Recently, scandals related to offshore zones have been heard, but not everyone understands the exact meaning of the term. Amounts held in offshore zones amount to tens of trillions of US dollars.

The history of the offshore zones

The emergence of this phenomenon is associated with events that occurred at the junction of the 18th and 19th centuries. First of all, this is the final formation of a separate, independent legal entity - the subject of legal, financial and economic relations. Secondly, it is the legislative attitude to resident companies: such as taxes, fees, etc. The third and final reason is the emergence of bank secrecy.

For example, Swiss banks back in 1713 decided not to tell anyone about the balances of their customers' accounts. And it was in Swiss banks that the citizens of European countries kept their savings. And now the goal of creating offshore zones is to attract business in the country.

Also in the 19th century it was decided to separate the company from an individual, thereby the company became an independent person from its owner. Creditors in this case could not claim the personal property of the owners. The company repaid the debt only from its own assets owned by the legal entity.

Great Britain in the 19th century adopted the principles of company location. An English court decided that the residence of the company would be considered the country where the company is centrally managed by the directors who live in this country.

That is, a company can be registered in any country, but if the business management resides in another country. Also, in the territory of company registration, no activity is carried out. In this case, the company is considered unattainable to the tax authorities.

Already in the second half of the 20th century, one of the British newspapers gave the name to this phenomenon. Offshore was the activity of one of the companies that placed assets abroad.

Currently, Russian business has a legal opportunity to evade taxes (tax optimization) in offshore zones.

Why are there offshore companies now?

Now offshore companies are used for legal transactions requiring confidentiality in order to save on taxes.

What areas of business are most often registered in offshore zones?

• A large number of insurance companies are registered in offshore zones;
• Bookmakers and casinos receive licenses for activities in other countries;
• Registration of air and sea transport;
• Some commercial banks obtain licenses in offshore zones.

What functions can an offshore zone perform?

The first is savings. Many entrepreneurs open offshore accounts to save personal funds. Savings in foreign banks also help to hide from taxation.

Doing Business. It is easier for a company registered abroad to keep documents, reduce taxes, and increase the amount of investments received.

Import.Purchase for an offshore company makes it possible not to pay VAT and customs fees, then the goods are entered into the JV authorized fund.

Cons of offshore zones

Despite the obvious advantages, design in other countries has its drawbacks. International legal units treat such companies with suspicion and special attention. An entrepreneur needs to come to terms with the fact that the image of the company will have a slight shade of negative.

Perhaps not all businessmen will want to cooperate with a company registered in offshore. Also, companies registered in other countries do not lend to Russian banks.

Offshore Classification

Offshore zones are divided into three groups, they differ in the tax regime:

Classic - the states are not a high level of development, but a fairly stable political and economic situation. In these countries, taxes are not required and government does not interfere in any way with the company. These offshore zones have the highest degree of confidentiality, which is why they are most distrusted by international firms. Classic zones are also quite remote from the Russian Federation, which affects costs.

Respectable Offshore - require a registered business to provide financial statements. The company’s activities are tightly controlled. Companies registered in respectable offshore zones pay taxes, but at a reduced rate. The prestige of companies registered in the prestigious zone is much higher than the companies from the first group.

Other or non-standard zones - These are countries that cannot be considered offshore in the full sense of the word.They get offshore status because of tax benefits, while the state puts forward the same requirements for foreign companies as for residents. In fact, these zones are not related to offshore, therefore, the company will not be biased.

So what is offshore and why is it needed?

This is a country with favorable business conditions for foreign companies. The offshore zone creates a preferential corridor for foreign business, which subsequently helps the company free itself (reduce) from paying taxes (tax optimization). An account that is opened in a country other than the registration of a company or individual will be considered offshore. Registration of business in other countries is a completely legal procedure. Which facilitates the conduct of business with lightweight documentation and the absence of taxes and fees.