Offshore operations Offshore operations website website

Offshore legislation opens up opportunities for optimizing the work of different types of businesses. The real mechanism for obtaining benefits comes down to specific operations. They are carried out on a global scale, since offshore companies are a tool for international trade, financial and tax planning and capital diversification. This determines the essence and nature of such activities.

Offshore operations are legally permissible, legal processes that are carried out on behalf of business structures (companies, funds, holdings) registered in jurisdictions with preferential tax regimes and convenient financial legislation. In essence, they represent a list of services that territories provide to entrepreneurs for remuneration in the form of annual fees or duties.

What is considered offshore operations?

Operations carried out in jurisdictions with favorable conditions vary as much as offshore companies themselves. In light of trends towards increased control over international taxation, more and more countries are beginning to offer alternative financial instruments that are both beneficial to business and suitable for the global community. In order not to violate global rules, offshore companies have to constantly modernize their services. The main transactions with such jurisdictions include:

• consulting support - when working with offshore companies, it is very important to find the right strategy in advance, decide on the location of the business and production facilities, and choose a country with the desired tax regime;
• registration of companies in the jurisdiction - this opens up opportunities for effective profitability planning (due to the fact that traditional offshore companies do not levy taxes on activities outside their borders) and allows you to conduct business on behalf of a company from a “respectable” country;
• opening accounts in banks of a convenient jurisdiction - this will ensure the secrecy of deposits, the safety of funds and their availability for business transactions;
• trust management and nominee service - hiring persons who undertake to represent the company in government agencies in the international arena makes it possible to hide the true owners and beneficiaries, as more and more offshore companies, under pressure from the international community, open their registers;
• capital management, investment, acquisition/ownership/disposal of property, trust and other operations of a speculative nature.

The situation on the international market often changes - some instruments become a thing of the past, they are replaced by alternative ones. For example, trusts are increasingly being embedded in holding structures, whereas previously they were used mainly in private settings. The most popular offshore operations that are not losing ground are mainly in the areas of tax planning and banking finance.

Operations that allow you to optimize taxes

Tax optimization is almost the main goal of using offshore jurisdictions. Its essence lies in choosing the most effective, low-cost business model, in which, if operations are legal, it will be possible to save most of the profit. Savings are achieved by reducing tax losses due to the correct interpretation of legislation and the correct choice of location for the company and assets. Along with increasing profitability, an entrepreneur can receive other benefits - a high degree of business confidentiality (although it is constantly decreasing in the modern world), access to international lending, and so on.

Tax planning operations can be divided into four areas:

• selection of an advantageous location for companies, taking into account the specifics of management, asset control, and the structure of commercial divisions;
• selection of legal forms based on the principle of increasing tax efficiency;
• carrying out transactions within a convenient legal framework and their documentary support;
• activities to allocate the profit received and place it in reliable, suitable for storage funds. jurisdictions.

Jurisdictions that are suitable for such transactions are called “tax havens”. They differ from financial and credit centers with strict and rigid fiscal rules. These are, in most cases, traditional offshore companies, although preferential conditions are also available in respectable European countries: Luxembourg, Switzerland, and Cyprus. Trading enterprises and ship-owning companies are founded in the jurisdictions - Singapore, Panama, Morocco and other states offer especially favorable conditions for the latter.

You need to understand that only an integrated approach will fully ensure the efficiency and legality of using an offshore company. This means that you will have to pay attention to working with banks, since in most cases the movement of capital flows passes through transnational accounts.

Banking operations offshore

Offshore banking refers to the established practice of providing services to external clients (non-residents of the country). This allows you to control taxes and conduct effective activities at the international level. In recent years, the loyalty of the world's leading powers and transnational organizations to banks from classic offshores has decreased. Therefore, it is more profitable to conduct transactions in jurisdictions with a good reputation and a stable financial system, even if you have to sacrifice some anonymity. In some cases, this will not be necessary: ​​for example, banks in Liechtenstein and many Swiss institutions do not disclose information, responding only to a personalized request from the authorities.

Offshore accounts allow you to:

• control the flow of capital during transnational business operations;
• distribute funds according to their intended purpose - accumulation, operating activities, investments;
• store money safely and securely, form capital, and so on.

