Offshore company
Overview
 
The term offshore company is ambiguous. It may refer to either:
  1. A company which is incorporated
    Incorporation (business)
    Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...

     outside the jurisdiction of its primary operations regardless of whether that jurisdiction is an offshore financial centre
    Offshore financial centre
    An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....

     (sometimes known as a non-resident company) i.e. a Canadian company may be 'offshore' for the purposes of a USA citizen ; or,
  2. Any company (resident or otherwise) incorporated in an offshore financial centre
    Offshore financial centre
    An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....

    , i.e.
Encyclopedia
The term offshore company is ambiguous. It may refer to either:
  1. A company which is incorporated
    Incorporation (business)
    Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...

     outside the jurisdiction of its primary operations regardless of whether that jurisdiction is an offshore financial centre
    Offshore financial centre
    An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....

     (sometimes known as a non-resident company) i.e. a Canadian company may be 'offshore' for the purposes of a USA citizen ; or,
  2. Any company (resident or otherwise) incorporated in an offshore financial centre
    Offshore financial centre
    An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....

    , i.e. offshore jurisdictions


Typically the requirements for company registration under the relevant provision for non-resident status (as in the former of the two options above) will be pursuant to some or all of the following criteria in a strict legal sense according to Offshore Company Law:Theory, Regulations& Operation(By Zhang Shiwei, China Law Press, 2004):
  • Must be incorporated under Offshore Company Laws and regulations of offshore jurisdictions
  • Must be incorporated by non-residents of offshore jurisdictions
  • Must not trade within the offshore jurisdictions; and/or,
  • Must meet nominal tax expenses levied by the offshore jurisdictions.

Management and control

It is worth mentioning at this juncture that taxation of a company somewhere other than its place of incorporation is not by any means an exclusively offshore concept. By way of example consider a UK incorporated company which traded exclusively in France. If the board of directors of this company were based in France there would be no doubt that the company would be subject to French tax.

Consider also a US citizen running a Bahamas company from the US, there is no doubt that the activities of that company are subject to taxation in the US.

The same principle extends to regulations also.

Benefits

Offshore companies have the following features which may be beneficial:
  • Taxation - In most jurisdictions authorities will not seek to tax companies which they treat as non-resident, save perhaps for a nominal fee -$350 BVI, £320 Isle of Man etc.

  • Simplicity and Reporting - except for regulated businesses, such as banks or other financial institutions, some jurisdictions make it relatively simple to set up and maintain companies especially with reference to lesser reporting requirements than so-called onshore jurisdictions - the level of information required by the registrar of companies varies from jurisdiction to jurisdiction.

  • Legal and asset protection - some jurisdictions have stricter provisions for allowing a court to pierce the corporate veil, and in many cases corporate governance rules require the laws of the jurisdiction where the corporation is chartered - rather than where it is sued - to apply. For example Gibraltar makes it illegal for the trustee of an Asset Protection Trust to surrender its assets to a creditor of the settlor
    Settlor
    In law a settlor is a person who settles property on trust law for the benefit of beneficiaries. In some legal systems, a settlor is also referred to as a trustor, or occasionally, a grantor or donor. Where the trust is a testamentary trust, the settlor is usually referred to as the testator...

     and in Switzerland it is illegal to disclose banking information.

  • Fees - some jurisdictions impose much higher fees to incorporate than other jurisdictions. They may also impose much higher maintenance fee
    Maintenance fee
    A maintenance fee, beyond the self evident meaning of 'a charge for maintaining something' can refer specifically to;* a fee need to be paid during the term of a patent in order to maintain it into force, see maintenance fee...

    s on a corporation's yearly renewal of its charter. This will vary from service provider to service provider and will be significantly based on the cost of local disbursements.

  • Anonymity - by carrying out transactions in the name of a private company, the name of the underlying principal may be kept out of documentation, since the company is a separate legal entity. Having said that, current anti-money-laundering regulations often require banks and other professionals to look through structures. This will always be the case for any reputable bank but it does not render ineffective the use of corporate structures, rather it ensures they remain legally compliant.

  • Thin capitalisation - Some offshore jurisdictions
    Offshore financial centre
    An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....

     tend not to impose "thin capitalisation
    Thin capitalisation
    A company said to be thinly capitalised when its capital is made up of a much greater proportion of debt than equity, i.e. its gearing, or leverage, is too high...

