An offshore company refers to a corporate entity incorporated outside the country of residence of its owners/managers in a foreign jurisdiction.
Key Characteristics:
- Incorporated in tax haven locations with favourable tax and confidentiality laws.
- Help owners diversify business risks across multiple countries.
- Nominee shareholders/directors maintain the owners’ confidential ownership.
Example:
A British entrepreneur formed an offshore company in the British Virgin Islands to privately hold equity investments in Asia.
Key Takeaways:
Offshore companies allow legitimate tax planning but can also enable illicit flows if misused. Proper documentation and compliance ensures their legal use for international business and investment diversification.