Recently many companies have started to register their business in countries other than the one they are operating in. You might wonder if this is legal and well to that the answer is yes, it is perfectly legal. The reason why many companies choose to do this is due to the massive benefits they stand to gain.
So what are these benefits? Well you can find them out right down below.
Minimize the amount of tax they need to pay
Many countries do not require offshore companies in Dubai as these companies are known to pay taxes. If they are taxed, it is generally at a lower rate than domestic companies. You might wonder if this is tax evasion and the answer is no, it is no. it is legal however you need to get advice from experienced professional and lawyers to ensure that you do not go against the tax policy or legal system of the country you are operating in. This is because corporate taxation can be a rather complex process so if you do not take guidance and help from someone who knows how it works in the country, there are chances you might actually do something illegal and put your company in danger.
The reason why even though the process is complicated, businessmen still choose to set up companies in a country other than their own primarily due to taxes, is that the benefit of reduced taxes is huge. When taxes are low, the company can choose to carry the tax burden instead of sending it to the customers. This would allow them to reduce the price of the good or service they offer which would in return increase sales and make them more competitive in the industry. Furthermore by having reduced taxes, the offshore company could reduce the overall cost of production, this would increase their margin of profit and allow them to earn more.
Certain information that you do not want to reveal does not have to be revealed
Any company will have information they would rather not share with the general public. Information such as the details of the shareholders and directors in the off-shore Company and financial documents are examples of what a company might not to share. In many countries off shore companies do not have to publish this information unless they are suspected of criminal activities. The benefit of this confidentiality is that companies who are having financial difficulties can choose to still keep face with the public and not lose prestige. Furthermore if one of the shareholders in the company is a person the public dislike then the company would not have to worry about receiving backlash as the public do not have to be informed.
As you can see companies stand to benefit significantly from registering in a country other than their own so if you wish to do the same, go ahead. However always remember to take guidance so you do not do anything illegal.