An offshore company is one which is registered in any other country other than your home country. The country under which you register is known as offshore jurisdiction. The offshore jurisdictions in the world are several like Hong Kong, Cayman Islands, Panama, Samoan Islands, etc. In here, we will focus on the offshore jurisdictions of Cayman Islands and Panama.
So why register as an offshore company? The following are the reasons –
- Enjoyment of Low Tax or Free Tax Business.
- Protection of Privacy.
- Allowance to engage in special kinds of businesses.
- Expansion of business outside the purview of your home country.
Local businesses can also be run with offshore registration but with some limitations in some cases only. Basically having an offshore registration adds an extra advantage to the company.
The Factors to be Considered
Before we dive into this, we should consider a few factors while choosing an offshore jurisdiction. The factors to be considered as follows –
- Tax consideration
- Protection of Privacy
- Bank Opening
- Trust arrangement
- Legal and political systems of the jurisdiction
- Fee structure
- Processing time
- Simplification Process
- The reputation of the jurisdiction.
Now we will look into the Panama Company Formation and Cayman Company Formation separately.
Panama Company Formation
Panama is a country in the continent of South America. Registering under this jurisdiction will need a lot of factors to be considered. There are so many jurisdictions in the world. Then why prefer Panama over all of them? Here are the reasons –
- No minimum share capital requirement for Panama Company formation.
- Minimum number of Directors required is only three – only non-resident and corporate directors.
- Shareholders are not on public record.
- Names and addresses of the directors are a matter of public record. (Nominee directors are customary)
- No requirement for filing of financial accounts or audit
- Shelf companies available immediately!
- Taxation – Non-resident companies in Panama have a tax-free status, which means exemption on all income tax, dividends, interest, rents, royalties, and capital gains from the sale of company shares. In place of tax, there is a fixed annual government fee, as well as an annual registered agent fee.
Cayman Company Formation
The Cayman Islands are an overseas territory of the United Kingdom in the western Caribbean Sea. This country also allows offshore companies registration. The factors to be considered remain the same.
These are the requirements for Cayman Company Formation –
- Director – Minimum of one Director. Corporations are permitted.
- Secretary – A secretary is necessary.
- Shareholders – Minimum of one shareholder. Corporations are permitted.
- Shares and Capital – The standard share capital is $ 50,000.00 divided into 50,000 shares of $ 1 each. They can be issued with or without par value. Bearer shares are permitted but must be held by an authorized or recognized custodian as approved by the Cayman Islands Monetary Authority.
The other factors to be considered are as follows –
- Formation of Cayman Company Formation takes 4-5 working days.
- There are no taxes in the Cayman Islands on income, capital gains, profits, dividends, investments or capital transfers. The company receives a twenty year guarantee against taxation from the Cayman Islands Government, which may be extended to thirty years on application.
So, considering the following factors, the choice of registering under these two jurisdictions should be made accordingly.