Not that it doesn’t happen, but there is a lot more involved in offshore company formation in Mauritius than tax evasion and money laundering. Many businesses are going global and setting up their offices across borders and setting up offshore companies.
A business entity that is legally registered outside the country is called an offshore company. For example, global businesses like Apple, Google, and Starbucks have multiple registered offshore companies to carry on global trading and reduce tax obligations.
Advantages of Setting Up an Offshore Company
Listed below are some of the benefits of setting up an offshore company:
Personal and corporate income tax rates can be quite high in some countries. Businessmen strive to find practical solutions to optimize their tax obligations rather than paying huge amounts in taxes. As said earlier, not all offshore companies do money laundering or evade taxes. It is actually a means to legally reduce their payable domestic and international taxes.
Business Expansion at International Level
Some countries have a lengthy and complicated process associated with company registration. When you set up an offshore company you open a bank account for the same as well so you can conduct business operations across the globe. Online businesses, particularly, can benefit from setting up an offshore company as they are no inventories or supplies involved in it.
Furthermore, the process of setting up an offshore company in Mauritius is quick and easy. There are not a lot of legalities or complicated procedures involved with it. For example, if you are running a business in Cambodia, it may not be an easy feat to transfer funds outside the country. So, there is an option to register an offshore company in Singapore and open a corporate bank account so that you can easily pay the Asian supplier.
Similarly, if you are taking your business to Europe, and you live in a place like Cambodia, you can open a bank account in Germany to receive funds from the customers there. This way, you can both grow your business without restricting oneself to the difficult domestic limitations.
Lower Business Costs
Another benefit of forming offshore companies is that it usually results in lower business operating costs. The complete registration process includes company registration, registered address, corporate bank account, and company secretary. You might require nominee director or nominee shareholder services along with mail forwarding services.
Some countries, like Indonesia and Thailand, need you to hire locals as directors and have local shareholders too. The reason for this being that foreign investment licenses take months for approval. This leads to substantial cost-saving.
Protection of Assets
This may not apply to all. However, having an offshore company may help you when you are in need of finances, for example, divorce or a lawsuit. Your offshore company might assist you in protecting your wealth in such circumstances. The law shall consider your assets held by the offshore company separately. You are held liable as an individual by the law in most divorces or lawsuits.
When you transfer your assets to the offshore holding company, you will be able to protect them. Along with that, many offshore jurisdictions let the company owners remain anonymous. Also, they cannot be searched via public register.
For those who live in a country where there is political instability and you are not sure what the future might bring, setting up an offshore company will protect your assets. Volatility and rapid fluctuation are synonymous with economic markets. When you have a company in another jurisdiction that is impacted by different market forces and regulations you can spread the risk against economic breakdown, rapid inflation, and political instability.
Businesses can open corporate bank accounts with an offshore company. This would let you quickly send and receive foreign currency with minimal transaction fees. Also, your business will benefit from lesser delays in payment transactions along with lower transaction costs as well.
You can open an international merchant account for an offshore company of your online business. This shall facilitate credit card payments from the international client. Moreover, you can open international brokerage accounts for trading securities as well.
Many domestic banks in numerous countries do not offer these facilities. Numerous companies are operating on fintech in Mauritius to assist easy and convenient handling of money.
So, if you are thinking of setting up an offshore company, these are the benefits you shall be reaping.