Why Incorporate an Offshore Company?

Most people have heard about offshore companies and offshore bank accounts. However, very few are familiar with what these terms really mean. In this article, we will attempt to introduce some of the key concepts in the context of the offshore corprate services industry. First and foremost, the term Offshore relates to managing, registering, conducting, or operating in a foreign country, typically with legal, financial and tax benefits.

Offshore Company is then a company incorporated outside the country of its main business activities and/or the place of residence of its principals, namely directors, shareholders and beneficial owners. Again, this is usually done to attain certain legal, financial or tax benefits. As most other companies, an offshore company may enter into contracts, purchase property, goods and services, open bank accounts, etc. A typical offshore company is also known as an international business company (or an IBC). This type of entity does NOT pay taxes in its home jurisdiction, however must also carry out ALL its business activities outside of the country of registration. A typical IBC would be a company incorporated in Belize, Seychelles or Anguilla.

Offshore incorporation can be carried out in a number of jurisdictions. The main decision criteria are price, reputation of the jurisdiction and time to incorporate. For instance, an offshore BVI company is the most popular offshore entity, highly regarded by the incorporators and business owners alike. An alternative would be a Seychelles company, which is the most affordable among popular offshore jurisdictions. Below, we include some other important considerations for incorporating offshore.


Most offshore companies pay no taxes on the income derived from offshore operations.

Ease of Reporting

The reporting and compliance offshore is limited in comparison to onshore jurisdictions. Most offshore ibc companies would not require annual reports and accounts filings in the jurisdiction of the company formation.. Instead an annual flat government fee is charged.

Operating Costs and Fees

With limited reporting requirements, offshore companies generally pay lower overall maintenance fees as the cost of accounts preparation and auditing is often insignificant. Registered office fees are considerably lower than buying or renting premises in onshore jurisdictions.


Most offshore registrars do not disclose information about the directors, shareholders and beneficiaries of an offshore ibc company. Thus, the underlying principal may anonymously carry out transactions in the name of an offshore corporation, which is a separate legal entity.

Asset protection

In the international business environment, it is customary that the laws of the jurisdiction of incorporation are applied, rather than those where the company is being sued. Many offshore jurisdictions are known for their favourable asset protection laws.

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