Banking operations as part of offshore mechanisms are a tool for protecting commercial interests and business secrets, but the tool must be used wisely. Insufficient knowledge of legal norms and the real state of affairs leads to dramatic consequences, including criminal prosecution. In order for operations involving offshore companies to be legal and profitable, the care of their development and implementation should be entrusted to professional experts. The Prifinance company will help establish work with convenient jurisdictions and will do everything to ensure that customers increase business efficiency without going beyond the boundaries of the legal field.

Offshore confidentiality is at the core of offshore transactions. Protection of trade secrets usually comes down to non-disclosure of the name of the actual owner of the enterprise. Such protection is provided by issuing shares to bearer or through a trustee (nominee owner, i.e., in fact, a figurehead).

Describe the content of offshore operations.

At the end of 1998 - the first half of 1999, the share of offshore operations

Currently, among European countries, offshore operations are developing most dynamically and making a significant contribution to the national economy of Cyprus. This type of economic activity arose here after 1974, when the country was threatened by economic ruin; to overcome the crisis, Cypriots began to look for opportunities to achieve economic success outside the island, trying to penetrate the foreign market.

European countries are beginning to gradually lose their leadership in the scale and dynamics of offshore operations. Europe is losing its status as a “trendsetter” in offshore business.

A type of offshore banking zone is international banking zones, isolated geographically or extraterritorially. Their specificity lies in the special conditions of banking operations, which differ from the national credit market, strict specialization, and partial tax exemption. A number of banking regulations do not apply to international banking zones, including the required reserve system and participation in the bank deposit insurance fund.

The latter include territories where tax, currency and other benefits apply to those non-residents who base their accounts and companies in these territories, but carry out financial transactions exclusively with other countries. These are predominantly island states, some of them have already turned into regional and global financial centers (Cyprus, Panama, Bermuda, Bahamas, Cayman Islands, Antilles, etc.), countries located next to world financial centers (Liechtenstein, Ireland, Channel Islands), or some territories of the countries participating in the IFR (for example, certain US states and cantons of Switzerland). It is estimated that about $5 trillion in financial resources are located in offshore centers, including an estimated $100 billion of Russian origin.

Offshore business is especially well represented in insurance and banking. For example, foreign banks that have migrated to offshore zones are issued an offshore license, on the basis of which these banks can enjoy certain benefits, but on the condition that they will carry out all their operations and transactions only with foreign borrowers (non-residents).

The fight against the creation of offshore zones within the country is carried out through the adoption of legal norms that complicate the procedures for registering taxpayers, establishing special rules for taxation of transactions between related parties, introducing liability for violations of tax legislation.

The development of the trust is primarily associated with a fall in the profitability of operations in the financial market, where its participants were faced with the need to form investment portfolios by qualified managers. Financial consulting, which has long been carried out by large investment companies, is often accompanied by the organization of trust management based on various types of schemes using balance sheet and off-balance sheet accounts, as well as the emergence of tax planning schemes and minimizing the volume of tax payments using offshore companies. The state views the trust as a source of replenishing the state budget by transferring into trust management blocks of shares of privatized enterprises that are federally owned. However, a limiting factor in the development of the trust services market in Russia is the lack of special legislation.

In offshore enterprises (companies) of these zones, accounting and reporting is reduced to a minimum, and in some offshore centers there is no requirement to maintain accounting records at all (Panama, the Antilles and Channel Islands, Liechtenstein). Offshore companies can carry out any financial and trading transactions around the world. Their advantages are the ability to carry out financial transactions as quickly as possible

The first way is to make foreign exchange transactions more expensive to reduce capital mobility and reduce the pressure of speculative foreign exchange rates. This approach, known as the "Tobin tax", has found support among many of the new generation of economists in the form of an international universal tax on all syllabic conversions of one currency into another, proportional to the size of the transaction. Traditional arguments against the Tobin tax include reducing liquidity, failing to collect the tax, and encouraging offshore foreign exchange transactions.

Question How do you think the growth of offshore financial transactions should be regulated?

OFFSHORE BANK - a bank located in an offshore zone, an offshore banking center or a free banking zone, where international transactions of banks with non-residents in

Also, it should be noted that currently control over the transfer of foreign currency to organizations resident in states that are offshore zones (or have offshore zones on their territory) has been significantly strengthened. Thus, by the Directive of the Central Bank of the Russian Federation On strengthening currency control on the part of authorized banks over the legality of foreign exchange transactions carried out by their clients and on the procedure for applying sanctions against authorized banks for violations of currency legislation dated February 12, 1999 No. 500-U, servicing banks are required to inform The Central Bank of the Russian Federation about each fact of transfer by a client of foreign currency funds in favor of non-residents registered in states and territories where offshore zones are located, the list of which is established in the appendix to this instruction. However, it can be noted that these instructions establish the obligation of servicing banks only to provide information to the Central Bank of the Russian Federation, but do not prohibit or limit such customer transfers.

