Today, the concept of "offshore" is becoming more and more popular every day, its widespread use, of course, is of interest. If experts from the field of economics and jurisprudence are very familiar with it, then for an ordinary citizen the meaning of this word is not always clear.

So, according to the definition, an offshore is a kind of financial center that constantly attracts capital from abroad by providing special benefits and tax privileges to various companies. Offshore zones of the world are widely scattered geographically: Gibraltar, Dominican Republic, Seychelles and even Russia. However, in our country, such an economic arena has a slightly different name, namely, the “Preferential Taxation Zone”.

Offshore zone. concept

An offshore zone is a country or part of it where, subject to certain conditions, it is possible not to pay taxes. Also, you do not need to submit quarterly financial statements. An offshore zone, as a rule, is characterized by a number of privileges, among which are the following: a diverse tax regime, financial development, economic stability, etc. Experienced entrepreneurs always special attention related to her choice, taking into account all of the above factors. To register each specific company, you should choose the most favorable conditions for cooperation.

Offshore zone. Classification

• Classic offshore zone (zero taxation). In this case, the company undertakes to pay a certain fee to the state every year, and it does not levy a tax and does not require accounting reports. This type includes the following zones: Nevis, Belize, Panama.
• States with a territorial sign of taxation. In this case, the income that was received in the course of transactions with sources located in this jurisdiction is subject to taxation. Thanks to this kind of system, it is possible to export goods, on the one hand, and inflow of investments, on the other. List of states: Costa Rica, Malaysia, Brazil, Morocco, UAE, Algeria.
• Countries that provide tax exemption for certain activities. For example, when making a profit from real estate in the territory outside the offshore zone (Denmark, Lithuania, Hungary, Bulgaria, Poland, Switzerland, Slovakia).
• Territories where there is no need to pay taxes to the state to a group of certain legal and even quasi-legal entities (Cyprus).
• Low level of taxation. In this case, the state sets fairly low tax rates in order to develop the country from an economic point of view and attract foreign investment (Cyprus, Estonia, Switzerland, Montenegro, Ireland, Portugal).

Development

On the this moment the list of offshores is constantly updated, now their number is just over 50. Indeed, as practice shows, such territories are very popular, including among Russian entrepreneurs hence the expediency of their occurrence is explained.

In connection with the fight against tax evasion, which has recently been covered by the media, many have become aware of the existence of offshores, offshore countries and zones. With this specific information about, "What are offshore countries?" catastrophically lacking. Today we will look at what offshore countries are, where offshore countries are located and why businesses need them.

Thanks to this article, you will understand the following topics:

What are offshore countries?

Offshore countries are those states that offer special conditions for business. To be correct to the end, the term "offshore countries" is inaccurate. The term "offshore jurisdictions" is more suitable. This is because not only a whole state, say, but also a part of the state - a state in the USA can be called offshore.

Another definition of an offshore country is when a state or jurisdiction is included in the list of offshores of an international organization or another country. For example, Russia considers Liechtenstein offshore, while the EU does not.

Offshore countries and jurisdictions offer special business conditions for foreign entrepreneurs and investors. The most common advantages of offshore countries, which are prescribed in the legislation, are the following:

• Simple and fast procedure for registering a new company;
• Simplified reporting system;
• No need for an audit;
• Reduced taxes;
• Additional protection from creditors, fraudsters and competitors;
• Flexible legislation that allows you to customize your company for specific tasks;
• Increased protection of personal information of owners and directors;
• Access to new markets and financial instruments;
• Much more.

Offshore business and offshore company

An offshore company is considered if it is registered in an offshore country according to the rules for offshore (international, non-resident) companies.

An offshore company may have owners, shareholders, directors, secretaries and other managers. This is determined by the laws of a particular jurisdiction and the type of company chosen: IBC, LLC.

Any modern offshore company, in order to benefit its owner, as well as not involve unnecessary risks, must meet several criteria:

• Registered and legally registered;
• Has a real presence: an office, employees, or at least a working site, server, etc. at the place of registration.

Real presence orsubstance is an extremely important point in modern world. "Paper" offshore companies, which existed only on paper, are today considered as a method of fraud and tax evasion. Only if the company can prove its real activity, it can be used in the international structure and asset protection.

• Leads, which is required by law;
• Engaged in legal activities and has the necessary licenses for this.

