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Establishing offshore companies are in a trend at present time. Every business thinking of expanding their business is opting for setting up an offshore company. Offshore companies provide benefits better than any regular company. A company is registered offshore for a variety of reasons. The main purpose of an offshore company is to establish a business in a business-friendly jurisdiction and enjoy the tax benefits of offshore companies. Offshore investments offer many advantages such as tax benefits, privacy, and asset protection. Among all the advantages, the major advantage is that of tax. Companies looking for ways to reduce the operating cost, establish companies in offshore jurisdictions also known as tax havens or International Financial Centers. Tax benefits of offshore companies are that all the preferred offshore jurisdictions set nearly similar legislation.
‘Offshore company’ is a term used for those companies which are situated outside the country of its residence or incorporation. Some jurisdictions provide a favorable business environment so these countries are known as offshore jurisdictions or tax havens[1]. The very purpose of offshore jurisdictions is to promote business growth and legally reduce tax. These offshore jurisdictions are comparatively more stable than other jurisdictions when it comes to politics and the economy.
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Tax Haven jurisdictions are countries where investment gives rise to tax benefits. Tax havens have favorable tax laws as compared to other countries. Having an offshore subsidiary set up in a country with low corporate tax helps a company to save money and taxes. The characteristics of tax havens are as follows:
The tax benefits of offshore companies are as follows:
All these are the tax benefits of offshore companies. Bettering the tax situation is one of the major reasons for setting up a business abroad. Businesses can explore trending offshore jurisdictions for better opportunities and exposure. However, these strategies should be applied carefully and must ensure compliance with local laws, regulations, and tax codes as failure to comply with them often amounts to tax evasion. Professional help and advice are necessary for expanding a business to have a global presence by setting up an offshore company.
Also Read:A Complete Analysis on International Business CompanyOffshore and Onshore Company: A Detailed Comparison
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