    " rules on companies (except for regulated entities such as bank
    Bank
    A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

    s and insurance companies), allowing them to be formed with a purely nominal equity investment.

  • Financial assistance - offshore companies are usually not prohibited from providing "financial assistance" for the acquisition of their own shares
    Stock
    The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

    , which avoids the needs for "whitewash" procedures in certain financial transactions.

  • Cost of operation - In many cases, i.e. where a self employed consultant provides services to a number of jurisdictions and travels frequently, it is a matter of choice where he chooses to incorporate. In this case the fact that companies in an offshore financial centre
    Offshore financial centre
    An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....

     are considerably cheaper than buying or renting premises, arranging to engage accountants, receptionists, IT providers etc. would be.

Practical uses of offshore companies

Offshore companies are beneficial for many purposes including at least some of the following:

  • 1. Consultancy, Professional Services, Agency

Professionals, consultants, artists and many self-employed individuals decide to incorporate a business representing their services to gain substantial advantages by working as employees or external consultants of offshore companies of which they may be the sole shareholders and, if they want to, the sole directors.
  • 2. Employment of Expatriate Staff

Expatriates working overseas frequently benefit from being employed through an offshore employment/consultancy company. By not remitting the full salary it can minimise tax and avoid exchange control difficulties in the country of temporary residence. This arrangement is sometimes attractive for expatriates working in politically unstable countries.
  • 3. Property Owning Companies

There are often significant advantages in using an offshore holding company for the purpose of holding property. The advantages of such an arrangement include the avoidance of inheritance tax, capital gains tax and the ease of sale which can be achieved by transferring the property owned by the company and reduction of property purchase costs to the onward purchasers.
  • 4. Investment Companies

Funds accumulated through investment companies set up in offshore areas can be invested or deposited throughout the world. Whilst generally returns or interest payable in respect of these funds will be subject to local taxation, there are a number of offshore areas in which funds may be placed as bank deposits where the interest and/or the capital gains are paid and kept gross. To invest in global securities including mutual funds not available to "local" citizens. Offshore jurisdictions are typically less invasive allowing for aggressive and unrestrained Free Enterprise.
  • 5. Copyrights, Patents and Trademarks

Offshore companies can purchase or be assigned the right to use copyright, patent or trademark. Royalties can then be accumulated offshore although often royalties may suffer withholding taxes at source. An interposing holding company in some cases may allow a reduction in the rate of tax withheld at source.
  • 6. Privacy

A high net-worth individual can save professional fees and unwanted publicity by owning property or other assets through an offshore company. Many jurisdictions require company accounting records to be published, but jurisdictions can offer privacy if they do not require offshore companies to publish accounting records, and the name and details of their shareholders.
  • 7. Protection

To file first position liens against assets and property closing the door to predatory litigation before it begins.
To segregate high-risk investments from other more secure holdings.
To protect retirement funds from possible bankruptcy.
To provide for the transfer of assets for the next generation in an efficient and discreet fashion.
Nominee directors and officers can allow you to conduct business transactions for your benefit while you remain anonymous.
To access your funds with corporate debit or credit cards thereby maintaining absolute confidentiality.

Disadvantages

  • Offshore companies are usually prohibited from conducting business or retaining employees in their jurisdiction of incorporation though this very much depends on the jurisdiction in question and type of company.

  • For regulatory reasons, there are often certain restrictions on the type of business which an offshore company can engage in without the need for a licence. In practice this is no different from trading 'onshore' since the majority of banks have offshore operations and the majority of the world's insurance companies are offshore captive insurance
    Captive insurance
    Captive insurance companies are insurance companies established with the specific objective of financing risks emanating from their parent group or groups, but they sometimes also insure risks of the group's customers as well...

     companies.

  • Due diligence in reputable offshore centres tends to be more strict than most onshore areas. For example, to open a bank account in the name of an offshore company, to comply with relevant anti-money laundering regulations, the bank will normally require documents verifying the identity of the signers on the account to be notarised
    Notary public
    A notary public in the common law world is a public officer constituted by law to serve the public in non-contentious matters usually concerned with estates, deeds, powers-of-attorney, and foreign and international business...

     and may require one or more professional reference letters from an attorney, accountant and/or banker who has known you.

  • Certain countries have "anti-tax haven
    Tax haven
    A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....

