What is an offshore company? Offshore Company Review

Basic Introduction

An offshore company is a limited liability company or a joint stock company established in an offshore legal area in accordance with its offshore company law. The local government does not impose any taxes on such companies, but only charges a small annual management fee. At the same time, all major banks recognize such companies and provide convenience for them to set up bank accounts and financial operations. It has three major characteristics: high confidentiality, tax relief, and no foreign exchange control.

"Offshore" means that the investor's company is registered in an offshore jurisdiction, but the investor does not need to be present there, and its business operations can be carried out directly anywhere in the world. For example, a trading company is registered in the Bahamas, but its trade business can be conducted between Europe and America. The world's offshore company registration places include BVI, Cayman, Seychelles, Bermuda, Marshall, etc.

Legal characteristics of offshore companies

1. The entity that establishes an offshore company should be an investor outside the offshore location, which reflects the essence of the separation of the offshore company's place of registration and place of operation. This is the main element of the establishment of an offshore company.

2. An offshore company must be established in a specific offshore jurisdiction. Common offshore jurisdictions include the British Virgin Islands, Cayman Islands, Cook Islands, Marshall Islands, Mauritius, Hong Kong, Samoa Islands, Seychelles, etc. This is the geographical factor of an offshore company.

3. The registered capital of an offshore company comes from the investment of investors outside the offshore jurisdiction. This is also the inevitable result of the main elements of an offshore company. The registered capital of an offshore company is non-local. This is its capital element.

4. Offshore companies are not allowed to operate in offshore jurisdictions. The reason for the creation of offshore companies determines that their place of operation and place of registration must be separated. This is the operating element of offshore companies.  

Advantages of offshore companies

1. It can improve the company's reputation and international status, create a brand, and enhance product competitiveness
2. The establishment procedures are simple and fast, with low costs and low thresholds
3. Foreign currency accounts can be opened, funds can be transferred flexibly, there is no foreign exchange control, and it is convenient to receive and use foreign exchange
4.Can conduct business and operate in any country or region
5. No need to pay taxes if you do not operate locally, which can reasonably reduce corporate tax expenditures and quickly accumulate funds
6. Limited debt, business risks will never involve shareholders' private property

Disadvantages of offshore companies

1. Offshore companies cannot actually operate in China. Only companies or offices registered in China can actually operate. The operating costs of the company are too high, which completely deviates from the purpose of registering an offshore company.

2. Failure to actually operate means failure to issue invoices, VAT invoices, etc., and failure to conduct domestic business. If a company is found to be operating a physical business in the mainland by the Industrial and Commercial Bureau, it will face high government fines and blacklisting of shareholders and directors.

3. Most offshore companies must be cancelled when they are no longer needed. For example, Hong Kong companies are required to undergo annual audits every year. For companies with large amounts, it is recommended to prepare an audit report. Otherwise, if they are found out, they may be blacklisted by the Hong Kong government, and in serious cases, they may not be able to enter Hong Kong.

effect

1. Build an international image and create a brand (domestic manufacturers can be authorized by the brand, such as authorization, supervision, cooperation, etc. by XX Company)

2. Used in international trade, as transit trade, to facilitate foreign exchange flows (offshore companies, as middlemen, can extract profit differences and intercept foreign exchange flows)

3. Establish a special purpose company and make return investment (return investment, enjoy government preferential policies, and enhance product reputation and competitiveness)

4. Facilitate effective tax planning (reasonable tax avoidance)

5. Confidentiality of company information and listing arrangements (serving as a springboard for listing)

Note

1. Choose the right offshore company registration place

When registering a Woan company, you need to understand the relevant tax laws, foreign exchange controls, laws, etc. of the place of registration. At the same time, you must choose a suitable offshore company registration place. Don't blindly follow others, because the registration fees and advantages of each offshore company registration place will be slightly different. You must choose a registration place that suits you.

2. Pay attention when naming

If you want to include words such as bank, trust, king, association, insurance, etc. in the name of your offshore company, you must obtain the franchise of the offshore territory. And the company name should not be too long, because a long company name may not be fully displayed in the bank, which will cause inconvenience to you and your customers.

3. Registering an offshore company requires subsequent management

It is not enough to simply register an offshore company. In fact, the procedures for registering an offshore company are not complicated, but company maintenance and management are very important. All offshore companies need annual audits, so they must be reviewed on time every year, otherwise they will be fined.

4. Choose a professional agency to register

When registering an offshore company, you must choose a good and professional agency to register. There are many agency registration agencies now, and they are mixed. However, the service quality of the agency and the professional knowledge level of the consultant are very important. Professional consultants will play a great role in your subsequent management.