It is important to understand that an offshore company is not a magic box that will hide dirty deeds and help launder money or deceive a client. The times when this was possible have passed or are rapidly passing. Companies, their accounts and activities are closely monitored by the law enforcement agencies of the world.

The old schemes that allowed you to evade taxes or hide the face of the true owner no longer work. The new schemes are designed to provide security, protection, reputation, but not to deceive the authorities.

Why then do we need offshore companies in offshore countries?

Why you need an offshore company

An offshore company is a tool that solves certain problems. The list of tasks depends on you and your business. At the same time, any offshore country has its own nuances and peculiarities. In other words, there is no one single offshore company that will solve any kind of problems.

If you want to open a bank, then you need a jurisdiction that issues banking licenses, for example, . If you are planning to gamble online games- then pay attention to and.

If your task is to protect assets from fraudsters and competitors, look at companies and - these two states leave little chance for those who are used to taking other people's assets, including through the courts. The legislation of these countries is spelled out in such a way that decisions of foreign courts are not accepted here, and in order to start office work in Belize or Nevis, you must first deposit $ 25,000 to the cashier.

If you are looking for a place to register a ship, aircraft or helicopter, then there is a choice:, and others.

If you are interested in a good reputation, access to a skilled workforce and the European market, create companies in , on .

In addition, pay attention to how and where you are going to accept payments. In other words, where should you have a bank account. As practice shows, opening a bank account is many times more difficult than opening an offshore company. Before buying an offshore company, we recommend that you sign up for and find out if you can open an account with the right bank along with the planned offshore company: [email protected].

List of offshore countries

The list of offshore countries is an ambiguous thing. The point is how to define offshore. In fact, today almost all states have offshore elements for foreign investors in their laws. The US is in many ways a much more important and larger offshore than St. Kitts and Nevis, and the UK is generally the head of half of the world's offshores, which are called “British offshores”.

Therefore, the list of offshore companies usually includes either international organizations or regulatory authorities responsible for taxes or business. In Russia, the “list of offshore companies” is compiled by the Federal Tax Service and currently includes 107 countries and 18 territories.

The OECD has its own list, as does the IMF.

List of offshore FTS

1. Angola

2. Andorra

3. Antigua and Barbuda

4. Afghanistan

5. Bahamas

6. Bangladesh

7. Barbados

8. Bahrain

9. Belize

10. Benin

11. Bolivia, Plurinational State of

12. Bosnia and Herzegovina

13. Brazil

14. Brunei - Darussalam

15. Burkina Faso

16. Burundi

17. Bhutan

18. Vanuatu

19. Gabon

20. Haiti

21. Guyana

22. Gambia

23. Ghana

24. Guatemala

25. Guinea

26. Guinea-Bissau

27. Honduras

28. Grenada

29. Djibouti

30. Dominica

31. Dominican Republic

32. Zambia

33. Zimbabwe

34. Jordan

35. Iraq

36. Yemen

37. Cape Verde

38. Cambodia

39. Cameroon

40. Kenya

41. Kiribati

42. Colombia

43. Comoros

44. Congo

45. Costa Rica

46. ​​Ivory Coast

47. Lao People's Democratic Republic

48. Lesotho

49. Liberia

50. Liechtenstein

51. Mauritania

52. Madagascar

53. Malawi

54. Maldives

55. Marshall Islands

56. Micronesia, Federated States

57. Mozambique

58. Monaco

59. Myanmar

60. Nauru

61. Nepal

62. Niger

63. Nigeria

64. Nicaragua

65. United United Arab Emirates

66. Oman

67. Pakistan

68. Palau

69. Palestine, State

70. Panama

71. Papua New Guinea

72. Paraguay

73. Peru

74. Rwanda

75. Samoa

76. San Marino

77. Sao Tome and Principe

78. Swaziland

79. Seychelles

80. Senegal

81. Saint Vincent and the Grenadines

82. Saint Kitts and Nevis

83. Saint Lucia

84. Solomon Islands

85. Somalia

86. Sudan

87. Suriname

88. Sierra Leone

89. Tanzania, United Republic

90. Timor-Leste

91. Togo

92. Tonga

93. Trinidad and Tobago

94. Tuvalu

95. Tunisia

96. Uganda

97. Uruguay

98. Fiji

99. Central African Republic

100. Chad

101. Ecuador

102. Equatorial Guinea

103. El Salvador

104. Eritrea

105. Ethiopia

106. South Sudan

107. Jamaica

TERRITORIES

1. Anguilla

2. Virgin Islands, US

3. Gibraltar

4. Greenland

5. Guam

6. Macau

7 Comoros: Anjouan Island

8 Malaysia: Labuan Island

9. Montserrat

10. Curacao

11. Niue

12. Puerto Rico

13. Cook Islands

14. Turks and Caicos Islands

15. Separate administrative divisions of the United Kingdom of Great Britain and Northern Ireland: Isle of Man and Channel Islands (Guernsey, Jersey, Sark, Alderney)

