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Offshore Business Activities

Engaging in trade or business creates wealth and employment. However, business is carried out only if they provide an adequate return. In many cases, the taxation derived from trade and its benefits is the difference between whether a business will be profitable or not, and therefore the difference between the decision to undertake or not undertake it, between creating wealth and generating employment or stay still. In many international businesses it is often the final cost depends on the use of offshore territory to relieve the taxation of operations.

In other cases, investments in third countries, in Latin America or Asia for example, must be conducted through branches in offshore territory’s near the place of investment, and enjoy greater legal security and greater experience and financial banking in the country receiving the final investment . The proximity of the offshore territory is, in these cases, a factor that may be critical to ensure the successful start and end of the operation.

Onto the field, no longer possible, but reality, large companies use offshore territory’s for many activities. One of them is to raise funds from investors around the world by issuing debt whose yield is paid tax free. In general, to capitalize on operating profits and reduce their taxes or, as mentioned before, to sell entire lines of products supplemented, directly or through the Internet. Another example is that of the great events and shows worldwide. For years, the championship of Formula 1 car has been run through a network of "trusts" Holding companies" and instrumental domiciled in Liechtenstein and Jersey.

In the United States with one of the most severe fiscal regimes, companies have used for years tax haven branches for the sale of distribution products, the consent of the authorities. They are called "Foreign Sales Corporations" Sales of foreign businesses. Some of the institutions, structures and social and commercial innovations in these enclaves designed to relieve tax burden, are incorporated into the general laws of the countries with high taxation: the focal points, holding companies.

Another factor is the ease of business formation and the absence of bureaucracy. The operational costs of administration, personnel and bureaucratic management of these areas are also lower.

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