Breaking the Panama paper misconception: The perfectly legal and legitimate reasons for forming an Offshore company
Since the Panama paper exposé exploded across every news feed, any mention of an offshore venture no matter it’s legality has earned a bad reputation. However dispelling the misconception of “offshore” as synonymous with “money laundering” or “illegal tax evasion” is crucial. Offshore company operation is far more than just tax conscientiousness yet far less scandalous than illicit tax fraud.
For many prospective offshore companies, the main attraction for seeking an offshore venture is the flexibility offshore structures provide in conducting business. Offshore structures can allow minimal red tape or bureaucracy with most jurisdictions allowing shareholder meetings to take place anywhere in the world. Moreover, in most instances there are no requirements to file annual returns or tax audits to Authorities.
Another major benefit is the privacy and protection which offshore companies can enjoy. Companies may be incorporated without disclosing details of directors, shareholders or beneficiaries. Moreover, financial information of the company is not available on public record.
Going “offshore” is as the name suggests crucial to internationalising a company and extending it’s global reach. In an age of globalisation it is essential for companies to look to oversea expansion if they truly wish to grow in profitability and gain a global presence. After all, it is no secret that the most successful corporations in the world have branched themselves via such offshore ventures.
Finally, perhaps the most anticipated yet controversial benefit is gaining advantage from greater tax efficiency. Companies can reduce or even sometimes eliminate certain tax liabilities through careful tax planning. As non-resident companies are often tax exempt or enjoy low levels of taxation depending upon the jurisdiction they thus can significantly reduce their costs attracting greater investment.Tax efficiency benefits can also come from tax deferment, meaning you postpone the payment of taxes into the future.
It is important to acknowledge that these offshore structures have been in place for many years and were created for the very purpose of companies benefiting from growth and profitability. Despite the rhetoric, they are in no way a newly established phenomenon or a part of a larger scheme tipping the balancing scales. Offshore structures could and should be used by any individual/ company large or small in size.