your incorporation plans and turn your offshore company formation into a costly exercise.

Forming an offshore company is not a way to cheat your local government out of taxes but is rather a component of your tax strategy that gives you options. Regardless of what country you incorporate in make sure you utilize the services of a local lawyer to help you understand the myriad of tax laws and rules for corporations to operate.

For the international client, each jurisdiction offers a slightly different proposition. The six primary benefits of incorporating offshore are as follows: anonymity, asset protection, financial privacy, lawsuit protection, simplicity and taxation.

The benefit that most business owners are especially interested in is the ability to improve the financial privacy of their transactions. In some countries, including Panama, you can register a company in bearer share formation which ensures the actual owner of the company does not have their name in any public registry as being associated with the company. This is called Sociedad Anonima or "the Anonymous Society".

Setting up your asset protection layers properly is a key to making sure you always have your money and no one can take it away. Registering an offshore company in Panama is a key cog in the asset protection wheel. Don't own it, but control it is a great way to look at offshore company formations. If they don't know you own it, they can't sue you for it!

Another benefit of offshore company formation is the simplicity factor, wherein most jurisdictions have made it relatively easy for most individuals to incorporate offshore. But beware, if your company or business entity falls under a banking, financial, or insurance category, this benefit does not exist. By not having assets searchable in the owner's name, a certain level of legal protection is also afforded that owner when it comes to law suits.

Mergers that are conducted for the purpose of acquiring assets of a subsidiary entity on its liquidation are another benefit that some jurisdictions provide. Also, should relocation become a future issue, it is wise to have that issue taken care of when performing investigations of a targeted jurisdiction. Merger legislation and tax treaties with other countries sometimes oftentimes become criteria for relocating. Laws in both the newer and the older jurisdictions do allow what they call "redomiciliation" or relocation.
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