By David Dadson From Examiner.com

One of the profit earning strategies of business firm is incorporating their companies in offshores. These countries are usually called as offshore financial centers (OFC) which offers service to offshore companies. Their business friendly traits help multinationals to establish their firms in these countries. There is no red tape in setting up a company and the tax legislation favors offshore firm to establish them. Also, it is giving legal protection to the company, directors and shareholders.

Popular tax haven countries

Every company wants to set up their manufacturing unit at a location where abundant manpower, power resources and transport facilities are available. In addition to that if there is any relaxation in profit tax and obviously the location will attract the business firms. Such countries are called tax havens. Places like Switzerland, Bermuda, The Cayman Island, Luxemburg, Ireland, Virginia islands are some of the tax haven countries. A recent study shows that about $21 to $32 trillion was invested in this tax havens.

Let’s see about an offshore financial center, the Cayman Islands. Cayman is the place where no personal, income tax, corporate tax, no sales tax, no estate duty, no gift or inheritance tax, no employment tax and many more no’s. The Cayman has not signed any treaty with any nation until the recent Organization for economic cooperation and development (OECD)’s BEPS agreement to disclose the secrecy information about the clients who are holding their wealth in Cayman banks. However, these traits are required by many multinationals for their offshore incorporation. It is a British colony near to USA which favors USA companies to register their company in this famous tax haven. It consists of 500 banks and trustiees and more than 300 insurance companies. Most of them are US and Canadian firms.

Why the business firms moving towards tax havens?

Many service providers are acting as intermediate between tax haven and the company. Those service providers know what is the procedure to incorporate your company offshore? And what are all the tax benefits in all these tax haven? They work according to your aspiration to put a berth on these tax exempted locations. The procedure itself simple and they will let you incorporate the company within 48 hours. The company’s bill and savings in banks will be in the name of trustee and also their political and legal legislation will not disclose any secrecy of you to the authorities of your company’s domicile. Even though there are recent efforts to put a break to these tax havens by world countries they will not able to identify you. Your name will not be there in any of the registers, bills etc. companies who want to avoid the extra burden of taxes by the governments are moving towards these locations, they will be grateful to the tax havens and globalization. They are earning more profit by legal means and it is also en route to business expansion in overseas. But government agencies are claiming that many companies exist in registry and website only. It is the era of political government started spying their citizens, some of the affected groups wanted to protect themselves from this authoritative government. So incorporating their firm seems protective cover for them.

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