How to choose the right Offshore Jurisdiction

With around 50 countries in the world offering tax benefits to offshore business, it is only logical to ask which offshore country is the best to incorporate in. Some of those countries are very popular and have an inherent image of offshore tax havens - like British Virgin Islands, Panama or Belize. It is less known that some attractive tax benefits are on offer to some types of non-resident businesses in places that do not ring the bell as "tax-havens" - for instance, UK, US, Holland, Iceland or Denmark.

There can be no standard reply as to which is the best offshore jurisdiction. That answer really depends upon the intended use of the offshore company, upon the personal and business circumstances of its owners and upon the various tax regulations in force in the countries where the offshore company will engage in business.

Before going into the particular detail, it would however be useful to define what is a tax haven, anyway?

Desirable corporate characteristics

Many offshore jurisdictions have made efforts to ensure that their company law provides features such as minimal or optional statutory filing obligations, availability of bearer shares, non-disclosure of beneficial ownership, minimum number of directors, minimum information on public file, ability to hold directors meetings anywhere in the world, lack of requirement to file audited records, flexibility in regards the amount and paying-up of the authorised capital, and similar. It is for you to decide if any of those special features (which will usually be widely advertised by the agents in the respective country) are of any particular interest for you.

Apart from that, an offshore company is an offshore company - generally they are very similar to each other. Virtually all entities that are known as "offshore companies" in the narrow tax benefit sense will have the same distinct feature. Such company is essentially relieved of any substantial tax obligation and all the reporting that usually comes with it, insofar as it stays out and away from the country where it has been registered. Hence, they will also be free from the requirement to prepare and file the financial declarations for income tax reporting. At the same time there are particular types of entities, subject to what is called "designer taxation", which pay minimum rate of tax. An example of that is a Seychelles Special License Company, which pays between 1.5% and 5% of tax, and, consequently, is also supposed to file tax returns.