16. Saint-Martin (Dutch part)

17. Taiwan (China)

18. Faroe Islands

Only 6 countries remain on the EU offshore blacklist: Guam, Namibia, American Samoa, Samoa, Palau, and Trinidad and Tobago. A few dozen more in gray - this means that they have a chance to get into both the "white" and the black list, depending on the implementation of EU requirements.

It is worth noting the following: a black list does not mean “forbidden”. This means that transactions with this state are considered with a little more care. In addition, the lists are constantly changing due to new bilateral agreements.

How to open a company in an offshore country

In order to open a company in an offshore country, we recommend that you follow the following algorithm:

1. The first step is to understand what you want to achieve with the help of a company in an offshore country: asset protection, search for new clients, agreements with a foreign partner, tax benefits;
2. Then you should seek advice from the specialists of our portal [email protected] and sign up for a free consultation on selecting a bank account (especially if you plan to run an active business or any activity where payment is required);
3. Depending on your goals and clients' location, we will advise you where to open an account and which offshore jurisdiction is right for you;
4. Determine the necessary additional services (open an account, hire a nominee service or);
5. Prepare documents:
   • Translated and certified copies of the passports of the beneficiary and directors;
   • Proof of residential address (utility bill);
6. If the documents are in order, then pay for company registration services using a card, bank transfer, WebMoney, Western Union, etc.
7. Wait for the company registration documents, send the originals of the documents indicated by us;
8. Start using a company in an offshore country.

What is an offshore zone?

An offshore zone is a territory or a state where it is legally allowed to register legal entities that have significant tax benefits or are completely exempt from taxes. Typically, such privileges are achieved through the fulfillment of certain conditions. In most cases, the main condition is the receipt of income by an organization outside a given territory or state. Offshore jurisdictions specialize in providing commercial and corporate services to non-resident companies, as well as investing offshore capital.

The term "offshore financial center" appeared in the 1980s. According to the definition of the IMF, such zones are all states whose financial sector is disproportionately large in relation to the population.

Offshore zone- a jurisdiction or a country that provides financial services to non-residents that are disproportionate to the size of the financial sector of its own economy. (A. Zorome, IMF working paper)

According to this definition, both the US and the UK should be included in the offshore centers. They are considered as such due to the large population, as well as membership in international organizations (OECD, G20, etc.).

Attitude towards offshore companies in the modern world

Offshore zones are often referred to as "tax havens". The opinions of experts about such jurisdictions are polar. Defenders argue that reputable offshore centers are legitimate and an important element of international trade. Due to the tax-free structure, they provide an opportunity to effectively manage risks and optimize cash flows. quite simple, and the cost of maintaining it and the degree of openness of data depend on the zone. Opponents believe that such formations are often used to conduct suspicious or illegal activities.

The international community has been paying close attention to offshore zones since 2000. At the G20 meeting held in April 2006, it was decided to take action against jurisdictions that refuse to cooperate (ie exchange information). The initiatives put forward by the IMF, FATF, OECD had a significant impact on offshore companies. Most of these jurisdictions have tightened their legislation on money laundering and other illegal activities. Today, the most "obedient" zone is Jersey. It implements 44 of the proposed 49 recommendations.

Specificity and development of offshore zones

The budget of offshore jurisdictions is filled not due to tax deductions, but due to annual fixed fees charged for renewing the registration of a company. Usually such financial centers are small states with small populations. And the annual fees are enough to ensure a high standard of living in the country. The influx of investors and business owners into the state allows creating jobs. The profits of companies that register and service non-resident legal entities are comparable to income from payment of registration fees.

The active development of such financial zones is caused by a constant increase in the tax burden in developed countries. According to experts, at the moment, up to half of the world's capital is located in low-tax or offshore jurisdictions. Today there are up to 70 financial offshore centers in the world. Another 100 states would not mind becoming such.

The word "offshore" by itself does not have a precise meaning. This term simply reflects the fact that most of these zones are in island nations. It is usually used to designate a jurisdiction that is outside the control of countries with a significant tax burden.