    " legislation which makes it difficult to conduct business in those countries using an offshore company. For example, capital markets regulations in France prohibit using offshore companies as bond issuing vehicles.

  • Where a shareholder of an offshore company dies, it is usually necessary to have the will
    Will (law)
    A will or testament is a legal declaration by which a person, the testator, names one or more persons to manage his/her estate and provides for the transfer of his/her property at death...

     admitted to probate in the offshore jurisdiction as well (or, if intestate, to have the letters of administration re-sealed in that jurisdiction), which can add to cost, delay and inconvenience in administering the deceased's estate.

Legitimate uses of offshore companies

  • International trading, especially where the owner has no fixed residence
  • Asset protection
  • Captive insurance
  • Yacht registration
  • Tax avoidance
  • Protection of intellectual property
  • Succession planning
  • Confidentiality (non-criminal)

Illegitimate uses

Historically the activities of offshore companies have included activities that were or have become illegal. These include
  • The finance of terrorism
  • Money laundering
  • Tax evasion
  • Fraud (including investor fraud)
  • Protection from current or future creditors (including taxation authorities and spouses)
  • Irregular trading practices (such as increasing margins on deals by interposing clandestinely controlled offshore companies as apparent third parties)


The situation has much improved since the 1970s and 1980s largely due to increased regulation and general changes in commercial practice. The leading offshore financial centres are now more compliant with the Financial Action Task Force on Money Laundering
Financial Action Task Force on Money Laundering
The Financial Action Task Force , also known by its French name, Groupe d'action financière , is an intergovernmental organization founded in 1989 on the initiative of the G7. The purpose of the FATF is to develop policies to combat money laundering and terrorist financing...

's '40+9' recommendations than many onshore financial centres. However some traces of these abuses persist today both in offshore and onshore jurisdictions.

Importance of choosing a legitimate jurisdiction

Many offshore jurisdictions are regarded by banks, the OECD and other bodies in the finance industry as being regulated either as effectively as or better than their onshore counterparts whilst others are known to be areas of dubious legitimacy.

Unfortunately gone are the days (if ever they existed) where the distinction between onshore and offshore equated to legitimate or illegitimate. The current position is that there is no correlation between legitimacy of jurisdiction and tax status. For example Nigeria would not be regarded as offshore but perpetrates much of the world's advance fee fraud whereas Switzerland would be regarded as a highly respectable jurisdiction.

It is no longer possible for illegitimate jurisdiction to operate in light of the OEDC and the FATF as well as current and pending US legislation (13/06/09). It is very much in the interest of most offshore jurisdictions to ensure their house is in good order as this failure to comply and subsequent sanctions could lead to the total economic collapse of a country dependent upon its international reputation.

Features of offshore companies

  • Memorandum
    Memorandum of Association
    The memorandum of association of a company, often simply called the memorandum , is the document that governs the relationship between the company and the outside...

     and articles of association
    Articles of Association (law)
    The term articles of association of a company, or articles of incorporation, of an American or Canadian Company, are often simply referred to as articles . The Articles are a requirement for the establishment of a company under the law of India, the United Kingdom and many other countries...

