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Tax haven companies are companies registered in tax havens mainly for offshore purposes. Most of the world’s tax havens are also offshore financial centers. Offshore company incorporation is just one of many services offered by tax havens. Some of the more developed and respected offshore tax havens which offer the incorporation of offshore companies are the British Virgin Islands, Dominica, Anguilla, Seychelles, Nevis, Dubai, Delaware, Mauritius, Vanuatu, Singapore, Hong Kong, the Republic of Panama, Cayman Islands and Belize among other jurisdictions. These offshore jurisdictions are also known for providing offshore banking, offshore foundation and trust formation and investment fund management among other services.
A tax haven company is commonly known as an International Business Company (IBC) or an offshore company. Normally offshore companies are not allowed to do business in the country of incorporation but there are offshore tax havens which permits business operation within the jurisdiction. A tax haven company is very easy to incorporate. For the incorporation of most tax haven companies there is no need for a client to travel to the jurisdiction as there are registered agents who specialize in working on behalf of clients to register companies. In fact according to the tax haven company legislation of many offshore jurisdictions a tax haven company cannot be registered without a registered agent.
Most of the tax haven corporations available are tax free companies. These companies are allowed to operate tax free as long as they have no business undertakings in the jurisdiction. Offshore jurisdictions such as the Republic of Panama allow offshore business companies to do business both in and out of the country. The earnings which offshore business corporations accumulate outside of most offshore jurisdictions are not taxed. These earnings include profits, interest gained and dividends.
In the low tax havens of Barbados, Gibraltar and Singapore tax havens companies are taxed on their global incomes. Tax havens companies in the offshore jurisdiction of Barbados are taxed on their annual profits regardless of where this is earned. Annual profits for a Barbados offshore corporation are charged at rates between 1 and 2.5%. Tax havens companies in the offshore jurisdiction of Singapore also pay taxes on their global income at the low rate of 18%. In Gibraltar, offshore companies pay a flat tax rate of 10%.
The tax havens corporations which are incorporated in pure tax havens will pay no capital gains tax, inheritance tax, estate tax, gift tax or withholding tax. In the tax havens offshore companies spay no Stamp Duty on transferred carried out on behalf of offshore companies. It is important to know that offshore companies incorporated in the tax havens must pay an annual license fee to the government in the different tax havens. The license fee will depend on the tax haven of incorporation; whereas some offshore havens have a fixed fee, other have fees determined by the amount of authorized share capital of the offshore company.
Incorporating an offshore company in an off shore tax haven is not a difficult task. The first step to incorporating is employing a registered agent to work on behalf of the beneficial owners. In many of the offshore jurisdictions around the world a registered agent is mandatory by law. To incorporate a Memorandum of Association and Articles of Association must be completed (the names of the documents may vary in the different jurisdiction but the information which goes into them is basically the same). Information to be entered in the incorporation documents are:
Tax havens companies can be incorporated within hours in the offshore jurisdiction of Dominica, Belize, Anguilla, Panama and Nevis, while it may take longer in other jurisdictions.
Tax haven corporations in some offshore jurisdictions are not obligated to disclose the names of the beneficial owners of the companies. A tax haven company can be incorporated with a total of one shareholder and one director who can be the same person. In the offshore jurisdiction of Panama three (3) directors are needed for incorporation. The offshore companies’ legislation of most tax havens allows for companies to be incorporated using nominee shareholders and directors.
In the offshore tax havens, privacy is a very important factor. The legislation which regulates tax havens companies in some jurisdictions provides privacy for tax havens corporations. In Belize, Nevis, Anguilla and Dominica for example, agents and other persons cannot divulge tax haven corporation’s information according to the laws this is a criminal offense punishable by prison terms and monetary fines. The financial statements of tax havens companies in many offshore tax havens are confidential. This is not filed with government authorities and is prepared only for the benefit of the tax haven company shareholders. In the low tax haven of Barbados where tax havens companies pay taxes the financial statements must be presented to the tax authorities.
Tax haven companies have many uses. Today there are widely used for engaging in business especially global trading. Once registered in the tax havens offshore business companies are legal entities and can be used for trading and can make investments anywhere in the world. Tax haven companies allow for the reduction of tax liability. Since most tax haven companies have no corporate taxes they allow the company to save on taxes. Tax haven companies are the ideal vehicles to use for offshore asset protection. By putting capital and other assets into a tax haven company they are safe from third party claims and other prying hands. Offshore tax havens are very confidential and keep the business of tax haven companies very safe.
Incorporating a tax haven company is a very good move in these economic times. This will ensure that assets are well protected in the stable economies of offshore tax havens which are at various locations around the world, and will guarantee growth (by saving on taxes).