In the 80s-90s of the 20th century, the impression was that highly developed states did not have the desire or the necessary influence to control offshore companies. Perhaps this situation is explained by the fact that the richest people on the planet widely use these zones to preserve and increase their capital. This connivance led to an increase in the number of offshore companies due to the fact that many countries with a backward (mainly agricultural) economy decided to become such a “tax haven”. Now their main business is selling tax breaks.

Developed states are systematically trying to restrict their citizens from using offshore companies. It's the only thing they can do. But over several decades of their existence, offshore centers have created a perfect legislative framework which protects the interests of company owners. Therefore, attempts to introduce restrictions usually turn out to be ineffective. The situation was exacerbated by the advent of the Internet. The global network allows you to remotely trade software, media files, and sell various services. Therefore, citizens of highly developed countries can easily circumvent the restrictive measures of governments.

Classification of offshore zones

Offshore jurisdictions are quite diverse. They serve the diverse purposes of corporations and individual entrepreneurs. In the country of residence of the latter, such purposes are not always legal. But the anonymity provided by offshore companies allows saving the owners of such companies.

For people who have not previously encountered offshore companies, the word "offshore" can be intimidating. Thanks to the efforts of highly developed countries, it has a negative connotation and is sometimes even associated with terrorism, which is not true. There are many talented professionals who are able to create completely legal schemes for using companies registered offshore in almost any business area.

Offshore centers can be divided into 3 categories.

1. Classic offshore. Companies registered here are completely exempt from taxes on income received outside the state. Examples of classic zones are the Seychelles, Belize, Panama. Such centers do not require the maintenance and regular submission of reporting documents on finances. An added benefit is an increased level of privacy. The use of a nominee service further increases anonymity. The authorities of classic offshore companies do not make any attempts to take control of the activities of companies that are registered there. Centers of this type are usually characterized by political and economic stability. Classic offshore companies are constantly improving their own legislation to make it more attractive to entrepreneurs. Maximum attention is paid to the protection of capital, data confidentiality. It is also important that registering a company in a classic offshore zone is very simple.

2. Offshore with low taxation. Alternative title- offshore jurisdictions of high respectability. Compared to a zero rate on profits, a 10 percent deduction may seem significant. On the other hand, in some states income tax can be as high as 45%. And, by comparison, the 10 percent rate seems low. In such areas, companies are generally required to keep accounting records. Reporting is submitted annually. Some countries also require an audit. The register of shareholders and directors is kept, the data from it is in the public domain. But the use of a nominal service allows you to ensure confidentiality. Registration and maintenance of a company in such a zone is more expensive, but the reputation of a legal entity will be higher. The centers of "high prestige" are Gibraltar, Ireland, the Isle of Man, etc.

3. States that are not full-fledged offshore, but provide certain tax benefits to legal entities. The level of trust in the partners registered there is increased due to strict reporting requirements. As an example, we can cite the UK (in relation to LLP companies), Cyprus.

Offshore functions

International trade and investment. Offshores are channels for international trade and facilitate the promotion of financial flows. According to statistics, in the states that work closely with them, more money in the economy, and lending rates are lower. Offshores are becoming increasingly important as investment channels in risky markets. For example, over 44% of direct investment in the Indian economy came in 2011 from the island of Mauritius. A third of such investments came to Brazil also through offshore companies.

Registration of aircraft/ships. Another traditional use of offshore companies is the registration of aircraft and ships (in the Seychelles, Bermuda, Bahamas or Panama). For example, Pakistan Airlines re-registered its entire fleet in the Cayman Islands in 2003. This was necessary to obtain a loan for the purchase of 8 new Boeing-777s. An American bank refused to accept Pakistani-registered planes as collateral.

Insurance. Many offshore companies register insurance firms and companies operating in the reinsurance market. Bermuda is the leader in providing these services. Even the largest insurance companies in the world move their business to this zone in order to improve risk management and reduce the tax burden.

Banking. Traditionally, a number of offshore zones offer banking licenses. For example, the Bahamas has 301 licensed banks, and the Cayman Islands - 295. At the same time, BVI has only 7 such banks.

List of offshore zones

The list below is not exhaustive. It contains only the main offshore zones.

