Offshore is a tax planning method in which the legislation of the countries establishes full or partial tax exemption for enterprises owned by foreign persons. The state or part of it, where such a provision is in force for non-resident companies, is called an offshore zone.
Offshore zones are characterized by a simplified and accelerated process of registration of foreign persons, during which a symbolic amount of tax is paid to the country's budget. Non-residents are provided with reduced rates for the payment of income tax and personal income tax. Offshore companies are exempted from state currency control, so they can be sure of the confidentiality of their activities, which is implemented by maintaining closed registers of shareholders and directors and there is no need to submit financial statements.
In order to protect national business, offshore companies are banned from doing business within the offshore zone. The income of an offshore zone is represented by fees for registration and re-registration, tax revenues, expenses for the maintenance of representative offices of offshore companies. The latter consist of: renting premises, communications, electricity, payment for food and accommodation, transport, leisure, wages and a number of social benefits and payments.
The representative office of an offshore company in an offshore zone is called a secretarial office. Quite often, a requirement is established for the employment of local residents in them in order to solve the problem of employment. Customs duties are not imposed on vehicles, equipment and materials imported for the needs of the company. Up to several tens of thousands of non-presidential firms can be registered in the offshore zone. As a rule, these are medium and large companies. For small businesses, registration and maintenance of an offshore company is quite expensive, so it is more profitable for them to engage in activities on the territory of their country.
All existing offshore zones can be conditionally divided into three groups: classic offshore, when companies are exempt from all taxes and reporting; low tax zones; other offshores, in which companies receive certain advantages in terms of doing business and taxation.
