How to lower your tax and protect your assets with an offshore company
By: Sibin Sebastian
Tags: Tax Free, Taxes, Investment, Finance, Offshore Company

After amassing wealth from years of hard work, it would be unfair for someone to come and take that away from you. It is, therefore, important that you are able to protect yourself from risks associated with losing money to taxation or related lawsuits, and one such way is by incorporating your company offshore.

What is an offshore company?

An offshore company is any company set up in a different country from that of its stakeholders for a number of reasons such as financial safety and privacy. Most people, at the mention of an offshore company, believe that offshore companies are for people looking to hide their illegal activities. However, this is not the case.

Benefits of incorporating offshore:

Tax Reduction

An offshore company is the best option for someone looking to reduce their tax. When an offshore company is structured correctly, it can reduce one’s tax amount to almost zero, especially if the company does not do any business, and the profits are not being drawn from the country of incorporation.

For example, the Hong Kong territorial taxation systems exempt profits drawn from business activities outside its territory from profits tax.

Asset Protection

Other than the tax advantages, incorporating an offshore business provides an avenue for wealth protection. An offshore trust will not only protect your assets from various entities and even the government, but it will also allow you to maintain control over the management of your assets while remaining independent from it. Some of the offshore destinations best for asset protection include Seychelles, Belize, and BVI, etc.

Cost-effective and simpler operations

Offshore companies not only get access to simple set-up processes but also flexible regulations after being fully incorporated. For example, most offshore destinations will not require offshore companies to submit any financial accounts or annual reports as long as they do not do any business within that jurisdiction. This helps reduce the budget on certain aspects such as record keeping and accounting.

Confidentiality and anonymity

Most offshore destinations will keep company information private since they do not disclose the company shareholders, beneficial owners, and the company directors to the public. Instead, the company is run by a nominee director, who will be in charge of all the company transactions and keeping company information from any public documentation.

Is it legal?

Unlike the media portrays it, there is nothing complex or illegal about the offshore world, and there is so much to it. Therefore, forget all the fear-mongering and misconceptions that were born out of the Panama papers and Hollywood’s portrayal of the offshore world being full of shady and illegal deals.

Offshore companies are created by law-abiding and honest citizens looking to take their businesses where they are treated best, and so should you.

How an offshore can help you reduce tax legally ?

Choosing the business tax rate

Moving a business to another country is no easy feat, but it is possible, and depending on the destination you choose, your business could end up paying 0 taxes.

Choosing a personal tax rate

You can also choose to move your life abroad, where you could be exempted from taxes. It is best that you first start by identifying the ideal jurisdiction for you.

Getting an offshore tax advisor

International tax law is not something that you want to be making mistakes on unless you want to face jail time or pilling up huge fines.

Choosing offshore destinations

You might not know, but there are countries out there competing for your business. However, most people will believe that their country is the best place to invest and do business and that no country is better.

However, dozens of countries out there are after successful people like you and are even willing to offer you efficient systems, fewer regulations, and lower tax rates, among other benefits. Some of these countries will take a small portion of your profits but will have set up tax regimes that will keep your share of the profits much larger and taxes much lower.

Choosing the tax rate

Choosing to stay put in a country with high tax rates means that you will be sending a huge chunk of your money into the taxman’s pockets. It is even highly likely that your government is succeeding is because of the high taxes they regularly draw from your income.

Interestingly enough, you have the power to choose the tax rate that should apply to you. You can opt for a smaller tax-rate and other benefits or even zero taxes. For example, you can choose to incorporate in Seychelles and BVI for lower taxes and other benefits or incorporate in Belize, where you will pay 0% in taxes.

Going where you are treated best means that you have the power to choose the tax rate that is better for you. Allowing you to take control of your life.

However, it is important that you keep off from strategies that will only cause you pain rather than lowering your taxes. There is a huge difference between choosing your tax rate, which is legal to skirting the taxman, which is illegal