     or bylaws
    - these documents are fundamental to the existence of the company. The Articles detail the rights of the members, the objectives of the company and the internal processes of the company and the Memorandum states the type of Company and its capital.
  • Certificate of Incorporation - this is issued by the Registrar of Companies or their equivalent, and is serves as proof that the company has been brought into existence. Other information may be necessary to prove that the company has not been liquidated or struck off such as a certified of incumbency or good standing.
  • Registered Agent - it is often the case that an agent must be appointed in the jurisdiction in which the company is incorporated for the purpose of dealing with official communications with the registrar. The Agent will have to be licensed and will assume some level of responsibility for the company's activities.
  • Registered Office - this is the official address of a company, to which official documents are sent and legal notices received. It is normal for the registration agent to provide a registered office. A company may have other business and correspondence addresses.
  • Shareholders or other members - these are the legal owners of the company. For administrative simplicity, or for anonymity, a corporate service provider may supply nominees who will hold shares on behalf of a beneficial owner, and act on his instructions.
  • Directors, Managers or their delegates - the individuals who manage the day-to-day affairs of company. In many jurisdictions it is possible for companies to be directors of other companies. Corporate service providers in offshore jurisdictions will often provide directors, provided they are able to control, and be satisfied with, the activities of the company. The company is generally considered to be resident for tax purposes at the place where the decisions are made. In many cases if a person is acting as a director they will be considered de facto to be a director in spite of not having recorded this with the relevant body.
  • Shadow directors - in some cases, it has been shown that the formally appointed directors merely act as the alter ego of others, blindly following their instructions. In these cases, the courts have considered that those instructing the named directors really control the company, and that the named directors merely rubberstamp decisions. Companies managed in this way will be tax resident in the jurisdiction where the shadow director is resident.
  • Company Secretary - this is the person or body corporate who is responsible for ensuring that the company meets its statutory obligations. Corporate service providers usually provide this service.
  • Statutory Records - a company is obliged to maintain registers setting out certain information about the company. The mandatory records vary from jurisdiction to jurisdiction, as does the level of public access to the information contained in the records. Many jurisdictions require that the records are kept within the jurisdiction in which the company is incorporated. The records required may include minutes of meetings, registers members, directors, officers and charges.
  • Bookkeeping - directors are generally required to keep proper records. They may be required to prepare audited accounts. Specific requirements vary between jurisdictions and may depend on the nature of the company's activity. For example all banks will need to prepare audited accounts, whereas a private investment

Types of companies

Examples of offshore companies include the International Business Company
International business company
An international business company or international business corporation is an offshore company formed under the laws of some jurisdictions as untaxed company which is not permitted to engage in business within the jurisdiction in which it is incorporated...

 (IBC). More recently new legislation has been enacted in a number of Jurisdictions, such as the British Virgin Islands, to replace the IBC type of company with the Business Company (BC).

The following types of company are common in both onshore and offshore jurisdictions:
  • Company having a share capital - these companies issue shares. Once the initial cost of a share (capital and premium) has been paid, the shareholders have no further obligation to the company. The shares may, subject to the rules of the company, be sold or transferred, and the shareholders have the right to enjoy the profits of the company or any proceeds of a liquidation. The liability of the shareholder is therefore limited to the amount invested. Shares are assets.
  • Company limited by guarantee - the members of the company agree to pay up to a maximum limit in the event that the company becomes insolvent. They may acquire certain rights against the company, such as the rights to a dividend and the specific rights will be set out in the rules of the company. Membership may terminate on death, and guarantee companies have been used for not for profit organizations. There are also sophisticated estate planning schemes which make use of guarantee companies. Membership is a liability.
  • Hybrid - a combination of the above two classes - i.e. a company have bother liability class shares and asset class shares.
  • Protected cell companies - some jurisdictions permit cellular companies
    Segregated portfolio company
    A segregated portfolio company , sometimes referred to as a protected cell company, is a company which segregates the assets and liabilities of different classes of shares from each other and from the general assets of the SPC.Segregated portfolio assets comprise assets representing share capital,...

    , where particular assets and liabilities are segregated into "cells", in such a way that the assets of one cell cannot be used to satisfy the liabilities of another. Cell companies are particularly used for umbrella mutual funds
    Umbrella fund
    An umbrella fund is an investment term used to describe a collective investment scheme which is a single legal entity but has several distinct sub-funds which in effect are traded as individual investment funds....

     or unit linked insurance bonds. In this instance the separate cells are effectively distinct legal entities.


It is important to note though that the above is a gross oversimplification of the near infinite variety of types of company most sophisticated jurisdictions permit. Shares themselves come in many different types with the rights in respect of dividend, preference, voting etc. being determined by the constitution of the company to which they relate. Also, it is by no means uncommon for companies to utilise many different classes in particular when they are soliciting for investment from third-parties.

However, many offshore jurisdictions offer increasingly specialised forms of companies (as well as specialised trust
Trust law
In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another...

s and partnership
Partnership
A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace...

s) seeking to increase their share of the market. Examples include limited duration companies, unlimited liability companies, companies limited by guarantee and with a share capital, restricted purpose companies and hybrid entities such as limited liability partnership
Limited liability partnership
A limited liability partnership is a partnership in which some or all partners have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence. This is an important...

s
, which are more akin to companies to actual partnerships, and foundations, which are nominally trusts but are more akin to companies than trusts.

