Dispelling Myths About Offshore Corporations

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Offshore companies and corporations bring lots of benefits to investors who are forward thinkers and risk-takers. But despite the incentives it provides to business owners, there are still lots of myths surrounding the nature of this business structure.

If you are having second thoughts on becoming one of the newest RAK free zone companies through offshore incorporation, you need to know these myths and the truth behind them:

  • Offshore is being used to illegal activities


One of the most damaging myth about offshore formations is that criminals and felons are using the system to conduct their illegal activities. Although there are some news corroborating such myth, these are considered isolated cases. Offshore companies are legit entities and the process of application and processing for incorporation includes verifying the identity of the stakeholders and the nature of the business. Since some offshore corporations are breaking laws, it is become associated with the whole concept of formation. But in reality, offshore company setup are legit and go through a legal process.


  • Offshore is not regulated


Since offshore companies are situated in business districts and location that have tolerable laws in terms of doing business, some people think that it is not regulated at all. But the fact is, each jurisdiction provides a set of laws and regulations that are to be followed by offshore companies and entities. There are also governing agencies that are monitoring the movements of these companies and regulating those who are about to join the ranks of offshore entities. The laws are a little relaxed but it doesn’t mean that there are new laws in placed.


  • Offshore is not a real company at all


One of the reasons why this myth sounds believable is because of the nature of offshore corporation – not requiring a physical business space to conduct their business. But it is a case-to-case basis. There are some jurisdictions who requires business owners to set up a physical presence, there are some who do not require applicants at all. But even without an office space, offshore companies are still considered legit companies as they went through the same process of personally applying for incorporation. They were issued certificates and permit which proves that they are operational.


  • Offshore companies are tax-free

Most business consultancy firms front that offshore companies are enjoying tax free privileges. Again, that would depend on the location. There are jurisdiction who offers tax-free haven to offshore incorporators but there are some who still impose corporate taxes.

Read full article about offshore formation here.