• Bahamas. Many ships are registered here. Previously, the Bahamas acted as the dominant offshore zone, but after gaining independence in the 1970s, they lost their top positions.
• Belize. It is characterized by maximum simplicity and ease of use among offshore jurisdictions.
• Bermuda. It is the leader of the offshore insurance market. Bermuda is also popular as a place of registration of ships.
• Virgin Islands. The largest number of non-resident firms is registered in this zone.
• Jersey. This is the most regulated jurisdiction.
• Cayman islands. This area plays significant role in the field of asset management.
• Mauritius. Used as an investment platform for the African, Asian and European markets.
• Seychelles. Here is one of the lowest costs of maintaining foreign companies. It is not surprising that as an offshore Seychelles enjoy well-deserved popularity among entrepreneurs from all over the world.
• Singapore. it international center management of financial assets, the place of concentration of hedge funds. Good for private banking.
• Panama. Significant maritime international center. Today, Panama is the second largest offshore and second only to the Virgin Islands in terms of the number of registered companies.

Offshore (from the English offshore - "out of the coast", "out of borders") is one of the most famous and effective methods tax planning. The basis of this method is the legislation of many countries, partially or completely exempting companies owned by foreigners from taxation.

Offshore zones - cities, regions and countries in which foreign (non-resident) credit institutions and other companies carry out transactions with non-residents (foreign individuals and legal entities) in a foreign currency for this country in the absence of intervention or minimal interference from the state that created the offshore zone .

An offshore company is a company that does not conduct business in the country of its registration, and the owners of these companies are non-residents of these countries. This is the requirement of those countries where the registration of such companies is allowed.

The term "offshore" first appeared in a newspaper on the East Coast of the United States in the late 1950s. It was about a financial institution that avoided government control through geographic selectivity: the company moved activities that the US government wanted to control and regulate to an area with a favorable tax climate.

An offshore zone is distinguished by the following features: tax benefits; anonymity of doing business; lack of currency control; minimum requirements regarding the existence of the company (holding meetings of shareholders, simplicity of financial reporting, etc.; the ability to conduct transactions in any currency; other benefits.

Conventionally, the countries where offshore companies are registered can be divided into two categories:

1. Small states, islands with a low level of development of their own economy, but with a fairly high political stability (Belize, Bahamas, British Virgin Islands, Vanuatu, Cayman Islands, etc.).

As a rule, these states do not impose any reporting requirements, the only requirement is to pay an annual fixed fee to the treasury. Usually in such countries there is no register of shareholders and directors, the confidentiality of owning such a company is very high.

2. Offshore zones of high respectability.

In such zones, offshore companies are required to provide financial statements and provide them with tangible tax benefits. On the part of the governments of these states, control is stricter than in countries of the first type, a register of directors and shareholders is maintained, but the prestige of companies is much higher. These are Cyprus, Hong Kong, Luxembourg, Switzerland, etc.

The concept of "offshore zone" should be distinguished from the concept of "free economic zone". If an offshore zone involves the conduct of activities by a company outside its territory, then in a free economic zone, benefits are provided precisely because companies conduct their activities there.

There is no single list of offshore zones; both the International Monetary Fund (IMF) and the central banks of various countries of the world are working to control offshore zones.

The most famous offshore zones include Panama, Gibraltar, Cyprus, the Bahamas, Ireland, Liechtenstein, and the US state of Delaware.

In Russia, the list of states and territories that provide a preferential tax regime and (or) do not provide for the disclosure and provision of information when conducting financial transactions (offshore zones) is approved by the Ministry of Finance.

By order of the Ministry of Finance dated November 13, 2007 (as amended on February 2, 2009), the following offshore zones were established: Anguilla; Principality of Andorra; Antigua and Barbuda; Aruba; Commonwealth of the Bahamas; Kingdom of Bahrain Belize; Bermuda; Brunei Darussalam; Republic of Vanuatu; British Virgin Islands; Gibraltar; Grenada; Commonwealth of Dominica; Republic of Cyprus; People's Republic of China: Hong Kong Special Administrative Region (Xianggang), Macau Special Administrative Region (Aomen); Comoros Union: Anjuan Island; Republic of Liberia; principality of Liechtenstein; Republic of Mauritius; Malaysia: Labuan Island; Republic of Maldives; the Republic of Malta; Republic of the Marshall Islands; principality of Monaco; Montserrat; Republic of Nauru; Netherlands Antilles; Republic of Niue; United Arab Emirates; the Cayman Islands; the Cook Islands; the Turks and Caicos Islands; Republic of Palau; Republic of Panama; Republic of Samoa; Republic of San Marino; Saint Vincent and the Grenadines; Saint Kitts and Nevis; Saint Lucia; Separate administrative units of the United Kingdom of Great Britain and Northern Ireland: the Isle of Man and the Channel Islands (the islands of Guernsey, Jersey, Sark, Alderney); Republic of Seychelles.