Merger

The traditional method of merging companies is for one company to acquire the assets of a subsidiary on its liquidation. This sometimes creates contractual difficulties, and requires third parties to accede to the transfer of obligations from the liquidated company. Some jurisdictions have tackled this issue by permitting companies to merge, forming a new combined entity, which represents a continuation of the businesses of each former company.

Relocation of companies

Some jurisdictions permit companies to redomicile. They may do this to take advantage of particular features of the new jurisdiction, such as merger legislation, or tax treaties with other countries. The law in both the old and new jurisdictions must permit redomiciliation. The business of the company is deemed to continue without interruption on redomiciliation.

This is usually not a complicated process, but it might be slow and involve some paperwork; it can be used when the cost of the transfer of domicile is less than the tax consequences of transferring the assets of the company in question to a company newly incorporated in the desired new jurisdiction.

Offshore jurisdictions

It is possible to incorporate offshore companies in many jurisdictions. In some onshore jurisdictions, such as the UK and New Zealand, there are particular types of companies which offer many of the advantages of typical offshore structures. The following list is not exhaustive.
  • Andorra
    Andorra
    Andorra , officially the Principality of Andorra , also called the Principality of the Valleys of Andorra, , is a small landlocked country in southwestern Europe, located in the eastern Pyrenees mountains and bordered by Spain and France. It is the sixth smallest nation in Europe having an area of...

  • Anguilla
    Anguilla
    Anguilla is a British overseas territory and overseas territory of the European Union in the Caribbean. It is one of the most northerly of the Leeward Islands in the Lesser Antilles, lying east of Puerto Rico and the Virgin Islands and directly north of Saint Martin...

  • Aruba
    Aruba
    Aruba is a 33 km-long island of the Lesser Antilles in the southern Caribbean Sea, located 27 km north of the coast of Venezuela and 130 km east of Guajira Peninsula...

  • Bahamas
  • Barbados
    Barbados
    Barbados is an island country in the Lesser Antilles. It is in length and as much as in width, amounting to . It is situated in the western area of the North Atlantic and 100 kilometres east of the Windward Islands and the Caribbean Sea; therein, it is about east of the islands of Saint...

  • Belize
    Belize
    Belize is a constitutional monarchy and the northernmost country in Central America. Belize has a diverse society, comprising many cultures and languages. Even though Kriol and Spanish are spoken among the population, Belize is the only country in Central America where English is the official...

  • Bermuda
    Bermuda
    Bermuda is a British overseas territory in the North Atlantic Ocean. Located off the east coast of the United States, its nearest landmass is Cape Hatteras, North Carolina, about to the west-northwest. It is about south of Halifax, Nova Scotia, Canada, and northeast of Miami, Florida...

  • British Virgin Islands
    British Virgin Islands
    The Virgin Islands, often called the British Virgin Islands , is a British overseas territory and overseas territory of the European Union, located in the Caribbean to the east of Puerto Rico. The islands make up part of the Virgin Islands archipelago, the remaining islands constituting the U.S...

  • Brunei
    Brunei
    Brunei , officially the State of Brunei Darussalam or the Nation of Brunei, the Abode of Peace , is a sovereign state located on the north coast of the island of Borneo, in Southeast Asia...

  • Cayman Islands
    Cayman Islands
    The Cayman Islands is a British Overseas Territory and overseas territory of the European Union located in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica...

  • Cook Islands
    Cook Islands
    The Cook Islands is a self-governing parliamentary democracy in the South Pacific Ocean in free association with New Zealand...

  • Costa Rica
    Costa Rica
    Costa Rica , officially the Republic of Costa Rica is a multilingual, multiethnic and multicultural country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west and the Caribbean Sea to the east....

  • Cyprus
    Cyprus
    Cyprus , officially the Republic of Cyprus , is a Eurasian island country, member of the European Union, in the Eastern Mediterranean, east of Greece, south of Turkey, west of Syria and north of Egypt. It is the third largest island in the Mediterranean Sea.The earliest known human activity on the...

  • Delaware
    Delaware
    Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...

     (see also Delaware General Corporation Law)
  • Dubai
    Dubai
    Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...

  • Gibraltar
    Gibraltar
    Gibraltar is a British overseas territory located on the southern end of the Iberian Peninsula at the entrance of the Mediterranean. A peninsula with an area of , it has a northern border with Andalusia, Spain. The Rock of Gibraltar is the major landmark of the region...

