The Top Five Offshore Company Formation Myths
Despite what movies and airport novels tell us, setting up an offshore company in a tax-neutral territory like the Cayman Islands is not an indicator of criminal activity. Here are the top five busted myths about offshore companies.
So-called tax shelters like the Cayman Islands are “sunny places for shady people,” said former British secretary of business Vince Cable a couple of years ago, reflecting a commonly held misconception that offshore companies are riddled with money laundering and tax avoidance.
But Hollywood and ignorance have propagated some powerful and enduring myths about offshore business and company formation. Here are the top five:
Myth 1: It’s Expensive Most business incorporation in the Cayman Islands can be handled for a couple of thousand dollars, start to finish. You can even buy a ready-made company, also known as a shelf company, and your business can be up and running in no time at all for very little cost. There is no minimum capital requirement at the time of incorporation, and the company can be incorporated with one shareholder and one director, which can be a corporation or an individual residing anywhere in the world.
Myth 2: It’s Time Consuming Company formation must be done properly, and there are different procedures in every country and state. If you don’t know what you are doing, it could be a lengthy and frustrating process. Far better to give the task to a licensed, respected company formation specialist with years of experience. Business incorporation can then often be handled in as little as 24 hours.
Myth 3: You Have to be a Tax Expert Each country, each state, and every municipality is different. You certainly want to avoid any conflict with regulators, so a top professional with access to accountants and lawyers within the offshore jurisdiction is a business essential. An expert provider of Cayman Islands corporate services will keep the minimal reporting requirements under control, allowing you to take full advantage of the complete lack of corporation, capital gains, income, payroll, property, withholding, or any other taxes on money earned outside the Cayman Islands.
Myth 4: It’s illegal Movies and airport novels are the source of this myth. If you open ANY business with the intent to steal, it’s illegal. As a British Overseas Territory, Caymanian Islands laws and the Court system are based on English common law and are recognized worldwide. The Cayman Islands company registry requires any company opening in the territory to have a registered office and a registered agent in the Caymans and there are any number of service companies that will provide you with an address and a dedicated agent for a very low cost, ensuring full legal compliance.
Myth 5: It’s Only for Criminals There is always the possibility that some proceeds from criminal activity will end up in an offshore company, but the majority of individuals and businesses that use them are legitimate. It has been recognized by international watchdogs that by far the majority of illegal funds are held in banks and financial centres in the United States. The Cayman Islands follows international tax rules, which has so far kept the territory off the blacklisted tax haven lists of the EU and the OECD.
Most people select an offshore company as a financially prudent decision. Whether it is to protect against inheritance tax, to reduce the amount of personal tax paid, or just to simplify conducting business across many jurisdictions, an offshore company can be the perfect vehicle to achieve financial security.