The issue of security and freedom of capital will always be relevant. As the solution to this issue will lead to maximum efficiency in the distribution of funds around the world. Offshore zones contribute to the solution of this issue in part. They are a kind of harbors for free trade, as in their time, the Venetian merchants used the nearby islets to make profitable deals.
Offshore companies will always be interested in their variety of goods and services. They will be especially in demand when conflicts and restrictions arise between large economically developed countries. And business will have to look for easy ways to trade. Studying this issue allows us to understand how to save our business in the future in a difficult economic and political situation.
The concept and essence of offshore zones.
Offshore zones are distinguished among financial centers. Offshore zones (jurisdictions) are called countries or certain territories of states, where at the state level for a certain type of companies, the owners of which are non-residents, established significant tax incentives, accounting and auditing requirements are partially reduced or absent, customs and trade limits are partially or completely abolished. Offshore zones carry out significant amounts of lending and financing in currencies of other countries.
Offshore zones have the following features: liberal currency and credit legislation, which protects the interests of investors without imposing excessive restrictions on financial institutions (low taxes, minor government intervention); performance of currency and credit transactions, usually with foreign currency for this country.
A characteristic feature of an offshore center is that its deposited capital is not stationary, but is intended for investment in high-yielding areas with a small tax abroad.
Domestic law considers the following to be cash flow related transactions: direct investments and portfolio investments; transfers for the payment of rights to real estate; purchase and issuance of loans for a period exceeding 180 days, as well as deferral of payment for the export and import of goods, works and services; other currency transactions that are not classified as current payments.
The implementation of these currency transactions in the international economy is often carried out with the participation of offshore companies. Therefore, it is difficult to overestimate the importance of offshore companies in foreign economic operations. Offshore production is understood as production going abroad in order to increase income through tax savings, the use of the most inexpensive labor force, and, in addition, to overcome significant import duties on finished products. There are several reasons why Russian companies prefer offshore zones:
1. Russian legislation is not sufficiently developed;
2. Low level of investment climate;
3. The stock market is underdeveloped;
4. Inefficient judicial system;
5. High energy tariffs, etc.
Offshore zones have many advantages for non-resident businessmen. Offshore registration of non-residents has been simplified and expedited, and a small amount of money is paid for it. Offshore tax payments are made at underestimated rates, and in some of them the confidentiality of enterprises' activities is also ensured, their operations are rid of government monetary control. Offshore markets in the United States, Canada and Europe are more easily accessible, international trade tariffs are removed, and the services of major transnational banks are acceptable.
In order to assess jurisdictions in accordance with their secrecy and the scale of their offshore financial activities, an index of financial secrecy was created. It has been calculated since 2009. The politically neutral rating is a tool for understanding global financial secrecy, tax havens or jurisdictional secrecy, as well as illegal financial flows or capital outflows. In 2018, Switzerland and the United States took the lead on this indicator.
Over the past few years, traditional offshore jurisdictions have begun to melt in the global marketplace. This happened after the U.S. and EU started a "war" with the leakage of money from the state and tax non-payers, when almost all traditional offshore jurisdictions were subjected to aggressive criticism and criticism in concealing data.
All this led to the signing of various data exchange agreements, both traditional offshore and offshore jurisdictions such as the British Virgin Islands, Bermuda, Cayman Islands, etc. All these states without exception belong to the British Commonwealth, namely Great Britain is considered the main activist in the war against tax evaders. Thus, in fact, these jurisdictions are offshore, but cooperation with foreign jurisdictions on the problems of providing confidential information makes these jurisdictions rather unattractive for safe business in the offshore.
Offshore jurisdictions are most commonly used in sectors such as real estate, investment and finance, banking, energy, telecommunications and retail. Offshorization or creation of tax havens has a very negative impact on the development of the global monetary and financial system. Now there is a huge number of offshore companies. It should also be noted that the actions of offshore companies are now global.