  • Grenada
    Grenada
    Grenada is an island country and Commonwealth Realm consisting of the island of Grenada and six smaller islands at the southern end of the Grenadines in the southeastern Caribbean Sea...

  • Guernsey
    Guernsey
    Guernsey, officially the Bailiwick of Guernsey is a British Crown dependency in the English Channel off the coast of Normandy.The Bailiwick, as a governing entity, embraces not only all 10 parishes on the Island of Guernsey, but also the islands of Herm, Jethou, Burhou, and Lihou and their islet...

  • Hong Kong
    Hong Kong
    Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...

  • Isle of Man
    Isle of Man
    The Isle of Man , otherwise known simply as Mann , is a self-governing British Crown Dependency, located in the Irish Sea between the islands of Great Britain and Ireland, within the British Isles. The head of state is Queen Elizabeth II, who holds the title of Lord of Mann. The Lord of Mann is...

  • Jersey
    Jersey
    Jersey, officially the Bailiwick of Jersey is a British Crown Dependency off the coast of Normandy, France. As well as the island of Jersey itself, the bailiwick includes two groups of small islands that are no longer permanently inhabited, the Minquiers and Écréhous, and the Pierres de Lecq and...

  • Jordan
    Jordan
    Jordan , officially the Hashemite Kingdom of Jordan , Al-Mamlaka al-Urduniyya al-Hashemiyya) is a kingdom on the East Bank of the River Jordan. The country borders Saudi Arabia to the east and south-east, Iraq to the north-east, Syria to the north and the West Bank and Israel to the west, sharing...

  • Labuan
    Labuan
    Labuan is a federal territory in East Malaysia. It is an island off the coast of the state of Sabah. Labuan's capital is Victoria and is best known as an offshore financial centre offering international financial and business services via Labuan IBFC since 1990 as well as being an offshore support...

  • Lebanon
    Lebanon
    Lebanon , officially the Republic of LebanonRepublic of Lebanon is the most common term used by Lebanese government agencies. The term Lebanese Republic, a literal translation of the official Arabic and French names that is not used in today's world. Arabic is the most common language spoken among...

  • Liberia
    Liberia
    Liberia , officially the Republic of Liberia, is a country in West Africa. It is bordered by Sierra Leone on the west, Guinea on the north and Côte d'Ivoire on the east. Liberia's coastline is composed of mostly mangrove forests while the more sparsely populated inland consists of forests that open...

  • Marshall Islands
    Marshall Islands
    The Republic of the Marshall Islands , , is a Micronesian nation of atolls and islands in the middle of the Pacific Ocean, just west of the International Date Line and just north of the Equator. As of July 2011 the population was 67,182...

  • Mauritius
    Mauritius
    Mauritius , officially the Republic of Mauritius is an island nation off the southeast coast of the African continent in the southwest Indian Ocean, about east of Madagascar...

  • Monaco
    Monaco
    Monaco , officially the Principality of Monaco , is a sovereign city state on the French Riviera. It is bordered on three sides by its neighbour, France, and its centre is about from Italy. Its area is with a population of 35,986 as of 2011 and is the most densely populated country in the...

  • Netherlands Antilles
    Netherlands Antilles
    The Netherlands Antilles , also referred to informally as the Dutch Antilles, was an autonomous Caribbean country within the Kingdom of the Netherlands, consisting of two groups of islands in the Lesser Antilles: Aruba, Bonaire and Curaçao , in Leeward Antilles just off the Venezuelan coast; and Sint...

  • Nevada
    Nevada
    Nevada is a state in the western, mountain west, and southwestern regions of the United States. With an area of and a population of about 2.7 million, it is the 7th-largest and 35th-most populous state. Over two-thirds of Nevada's people live in the Las Vegas metropolitan area, which contains its...

  • Nevis
    Nevis
    Nevis is an island in the Caribbean Sea, located near the northern end of the Lesser Antilles archipelago, about 350 km east-southeast of Puerto Rico and 80 km west of Antigua. The 93 km² island is part of the inner arc of the Leeward Islands chain of the West Indies...

  • New Zealand
    New Zealand
    New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

  • Panama
    Panama
    Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...