Let’s say that a contract of agency is concluded between the Russian enterprise in question and an offshore company for the purchase of imported goods on the territory of a foreign state. The amount of the attorney's remuneration constitutes the lion's share of the profit planned by the Russian enterprise. In fact, the search for partners is carried out by the Russian enterprise itself. The attorney's remuneration will form the net non-taxable profit of the offshore company. Similarly, profits from export operations can be deducted from taxation. The costs of a Russian enterprise in paying remuneration to an attorney will be attributed either to an increase in the cost of imported goods, or as part of the costs associated with the sale of exported raw materials. You can transfer part of the funds of a Russian enterprise to an offshore company by concluding an agreement for the provision of information and consulting services related to the acquisition or sale of goods (subject to mandatory compliance with all the conditions necessary to attribute these costs to the cost of products (works, services)).

Offshore - offshore 1) not subject to national regulation - usually about financial institutions with a special status or simply a company located abroad with headquarters and official registration in a country whose legislation helps reduce the tax burden or bypass various restrictions on operations 2) overseas, foreign.

Such zones also exist in developed capitalist countries. Here they are created as if in opposition to offshore centers in developing countries with the aim of subordinating operations on the international capital market to national monetary authorities. Thus, at the end of 1981, an international banking services zone was opened in New York. The American authorities did not need large capital investments for this; New York banks were allowed to create branches with some rights of foreign branches of US banks. The calculation is made to allow American banks to carry out directly in New York those operations that they previously had to carry out through their branches in London, the Bahamas, etc. This

Offshore operations (from English, op-spog - located at a distance from the coast, outside the territory of the country) represent the legislative basis for international financial and trade transactions carried out by enterprises registered in a territory that has the status of a tax haven, a type of which is an offshore center. Offshore operations are a financial instrument that, without violating current legislation, is used to plan and minimize taxation and to protect trade secrets. Offshore operations are a whole range of operations and services, which include

Since the mid-1980s, there has been an offshore boom in the coastal and island countries of the Caribbean, where there are currently about 20 offshore centers. Offshore operations in Hong Kong and Singapore have intensified. Offshore centers have been created in Malaysia (Labuan Island), in Oceania (Western Samoa, Nauru, Vanuatu, Marshall Islands, etc.).

The total reserves of TNCs are now several times greater than the reserves of all central banks combined. Moving only 1-2% of the mass of money held in the private sector is quite capable of changing the parity of any two national currencies. Today, financial capital has many new opportunities for self-expansion through generally unmediated processes: the functioning of offshore zones or tax oases, where capital is reliably protected from the outside and can be repeatedly scrolled, drawing funds from social funds (pension, social insurance) into the zone of influence of speculative capital through imposing a transition to the so-called funded social security system, intensive use of new financial instruments and operations (derivatives) in recent decades, including in the form of futures and options, which provide an excellent opportunity for limitless financial manipulation. As a result, economic globalization is increasingly taking the form of financial globalization, undermining the foundations of national monetary and financial systems. Financial globalization is dramatically increasing economic instability and social inequality. It ignores and nullifies the choice of peoples, suppresses the sovereignty of states in the interests of the development of TNCs and financial markets.

In most developed capitalist countries, O. With. - one of the official rates with the help of which the Central Bank exercises the function of lender of last resort in relation to commercial banks and regulates (mostly indirect) the loan capital market. OFFSHORE is a term used to characterize global financial centers, as well as some types of banking operations, roughly corresponding to the concept of the euro (see euro market, euro currency). O. is an established foreign company, for example, in the Republic of Cyprus, with the right to work only abroad . By encouraging the development of offshore business, which brings huge profits to the country, the governments of countries that have allowed the opening of an offshore organization in the country, as a rule, provide significant benefits to foreign companies. Here is one example. In addition to the fact that Russia has a double tax treaty with Cyprus, the official income tax for an offshore company is purely symbolic - 4.25%. Moreover, when settling in, such companies enjoy the right to duty-free purchase of all office goods, from cars to computers. O.'s services are useful to Russian businessmen for their speedy integration into Western business structures. O. requires a lot of preparation and knowledge. Through O., Russian banks and companies can advertise themselves on the foreign market or, conversely, obtain information about Western partners. O. works in any direction. Take, for example, the merchant and commercial fleet. You can, say, on the same o. Cyprus to establish a shipping company to organize and manage the ships of this fleet around the world, using Western technology and methods. At the same time, shipping profits in Cyprus are generally taxed

In addition to its huge capacity, the European securities market is also attractive because it allows issuers to reduce costs by conducting arbitrage operations, by taking advantage of differences in exchange rates, interest rates, and also through tax benefits. A number of financial centers of the European market are offshore zones. By the way, Japanese banks carried out almost all issues of medium-term Eurobonds in 1995 through them.