Evgeny Smirnov

# Business nuances

The most popular offshore companies in 2018–2019

The most reliable offshore zones include the Cayman Islands, Hong Kong, Singapore, Taiwan, Guernsey, Cyprus, the Isle of Man, and Panama.

Article navigation

• Extended interpretation
• What is a classic offshore
• Special Economic Zones
• Offshore jurisdictions of the world
• Are there offshore companies in Russia?
• conclusions

Economic terminology is rapidly following economic practice, which sometimes leads to discrepancies in some concepts. More recently, offshore was understood as a territory within which it is convenient to hide illegally acquired capital.

Now it turns out that these are not only poor island states with exotic names that have created a "tax haven", but also quite ordinary European countries or parts of them. Moreover, there is an opinion that Russia has its own offshore companies.

Is this true, or is it just that the interpretation of the term has become broader? What is called offshore today? How many are there on the planet? These and other questions are covered in the article.

Extended interpretation

The idea of ​​avoiding taxation by registering a business entity in a territory with a milder fiscal climate is quite old. It has been used by merchants and industrialists since ancient times, and formally the term "offshore" was coined in the 50s by American newspapers.

What is a classic offshore

The concept of offshore was finally formed after the collapse of the largest country in the world - british empire(which should not be confused with England and the United Kingdom). Until 1947, the sun never set over the territory of the kingdom. Many colonies, having achieved independence, did not begin to live richer: the lack of managerial personnel affected, and there were other reasons.

After some time, the idea arose that it was possible to replenish poor state budgets by registering an enterprise on the territory, simultaneously freeing them from taxes and the annoying attention of national fiscal authorities. Such an attractive tax and legal climate immediately attracted many entrepreneurs, both law-abiding and not so.

Since then, an opinion has been formed that, in the classical sense, offshore zones are islands in the equatorial belt of the planet, where they do not ask where businessmen got their money from. And where they are physically located, these entrepreneurs are also not interested in local authorities. It was only necessary to comply with local legislation, and it was very liberal.

Definition: offshore - a country or part of it, within which registered enterprises with foreign capital are offered special preferential terms.

Four features were originally understood as special conditions:

1. The best taxation system for business, that is, in fact, its absence. It is enough for a businessman to pay the registration fee.
2. Fast and extremely simple registration of legal documents for business.
3. Simplified reporting or lack of mandatory reporting requirements.
4. Guaranteed secrecy about the founders, their partners and transactions carried out by their banks.

Despite the obvious harm brought by offshore companies to national budgets, all developed countries have come to terms with their presence on the world economic map. It is possible that there were no formal reasons to put pressure on the young independent "banana republics". However, history knows more than one example when very strict measures (up to interventions) were applied to states that were militarily weak and for less serious reasons.

Be that as it may, classic offshore companies have been successfully operating for several decades. Schemes for working with them are simple to the point of primitiveness. A common method of selling goods to an offshore enterprise with a minimum profit: a reduced tax is paid in the exporting country. Then the same product is sold at the market price, and the tax is not paid at all, because the intermediary company is registered offshore. In this case, both "partners" belong to the same owner. But no one knows about this, because the offshore company keeps the secret of the identity of the beneficiary.

Businessmen and corrupt officials argued only about which island states were the most popular among them and for what reasons. However, this situation could not continue indefinitely.

Special Economic Zones

Nowadays, opening a business in a classic offshore has become unofficially considered a sign of dishonesty. Of course, this fact itself could theoretically be hidden, but only until the first invoice issued or the contract concluded - these documents indicate payment and other details. If the company registration address is the Virgin Islands or Bermuda, this is alarming in itself.

At the same time, the so-called free (or special) economic zones began to develop, in some respects corresponding to the concept of offshore, but not to the full extent. Their differences are that, firstly, taxes are paid there, although relatively low, and secondly, the identity of the beneficiary can be recognized.

In other words, only two of the four criteria for belonging to offshore territories remain: simplified registration and preferential taxation.

In addition, a special economic zone can only be a part of the state - it usually does not occupy its entire territory.

