Off Shore Companies
Off shore companies are
those companies which are set outside the jurisdiction of a country. There are
number of purposes for setting an off shore company. Purposes of off shore companies have been
explained below
1. Tax Relief
Offshore
companies are normally set up in tax heaven, where there is either no tax or
very low tax rate on income. Therefore some counties encourage or allow
establishing of off shore companies by keeping the tax rate nil or very low.
Thus investment is attracted by providing tax relief to the investors.
2. Concealment of identity
Off
shore companies may be used to conceal the identity of the investors. The
information of off shore companies is normally not available to general public.
Moreover, these companies are operated by paid director, thus the actual
beneficiaries (shareholder or owner) are not known to the world.
3. Concealment Source of Income
Off
company May works as a middle company, first money are transferred to this
company and then money transferred to some other business or for personal use.
Therefore off shore company may be used to conceal the original source of
income.
4. Black Money Utilization
Limited
information are required to set up an off shore companies, similarly limited
information available about off shore companies to the world, Thus black money
may be invested in these off shore companies and later on this money is
transferred back as white money earned by the off shore company.
5. Easy to Set Up.
There
are limited legal formalities for setting up off shore companies, while setting
a normal corporate business or company is an extensive process and involves
many legal formalities and disclosure are required.
