Offshore is a term that denotes a way of conducting your business that consist in
registering your company in a tax heaven and investing in companies that run there. The
majority of countries require that their entrepreneurs pay taxes. These taxes provide the
income that is necessary to run the country. A country of 80 million people has to take
care of the ill, elderly, children, has to provide education and maintain the army, courts,
and so on. Therefore the minority of the citizens that are involved in commercial activity
have to pay significant amounts of money as taxes to support the rest. However, when
they are forced to pay taxes, they have less money for their investments and therefore
they make less profit than they would if they were exempted from paying taxes. On the
other hand, there are countries that have only a couple of thousand of citizens and which
have a different way of securing the money necessary to operate (these countries are
usually located on small islands hence the term “offshore”). They are too small and are
not an attractive place for commercial activities, and therefore can not rely on taxes as
means for providing money. They allow anybody to run their companies without paying
real taxes, instead demanding just a constant, annual fee. The freedom of trade means
that you can register your company in any country you want, and that is why wise
entrepreneurs register their companies offshore, and then work as if they had business in
their own country. This way a small country attracts hundreds of thousand of
companies, and its budget is filled with tremendous amounts of money coming from the
annual registration fees. The companies are freed from paying taxes and both sides are
satisfied. At this point you probably want to ask why aren’t all the companies registered
offshore? Well, there are two reasons: the lack of knowledge among the entrepreneurs
(ask a typical business person what offshore is and most likely you will not get any
answer) and the fact that the annual fee is at the level of $3000. So this business is good
for people whose tax per year exceeds this amount. This excludes 90% of small
companies, giving unlimited possibilities to the remaining 10%, however.
Apart from zero taxes and maximal profits there are two more things that direct
businessmen to offshore – the knowledge and over-average skills in making money.
Somebody who was clever enough to find out what offshore means, learn about the
mechanics of international investments, and start a company in a tax heaven without any
doubt must be predestined to increase his money effectively.