A good illustration is the Hong Kong SEZ. When Hong Kong came under Chinese jurisdiction, many analysts assumed that the PRC authorities would extend the country's common legislative norms to it. This did not happen for several reasons, in particular because there is an agreement with the UK on this subject. Hong Kong has a special economic zone that promotes high business activity. In the classical sense, this is not an offshore, but this unusual city is often referred to as such.

Special zones began to appear in different countries, including the most economically powerful. The main goal pursued by states during their creation is to stimulate the development of territories or sectors of the national economy, as well as to attract investment, internal and external. This factor also indicates the difference with the classic offshore.

The terminology has changed. Now, in fact, an offshore is called a SEZ. There was also a hybrid concept of offshore zones and their division on the basis of the privilege that an entrepreneur receives by registering an enterprise there:

• Low tax zones. Typically, firms (they are also often called offshore, although this is not entirely correct) are required to pay a registration fee and a single annual fee at a fiscal rate of 0%.
• Conditional offshore. It is possible to register an international company on their territories, and at the same time it is impossible to carry out direct commercial activities.
  It is also useful to understand the reason for the interest of states that open zones with special business conditions on their territory. By providing benefits, they lose part of the budget revenues, but in return they require compliance with certain conditions.
• Business transparency. An entrepreneur is obliged to keep accounting records and at the same time he cannot be guaranteed to remain incognito. If the state of which he is a resident sends a request to the offshore, he will receive a response about the identity of the beneficiary and other data of interest to law enforcement and tax authorities.

The enterprise must provide employment to the local population within the established boundaries, for example, to hire a secretary, accountant or lawyer - according to the capabilities and scale of the business.

These conditions (especially the first of them) significantly reduce the attractiveness of non-classical offshore companies in the eyes of those who want to do business in secret. However, such orders have a big plus: it increases the credibility of the company. Indeed, in itself the desire to reduce the tax burden is natural. If the entrepreneur does nothing illegal, then why shouldn't he take advantage of this opportunity?

Every year a list of the most reliable countries and a list of the best offshore companies operating in them are compiled. More on this later.

Offshore jurisdictions of the world

Each entrepreneur is looking for the best offshore in the world based on their goals.

Switzerland can be considered as such very conditionally, but certain signs are present. These are very low fiscal rates in some cantons, agreements with many states on the exclusion of double taxation and the maximum possible confidentiality of business information. However, if there are good reasons for suspicion of illegal activity, it will still be provided. Accounting is a must. An enterprise registered in Switzerland is unlikely to be suspected of being used for money laundering.

Other European states have created similar types of offshores on their territory: the Netherlands, Ireland, Luxembourg, Liechtenstein, Denmark, Malta, Estonia, etc. The UK is leaving the EU, but this country also has preferential zones. Orders in different states are different: tax rates range from 1 to 12%. At the same time, the authorities attract businessmen not only with them, but also with the general comfortable conditions created for entrepreneurial activity.

The Cayman Islands are considered a classic "terry" offshore. Foreign firms do not pay taxes here, and non-transparency of business is protected at the legislative level. The company is registered maximum per day. The result is 100,000 business entities, 500 banks, 800 insurance companies and 5,000 mutual funds. The problems of a small country have been solved, at least in terms of employment - everyone can find a job if they wish.

Approximately similar laws are used by the Marshall Islands, the Seychelles and the South American country of Belize. Offshore, registered here, allows you to develop business, in particular banking. Belizean law prohibits the disclosure of trade secrets, including those of beneficiaries.

The "Panama scandals" not so long ago glorified the country, previously known more thanks to the famous canal dug between two oceans. The state has not concluded an international agreement on combating financial fraud with the FATF and OECD organizations. It is difficult to judge how much this fact contributes to the popularity of Panama in the world rankings, but there are obviously enough people who want to register their company there.

Cypriot banks were hit hard during the massive crisis. Since the beginning of 2013, the Greek part of the island has been excluded from offshore by the Central Bank of Russia. Of the privileges, there was a reduced income tax rate and a simplified notification procedure. An end has been put to the disputes about whether Cyprus is an offshore zone or not.

Andorra is also unlikely to be classified as offshore today. The main advantage of this country lies in the right granted to foreign businessmen to own local enterprises completely. Taxes are attractive, but the rates are not zero: 10% on profits, 4% VAT.

A relatively respectable offshore company was created on Curacao, an island in the Caribbean. Profits are taxed at only 2%. Mandatory annual audit and reporting has been established.

