Offshore Company Formation Guide For Tax Reduction

By Author: Biz Formation
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One thing that is permanent in this world is taxes and more taxes. That is the reason why you can’t blame the top 500 Fortune Companies to use offshore companies to somehow reduce the tax they are forced to pay in the countries where they operate.

Tax Reduction is Mainstream

A report by two public advocacy groups in the United States revealed that as of 2013, over 70 per cent of Fortune 500 companies maintained offshore companies in tax haven countries just to reduce the tax they are required to pay to the U.S. Treasury.

The most popular tax haven countries are the Cayman Islands, and the city state of Hong Kong. So, if you are hammered with humongous taxes that eat up your otherwise large largesse, you must learn how an Offshore Company Formation
can lessen your taxes.

Using an Offshore Company Registration to Reduce Taxes

There are several ways you can use your offshore company to lessen the taxes the government requires you to pay. Here are some of the most popular methods.

1. Through International ...
... Trading
Import and export are usually made more tax efficient if you carry it out through your offshore company. This company will function as a mediator between a seller and a buyer of products or items in at least two separate countries.

This allows you to accumulate your profit offshore where taxes are more lenient than your original country of residence. In financial parlance, it is called Transfer-Pricing.

2. Operating your Offshore Company Like a Holding Company
An offshore holding company can take charge of dividend receipts from several subsidiaries. This process enables a business to centralize its resources and maximize tax benefits.

If you carefully use tax treaties, you will obtain the best result, in terms of reduced taxes. You can use different locations, offshore and onshore, with your holding company funding your subsidiary companies in a tax-efficient way.

3. Using Your Offshore Company as an Investment Company
An onshore company can invest in stocks, commodities, property and shares. So can your offshore company. You can use your company to invest and accumulate wealth.

The big difference is that your offshore company is not required to pay tax on its profits, nor accumulated taxes if it passes on to its beneficiary. In many countries, a person or a business is levied a withholding tax on income. But if you will wisely use double–tax treaties, you can reduce or even eliminate taxes levied on your investments.

There are other ways by which you can use your offshore companies to reduce your taxes. But the three ways mentioned above are some of the most popular uses of offshore companies for the purpose of tax reduction.

For details of offshore company registration, please visit bizformation.org for details.

Source:
Bizformation.org
Hong Kong & offshore company formation professional
Your one-stop company registration & services provider
http://www.bizformation.org