A tax haven is a spot where certain taxes are levied at a low rate or under no circumstances e.g. Seychelles tax for an offshore company is zero. This encourages wealthy individuals and/or firms to determine themselves in areas that might otherwise be missed. Different jurisdictions are inclined to be havens for several types of taxes, and for various categories of individuals and/or corporations.
A Seychelles offshore company formation is allowed when the corporate incorporated doesn’t conduct substantial business in Seychelles. Such a International Business Company [I.B.C] is generally known as a Non- Resident company.
Benefits
A Seychelles offshore company formation may bring quite a few advantages to individuals or corporations incorporated under the Seychelles offshore laws.
* Taxation: Business could also be structured in order that profits are realized in ways in which minimize their overall tax liability.
* Simplicity: Apart from regulated businesses, similar to banks or other financial institutions, a Seychelles offshore company formation is comparatively easy to establish and maintain.
* Reporting: The extent of knowledge required by the registrar of corporations varies from jurisdiction to jurisdiction.
* Asset protection: It is feasible to prepare assets and transactions in such a way that assets are shielded from future liabilities.
* Anonymity: By carrying out transactions within the name of a personal company, the name of the underlying principal could also be kept out of documentation. Having said that, current anti money laundering regulations often require banks and other professionals to leaf through company structures. Documentation for Seychelles offshore company formation is comparatively uncomplicated.
* Thin capitalization: Seychelles offshore company formation allows “thin capitalization” rules for its I.B.C corporations (aside from regulated entities similar to banks and insurance firms) in order that they will be incorporated with nominal equity.
* Financial assistance: Seychelles offshore company formations are often not prohibited from providing “financial assistance” for the acquisition of their very own shares, which avoids the needs for “whitewash” procedure in certain financial transactions.
Disadvantages
* Seychelles offshore company formation is often prohibited from conducting business of their jurisdiction of incorporation. They aren’t any allowed to take a position in property Seychelles either.
* For regulatory reasons, there are particular restrictions on the form of business which a Seychelles offshore company formation can engage in. For instance, it is sort of common for there to be general prohibitions against offshore corporations engaging in banking business, insurance business or operating as a trust company.
* Due to the limited amount of publicly available information in reference to offshore corporations, there is often a high level of hidden costs at the executive level.
For instance, to open a checking account within the name of an offshore company, to comply with relevant anti money laundering regulations, the bank will normally require large quantities of corporate documentation to be notarized within the jurisdiction of incorporation, and should require opinions from local lawyers in that jurisdiction as to the capability and power of the corporate to open and operate a checking account.
* Certain countries have “anti tax haven” laws which makes it difficult to conduct business in those countries using an offshore company. For instance, capital markets regulations in France prohibit using offshore corporations as bond issuing vehicles.
* Where a shareholder of an offshore company formation dies, it is often vital to have the desire admitted to probate in Seychelles as well (or, if intestate,to have the letters of administration re sealed in that jurisdiction), which might add to cost, delay and inconvenience in administering the deceased’s estate.
Features of Seychelles offshore company formation
* Memorandum and articles of association or bylaws – these documents are fundamental to the existence of the corporate, and detail the rights of the members, the objectives of the corporate and the interior processes of the corporate.
* Certificate of Incorporation: That is issued by the Registrar of Corporations, and is proof that the corporate has been brought into existence. Other information could also be vital to prove that the corporate has not been liquidated or struck off.
* Registration Agent: It’s normal for an agent to be appointed within the jurisdiction through which the corporate is incorporated for the aim of coping with official communications with the registrar.
* Registered Office: That is the official address of an organization, to which official documents are sent and legal notices received. It’s normal for the registration agent to supply a registered office. An organization can have other business and correspondence addresses.
* Members: These are the legal owners of the Seychelles offshore company formation. For administrative simplicity, or for anonymity, a company service provider may provide nominees who will hold shares on behalf of a helpful owner, and act on his instructions.
* Directors: The individuals who manage the routine affairs of company. In lots of jurisdictions it is feasible for corporations to be directors of other corporations. Corporate service providers in offshore jurisdiction of Seychelles will often provide directors.
The corporate is mostly considered to be resident for tax purposes on the place where the selections are made.
* Nominee directors: In some cases, it has been shown that the formally appointed directors merely act because the alter ego of others, blindly following their instructions. In these cases, the courts have considered that those instructing the named directors really control of company, and that the named directors merely rubber stamp decisions.
* Company Secretary: That is the one that is accountable for ensuring that the Seychelles offshore company formation meets its statutory obligations. Corporate service providers often provide this service.
* Statutory Records: An organization is obliged to take care of registers setting out certain information concerning the company. The mandatory records vary from jurisdiction to jurisdiction, as does the extent of public access to the data contained within the records. Many jurisdictions require that the records are kept throughout the jurisdiction through which the corporate is incorporated. The records required may include minutes of meetings, registers members, directors, officers and charges.
* Bookkeeping: Directors are generally required to maintain proper records. They might be required to arrange audited accounts. Specific requirements vary between jurisdictions and should rely on the character of the corporate’s activity. For instance all banks will need to arrange audited accounts, whereas a personal investment company may not have such an obligation.
Kinds of Seychelles offshore company formation
To facilitate business Seychelles, several types of company formation have been allowed by the authorities. Examples of offshore corporations include the Limited Liability Company (L.L.C) and the International Business Company (I.B.C). The next forms of company are common in offshore jurisdictions:
* Company having a share capital: These corporations issue shares. Once the initial cost of a share (capital and premium) has been paid, the shareholders don’t have any further obligation to the corporate. The shares may, subject to the principles of the corporate, be sold or transferred, and the shareholders have the best to benefit from the profits of the corporate or any proceeds of liquidation.
* Company limited by guarantee: The members of the corporate comply with pay as much as a maximum limit an event that the corporate becomes insolvent.They might acquire certain rights against the corporate,similar to the rights to a dividend and the precise rights will likely be set out in the principles of the corporate. Membership may terminate on death, and guarantee corporations have been used for not for profit organizations. There are also sophisticated estate planning schemes which make use of guarantee corporations.
* Protected cell corporations: Some jurisdictions e.g. Mauritius and Seychelles permit cellular corporations, where particular assets and liabilities are segregated into “cells”, in such a way that the assets of 1 cell can’t be used to satisfy the liabilities of one other. Cell corporations are particularly used for umbrella mutual funds or unit linked insurance bonds.
Many offshore jurisdictions offer increasingly specialized types of corporations in addition to specialized trusts and partnerships, searching for to extend their share of the market.
Examples include limited duration corporations, unlimited liability corporations, corporations limited by guarantee and with a share capital, restricted purpose corporations and hybrid entities similar to limited liability partnerships, that are more akin to corporations to actual partnerships, and foundations, that are nominally trusts but are more akin to corporations than trusts.
Merger
The standard approach to merging corporations is for one company to amass the assets of a subsidiary on its liquidation. This sometimes creates contractual difficulties, and requires third parties to accede to the transfer of obligations from the liquidated company. Some jurisdictions have tackled this issue by permitting corporations to merge, forming a recent combined entity, which represents a continuation of the companies of every former company.
Relocation of corporations
Some jurisdictions permit corporations to re domicile. They might do that to benefit from particular features of the brand new jurisdiction, similar to merger laws, or tax treaties with other countries. The law in each the old and recent jurisdictions must permit re-domicile. The business of the corporate is deemed to proceed without interruption on re-domicile.