The British Isles have different jurisdictions: Maine, Guernsey, Jersey, which are formally considered independent states that are members of the Commonwealth. The zones taken on them are oriented by specialization. For example, in Guernsey it is profitable to engage in electronic gambling business, in Maine it is convenient to register shipping companies, and Jersey is optimal for providing financial services.

England has its own special economic zones, Northern Ireland, Wales and Scotland- parts of the United Kingdom. English offshore companies for LLPs (Limited Liability Company - an approximate analogue of our LLC) are considered one of the most respectable, they combine legal transparency and tax flexibility.

As is probably already clear, today offshore zones are understood as territories that provide benefits to foreign businesses. In the US, these include Puerto Rico and the US Virgin Islands (states that America has full control of), as well as the states of Delaware and Wyoming. American taxation rules are very complex, but offshore advantages objectively exist.

Malaysia uses the island of Labuan as a special territory. It can also be considered offshore quite roughly - we are talking only about a favorable tax climate and a ban on disclosing the identities of business participants.

The reasons why Singapore is sometimes referred to as offshore is mainly due to the territorial principle of taxation. If a citizen of this country received income outside of its borders and did not bring it to his bank account, then he does not pay taxes.

Benefits exist and there are many. At the same time, Singapore has signed agreements on the automatic provision of information about beneficiaries with many countries, including Russia. Reporting and accounting are required. Singapore is not an offshore, it is just a country in which it is profitable to do business.

A separate line is the United Arab Emirates, being a state with a federal structure and general administration. There are no taxes from individuals as such in the UAE, which gives some reason to equate this country with an offshore. Numerous benefits speak in favor of this opinion.

In the Emirates there are zones with special economic conditions: Dubai and Ras al Khaimah. The main advantages of registering enterprises here are political stability, developed infrastructure and an efficient banking sector. The movement of capital is practically unlimited.

There are also disadvantages. The very high cost of the registration procedure, the difficulty in obtaining ownership of real estate and strict licensing. There are also complaints about some other bureaucratic problems in the UAE. Reviews are generally positive, but local orders are not always clear to Europeans.

In the classical sense, the Emirates cannot be considered offshore. It is impossible to launder or hide money in the country.

Zones of preferential taxation have also been created in the post-Soviet countries. Against the backdrop of a constant struggle against the leakage of investments, in the Russian Federation, the Republic of Belarus and other former republics of the USSR, legislative acts are being adopted to prevent the outflow of capital to uncontrolled territories. As for the SEZs, which were opened by Kazakhstan, Armenia, Azerbaijan and some other countries, they do not correspond to most of the signs of an offshore.

The purpose of special economic zones is the development of individual regions and industries. For example, a target industrial, tourist or IT offshore is being created. Georgia followed this path, at the same time freeing foreign companies from taxes (including on property) and allowing you to change the profile of activity within the limits of legality.

Are there offshore companies in Russia?

In the original sense of the term, there are no offshore companies in Russia. The country has special administrative regions (SAR). The rules established in them provide for benefits for enterprises registered in their territory.

Under Russian law, local authorities are given the right to set their own taxes and fees. If a legal entity does not conduct economic activities within the boundaries of the administrative unit that has created an internal "offshore zone", it is exempted from the fiscal burden. In 2019, the list of "offshores" in Russia contains 25 names, divided by their focus.

In addition to the SAR, on the basis of the Decree of 14.03.04 in the Republic of Kalmykia for some categories of entrepreneurs, the income tax rate was reduced to 5%.

The desire to develop the Far East and attract foreign capital to this region is expressed in the adoption by the State Duma and the approval by the Federation Council of a bill on the creation of special administrative regions on Russky Island and in Kaliningrad, positioned mainly for foreign investors.

Approximately on the same legal basis other internal territories of the Russian Federation provide tax benefits. However, even today, many entrepreneurs prefer to work with foreign special economic zones (especially if it is an IT offshore), registering their companies in them, located, for example, in Yekaterinburg.

In the Russian SAR, businessmen who have registered their enterprises on their territory are provided, in addition to a reduced income tax rate, additional benefits:

• Reducing the transport fee.
• Exemption from taxes on land resources and property (for a period of up to 10 years), if it was acquired for economic and production activities.
• The right to apply accelerated depreciation of fixed assets.
• Reduced coefficients for calculating insurance premiums (until 2019).

conclusions

Registering an enterprise in a classic offshore nowadays leads to a certain “toxicity” of the business and a decrease in the level of trust.