Tax Free Havens
Tax free havens or offshore havens are countries which are known to have very low or no tax schemes in place to attract foreign investments. Tax free havens are also know for providing clients and registered companies with privacy and secrecy. There are many tax free havens in the world today which provides the opportunity for reducing tax liabilities as well. A tax free haven is also known as an offshore tax haven in many parts. Many persons and organizations have tried to make tax free havens look like shady places or discredit them but the tax free havens of the world are indeed countries with strict rules and legislation in place.
The offshore havens which do not implement any type of local taxation on foreign earned income are known as the pure tax havens or zero tax havens and these countries include Panama, Anguilla, Nevis, Dominica, Seychelles, Belize and St Kitts among many others. Other tax havens are simply considered low tax havens and these are the tax free haven which imposes local taxation on foreign earned incomes but at very low rates. Examples of low tax havens include Barbados, Cyprus and Hong Kong.
It is very easy to incorporate a company in an offshore haven which is most often referred to as an offshore company. Only one shareholder and one director are needed to establish an offshore company in most tax free havens. Company incorporation can be completed in one working day in most tax free havens. Offshore companies registered in an offshore tax haven is a legal company and this corporation can do business anywhere in the world but most offshore jurisdictions restrict offshore companies from carrying out operations in the country of incorporation. Perhaps the biggest advantage of incorporating a corporation as offshore in a tax free haven is the tax savings to be enjoyed by that company.
Offshore companies pay no local corporate tax ad income tax if registered in an offshore haven. No incomes earned abroad by the company will be locally taxed. Most tax free havens have no withholding tax, capital gains tax or estate tax in place additionally these offshore corporations also benefit from no Stamp Duty. Exempt trusts, offshore foundations and offshore Limited Liability Companies as well as exempt partnerships also benefits from the lack of taxes in tax free havens.
Apart from no taxes offshore business corporations and entities benefits from privacy and secrecy clauses in offshore legislation in offshore havens. The offshore havens normally prohibit information about offshore companies, offshore bank accounts and offshore entities to become public information. For starters when registering these offshore entities information such as the names of the company shareholders and directors and the names of the beneficiaries to offshore trusts and foundations is not made part of public records. For added privacy of company owners some tax free havens allows persons to form companies using nominee directors and nominee shareholders.
Offshore legislation in tax havens makes it illegal for persons to divulge information concerning offshore companies and offshore entities to members of the public unless permission has been given or in cases where these entities become involved in criminal activities and a court order has been handed out. The financial statements of offshore companies remain private to the company in many tax free havens as legislation does not obligate that these be filed with local tax authorities.
Many persons turn to offshore havens for asset protection. By placing assets in offshore bank accounts, offshore companies, offshore trusts and foundations in tax free havens makes them safe from third parties. Legislation in tax free havens makes assets of offshore entities safe from foreign court rulings and foreign legislation.
The tax free offshore havens go to long lengths to ensure that the services being offered are up to standard. Many offshore tax havens have established bodies which regulate the provision of offshore services and ensure that the process of offshore registration is followed. These bodies are known as financial commissions, International Business authorities or financial intelligence units. The offshore havens of the world are known for modern legislation.