Jurisdictions

- ECONOMIC & POLITICAL STABILITY
- COMMUNICATIONS
- CONFIDENTIALITY AND SECRECY
- EXCHANGE CONTROLS
- JURISDICTIONS

There are many differences between the 50 or so recognised offshore centers, the financial structures available and levels of protection they offer - for individuals or the corporate sector. Some are independent territories, some are dependants of other nations. All of them offer favorable tax regimes which can be used in tax planning. The various locations available can be viewed as in the following regions: European "Common Law" jurisdictions, e.g. Isle of Man, Gibraltar jurisdictions. British Virgin Islands (BVI), Bahamas e.g. Panama, Delaware, Wyoming Onshore. There are several mainstream onshore countries where companies can form part of a tax planning structure, e.g. UK, Luxembourg. There are also low-tax or no-tax structures available through apparently mainstream onshore countries, like the Irish and UK nominee companies. Structures can be established in certain cases using Netherlands, Danish or Cypriot companies to exploit double tax treaties to obtain the most advantageous tax arrangement.
Tax Related Issues It is reasonable to ask the first question: In what respect is the taxation of the offshore company favorable? And in connection with this: Why is it worth for these countries to offer such benefits?

On all serious tax haven territories, tax benefits have a legal basis and foundation. For instance, this benefit is provided for the companies registered in the above-mentioned British Virgin Islands by the code of laws adopted in 1984.

Accordingly, offshore companies pay no taxes of any kind to the British Virgin Islands, except for the state duty of the usual amount of 300 US Dollars, independent of turnover. In the case of the Bahamas and Belize, this annual duty is 100 US Dollars, while in Panama it is 150 US Dollars. It is obvious that these tax benefits are considerable, compared with the 40 to 50% tax on profit typically imposed in Europe.

ECONOMIC & POLITICAL STABILITY

Important considerations when moving substantial amounts of money offshore. In practice, even the impoverished small countries which act as tax havens are aware of the importance of the income from companies, trusts and licensing and are unlikely to threaten an important part of their economy for political expediency.

Principles of taxation. As it was mentioned above, one of the most important purposes of the registration of offshore companies in tax havens is to reduce high tax burdens and to take advantage of direct or indirect tax benefits. However, we should stress that completely tax-free and cost-free companies do not legally exist in any part of the world, in spite of the fact that in a number of countries offshore companies are often referred to as tax-free companies. Fundamentally, the following principles of taxation may be enforced in the locations of registration of offshore companies:

- Fixed annual fees: In countries where the company may only derive revenues from abroad, these revenues will be completely free from the payment of any tax. In this case, the company is required to pay a fixed annual fee, which is independent of the turnover and profit of the company. Such locations are the British Virgin Islands already mentioned above, the Bahamas, Belize, etc.

- Registered capital tax: The tax is not based upon the turnover but upon the company's registered capital. For instance, the Liechtenstein foundations are required to pay 0.1% of their issued capital (or at least 1,000 Swiss Franks) to the state annually.

- Tax of revenues derived from abroad: In such countries as, for example, Panama and Hong Kong, companies may pursue economic activities within the country, too, and the domestic revenues are taxed on the basis of a linear rate, while revenues derived from abroad are tax-free. In this case (Hong Kong), the company is required to indicate domestic revenues separately in its annual report.

- Linear taxation rates: One of the best-known locations is Cyprus where offshore companies pay a 4.25% tax on their net profits. (In these locations, without exception, the keeping of books and preparation of annual reports is compulsory.)

COMMUNICATIONS

In order to execute your instructions and to communicate with your corporate service provider and your bank, modern telecommunications are important. Select a jurisdiction which has satellite voice and data links, otherwise running your offshore company can quickly become very frustrating.

You may wish at some stage to visit the jurisdiction and meet the corporate service providers - are there regular flights?

CONFIDENTIALITY AND SECRECY - Privacy is important and valuable when conducting business offshore. The offshore centre must have the ability to control and sanction unauthorised disclosure of information relating to its offshore clientele and their financial affairs.

EXCHANGE CONTROLS - It is important that you can freely move your money in and out of the country. The best situation is to bank in a country with no exchange controls. Money that is restricted from movement can be easily subject to possible seizure. Note: companies may open bank accounts in jurisdictions other than the jurisdiction of the corporation.

JURISDICTIONS

Jurisdiction	Set up fee	Annual fee	Shelf Companies
Panama	$ 690 + $ 250	$ 700	available
Delaware (Economy Kit)	$ 690	$ 590	available
Nevada	$ 990	$ 700	available
Arkanzas	$ 800	$ 750	available
Gibraltar	$ 1,250	$ 1,050	to be ordered
Cyprus	$ 2,700	$ 1,700	available
Seychelles	$ 780	$ 690	available
Niue*	$ 950	$ 850	to be ordered
BVI	$ 2000	$ 1,750	available
Nevis	$ 1,450	$ 985	to be ordered

* in two years won't be anymore favourable offshore legislation