  • Ras Al Khaimah
  • Seychelles
    Seychelles
    Seychelles , officially the Republic of Seychelles , is an island country spanning an archipelago of 115 islands in the Indian Ocean, some east of mainland Africa, northeast of the island of Madagascar....

  • Singapore
    Singapore
    Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

  • Trinidad and Tobago
    Trinidad and Tobago
    Trinidad and Tobago officially the Republic of Trinidad and Tobago is an archipelagic state in the southern Caribbean, lying just off the coast of northeastern Venezuela and south of Grenada in the Lesser Antilles...

  • Turks and Caicos Islands
    Turks and Caicos Islands
    The Turks and Caicos Islands are a British Overseas Territory and overseas territory of the European Union consisting of two groups of tropical islands in the Caribbean, the larger Caicos Islands and the smaller Turks Islands, known for tourism and as an offshore financial centre.The Turks and...

  • United Kingdom
    United Kingdom
    The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

  • Vanuatu
    Vanuatu
    Vanuatu , officially the Republic of Vanuatu , is an island nation located in the South Pacific Ocean. The archipelago, which is of volcanic origin, is some east of northern Australia, northeast of New Caledonia, west of Fiji, and southeast of the Solomon Islands, near New Guinea.Vanuatu was...


Buenos Aires ban of offshore companies

Following the 2004 República Cromagnon nightclub fire
República Cromagnon nightclub fire
República Cromañón was a nightclub in Buenos Aires, Argentina.On 30 December 2004, a fire broke out in the club, killing 194 people and injuring 714 others. The venue was playing host to rock group Callejeros and around 3,000 people were in attendance...

 in Buenos Aires
Buenos Aires
Buenos Aires is the capital and largest city of Argentina, and the second-largest metropolitan area in South America, after São Paulo. It is located on the western shore of the estuary of the Río de la Plata, on the southeastern coast of the South American continent...

, Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...

, it was discovered that the club was owned by shell corporations. Ricardo Nissen, Inspector General of Justice for Buenos Aires, subsequently froze $20 million, and then banned offshore corporations from Buenos Aires that could not prove that they had real activity in the city. Such a ban is the first to be implemented world-wide.

See also

  • Flag of convenience (business)
    Flag of convenience (business)
    In business and commerce, the term flag of convenience is the use of a place, jurisdiction, state or country as a nominal "home base" for one's operations or charter, even though either no or virtually no operations or business are conducted there. It is also used where the organization operates...

  • Quasi-foreign corporation
    Quasi-foreign corporation
    A quasi-foreign corporation is a corporation incorporated in a jurisdiction with which it has minimal business contacts...

  • Offshore bank
    Offshore bank
    An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction that provides financial and legal advantages. These advantages typically include:...

  • Offshore Financial Centres
  • Private foundation
    Private foundation
    A private foundation is a legal entity set up by an individual, a family or a group of individuals, for a purpose such as philanthropy. The Bill & Melinda Gates Foundation is the largest private foundation in the U.S. with over $38 billion in assets...

  • Tax avoidance and tax evasion
    Tax avoidance and tax evasion
    Tax noncompliance describes a range of activities that are unfavorable to a state's tax system. These include tax avoidance, which refers to reducing taxes by legal means, and tax evasion which refers to the criminal non-payment of tax liabilities....

  • Tax exporting
    Tax exporting
    Tax exporting occurs when a country indirectly encourages economic activity to move to another country with a lower tax burden. This is more likely if the economic activity is more mobile....

  • Tax haven
    Tax haven
    A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....

  • Tax resistance
    Tax resistance
    Tax resistance is the refusal to pay tax because of opposition to the government that is imposing the tax or to government policy.Tax resistance is a form of civil disobedience and direct action...

  • Underground economy
    Underground economy
    A black market or underground economy is a market in goods or services which operates outside the formal one supported by established state power. Typically the totality of such activity is referred to with the definite article as a complement to the official economies, by market for such goods and...

  • Liquidation
    Liquidation
    In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...

  • International business company
    International business company
    An international business company or international business corporation is an offshore company formed under the laws of some jurisdictions as untaxed company which is not permitted to engage in business within the jurisdiction in which it is incorporated...

  • BVI Business Companies Act
    BVI Business Companies Act
    The BVI Business Companies Act is a statute of the British Virgin Islands relating to the formation of all companies in the British Virgin Islands, both offshore companies and local companies...

  • Delaware General Corporation Law
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