Offshore companies

Offshore means "operating or located in a foreign country" (Merriam-Webster Dictionary). This term initially was used by English lawyers in description of companies which are established under the laws of foreign countries (other than the United Kingdom). Onshore is the antonym of the word offshore. These terms are quite often used by lawyers and consultants but are very seldom used in national legislation. For example, from the point of view of English legislation a company registered on England, Wales or Scotland is a resident legal entity (onshore company — in professional jargon), and the company registered in any other jurisdiction (USA, Germany, Cyprus, Bahamas, etc.) – is a non-resident legal entity (offshore company).

Thus, offshore business is a — is business run by an international group of companies some divisions off which are located in the countries giving tax, currency, investment and other benefits under definite terms. These countries are traditionally called “tax heavens”. Richard Gordon in his analytical essay в своем аналитическом обозрении "Tax havens and their use by tax-payers in the USA" ordered by Internal Revenue Service USA (IRS) defined “tax heaven” in the following way: "Tax heaven is any country having zero or low tax rates for all or some parts of income and offering confidentiality of bank or commercial data".

In November 1981 Roscoe L. Egger a high authority of IRS USA listed 30 tax heavens:
Antigua, Austria, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Guernsey, Jersey and Sark, Gibraltar, Hong Kong, Grenada, Cayman Islands, Costa Rica, Liberia, Liechtenstein, Luxembourg, Monaco, Nauru, Netherlands, Netherlands Antilles, New Hebrides (now Vanuatu), Isle of Man, the island of Turks and Keykos, Panama, Singapore, St. Kitts and Nevis, St. Vincent, Switzerland.

During the latest 15 years the number of tax heavens has greatly increased and it will take much time to recite them all. Below some new tax heavens are listed.

  • In Europe: Andorra, Cyprus, Ireland, Madeira, Malta,
  • In the East: Bahrain, UAE. In Africa: Mauritius, Seychelles, Zanzibar.
  • In the Pacific Ocean: Cook Islands, Labuan, Marshall Islands, Samoa.
  • Central and South America: Uruguay.

Doing business using International groups of companies is an opportunity to legally decrease tax burden, increase the degree of investments protection, to work in a favorable currency regime.

Using off-shore business is especially advantageous for businessmen from former Eastern bloc. These countries are characterized by a high investment risk because of economic, political, social and legal instability which limit foreign investments which are necessary for developing of industry, trade and financial sphere. State budget deficit leads to foreign loans. Creditors set their own rules in the world credit markets, and countries accepting foreign investments compete with each other offering additional guarantees to get these loans.