Today legality and appearance are the essential requisites for the offshore entrepreneur. In many circumstances, it is not desirable to raise invoices in the name of an exotic offshore company, nor is it possible to ask your offshore company’s clients or trading partners to make payments to a bank in an obvious offshore tax haven.

Remember that the books of your customers or trading partners are open to scrutiny by their local tax authorities and dealings with offshore havens (even if legal) are viewed with skepticism, if not suspicion. Tax authorities of high-tax nations are aware that offshore companies can be used for illegal tax evasion by businesses that need to “reduce” their taxable profits before year-end.

After all, the ownership of an offshore company is difficult and often impossible to establish. This allows dishonest business owners to incorporate a company in an offshore haven and use it to siphon money offshore, usually by having the offshore company raise invoices payable by the onshore business.

Consequently, trading directly in the name of a tax haven company can cause loss of business as many prospective customers feel uneasy about being wrongly suspected of participating in such invoicing.

In many developed countries, tax authorities do not even allow or recognise payments remitted to companies based in offshore tax havens. This reflects the opinion that anyone entering into a transaction with an offshore company is not doing so out of genuine commercial need, but solely for reasons of tax mitigation, if not tax evasion.

Of course, there are times when an offshore company can be used to close a one-off deal if both your trading partners and the relevant tax office feel happy about the arrangement, or they are not located, most usually, within Europe, North American and other sensitive countries. But entering new markets or marketing products or services to unknown customers under the name of Tropical Island Trading Corp., incorporated in the Seychelles or Belize, which is perfectly workable, unless, of course, you really are exporting current consumer goods.

Staying within the law! Any tax mitigation structure must ensure compliance with the law. If mistakes are made, not only can any tax-saving benefits be lost, but heavy penalties can be incurred.

And that’s all we shall discuss on this e-Report to keep you full informed about the New Offshore Options.