Offshore Formation – A Guide To Taxation Benefits and Tax Havens

Offshore formation is the act of forming a company in another location. It does not confer trading rights and can allow you to open a bank account in another country and ensure that no one else uses the name of your company. There can be additional benefits that include tax relief, but these will vary from jurisdiction to jurisdiction.


The vast majority of business owners choose to form an offshore formation to take advantage of the generous tax breaks which overseas jurisdictions offer. Tax which is liable to be paid in these countries and regions is typically much lower than the equivalent UK obligations. Many countries provide complete tax immunity for their offshore companies and also allow company directors to enjoy this facility as well on their business earnings. Over time, this can provide substantial savings for your business. Countries where businesses can befit from lower tax rates are normally considered tax havens.

What is a Tax Haven

A tax haven can be referred to as a state, country or territory where tax rates are levied at a lower rate.
Businesses or individuals can find it very attractive to set up a offshore formation in such havens where they will benefit from reduced or nil taxation levels. You will that there is competition among governments in different countries. There are many different jurisdictions that are havens for different types of taxes, and for different categories of people and companies.

Some sovereign or self-governing states under international law can possess unlimited power to enact tax laws affecting their territories or country unless this has been previously limited by previous international treaties.

The term tax haven has many definitions.  Geoffrey Colin Powell (former economic adviser to Jersey) has a tax haven defined as: “What … identifies an area as a tax haven is the existence of a composite tax structure established deliberately to take advantage of, and exploit, a worldwide demand for opportunities to engage in tax avoidance.” The Economist points out that this definition would still exclude a number of jurisdictions traditionally thought of as tax havens.
Other suggestions are that a tax haven is any country which modifies its tax laws to attract foreign capital.

Another definition is that the primary feature of a tax haven is that its laws and other measures be used by any company or individual wishing to evade or avoid the tax laws or regulations of other jurisdictions.

Key Features of a Tax Haven

  • lack of transparency in the operation of legislative, legal or administrative provisions;
  • no requirement for a substantive local presence;
  • nil or nominal taxes;
  • lack of effective exchange of tax information with foreign tax authorities;
  • self-promotion as an offshore financial center.

Another major benefit of setting up an offshore formation is Asset protection  Because of the strong privacy legislation in place in many of these offshore financial centres, it is not possible for a third party to gain access to information about offshore accounts, investments or trusts.

Finding a recognised expert in UK and international tax planning can be both difficult and not to mention expensive. It is also hard to find high street accounts with specialist knowledge of offshore tax planning. Offshore Formations 247 works in partnership with the advisers at Wealth Protection Report offering you a simple, cost effective service that gives members access to fast online tax planning covering both UK and offshore tax planning.

What do I need for Offshore Formation

The Offshore Formation process is very simple though there are some application procedures. To comply with the various anti-terrorism, anti-laundering and anti-tax evasion laws, you will need proof of identity and proof of residence.  Here at offshore formations it is our mission to  assist our clients in getting their companies incorporated in the quickest possible timeframe, in the most professional manner. For some jurisdictions, company packages can be delivered in just 24 hours. Our agents are happy to discuss the start up procedure with you and also provide more information on the other services that we provide.

Things to Consider

Offshore formation really is a great option for business people in the UK to consider. Sometimes trading is not the prime purpose of forming an offshore company. Because of local investment restrictions or risk of actions from creditors, directors may wish to keep their identities secret.
The benefits of minimal tax rates that offshore formations can benefit from makes expanding offshore an attractive and profitable option. Also the prospect of not losing all of the income earned in comparison to other countries where the government would levy a tax on the income is one reason why opening offshore branches can be a good option.

Contact us today at offshore formations 247 and our specialist team will be more than happy to assist in the offshore formation process.