OFFSHORE BANKING CENTER - a global financial center where banking institutions are allowed to conduct transactions with non-residents in a foreign currency for a given country, which are not subject to the national regime for regulating banking operations, levying taxes and currency control. A similar regime exists on the European market in relation to transactions with Eurocurrencies. In O.b.c. The internal market for loan capital is isolated from the external one by separating the accounts of residents from non-residents. The most important O.b.c. - London, Paris, Brussels, Luxembourg, Bahamas, Bermuda, Cayman Islands, Singapore, Hong Kong, Bahrain, Panama, Vanuatu, Norman Islands (Guernsey, Jersey). After New York was declared a free banking zone, O.b.c. This city also applies

Yes. But they didn't admit it, officially. They can't admit it. L TCI was not insured. It was even offshore. You can imagine the political fallout if government officials admitted that they were essentially investing taxpayer money in an uninsured offshore corporation. But as I told you, LT M's executives were well connected. One of them was a former Federal Reserve official. He apparently contacted the New York Fed, and authorities immediately launched a rescue operation.

Free banking or insurance zones are talked about in cases where they want to characterize the features of the activities of transnational banking and financial corporations in a number of small island states (Bahamas, Bermuda, Cayman Islands, etc.). who have built their well-being on the fact that they have created within their own borders the most liberal regime for the functioning of such corporations. The only serious restriction is that they are prohibited from entering into transactions with residents of the host country. Otherwise, the regime is extremely favorable; there are no restrictions on the size of investments and the nature of transactions; no mandatory level of liquidity has been established for banks operating here; full or partial tax exemption on profits and interest transferred abroad is allowed. Typically only property taxes, registration fees, and stamp duties are charged.

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The emergence of offshore operations is caused by the implementation of tax reductions on business income through legislation.

A resident entrepreneur is required to pay taxes on turnover and on profits received from his activities within the country and abroad.

An entrepreneur involved in foreign economic activity pays taxes twice.

Double taxation is the taxation of the profits of a foreign participant in a joint venture when they are transferred abroad and the taxation of the same profits in the country of the foreign participant. Therefore, in order to avoid double taxation and to stimulate the foreign economic activity of entrepreneurs, many states have entered into an agreement (convention, treaty) with each other on the exclusion of double taxation. For example, as of April 24, 1997, the Russian Federation has agreements (conventions, treaties) on the avoidance of double taxation with 28 countries (Austria, Belgium, the United Kingdom of Great Britain and Northern Ireland, Denmark, etc.).*

* Letter of the State Tax Service of the Russian Federation dated April 24, 1997 No. BE-6-06/318 “List of existing agreements on the avoidance of double taxation.” - Economics and life. - 1997. -№20.

In addition to eliminating double taxation, to stimulate international commercial turnover, the principle of minimizing taxes on a legal basis is used, which is the basis for offshore operations.

OFFSHORE OPERATIONS (eng. off-chore - located at a distance from the coast, outside the territory of the country) represent the legislative basis for international financial and trade transactions carried out by enterprises registered in a territory that has the status of a tax haven, a type of which is an "offshore" center. .

Offshore operations in their content represent a financial instrument that, without violating current legislation, is used for planning and minimizing taxation and for protecting trade secrets.

Offshore operations include:

1) consulting services on minimizing taxation, choosing an offshore zone, etc.;

2) services for the creation and registration of offshore enterprises (companies), for opening bank accounts, for the sale of these enterprises, etc.;

3) services for the effective use of offshore companies in international commercial transactions;

4) services for managing an offshore company through a trustee;

5) speculative operations for capital management (currency dealing, investments, ownership and disposal of foreign property, real estate transactions, transfer, trust transactions, etc.);

6) consulting services on tax planning.

Tax planning means using a variety of factors (geographical, legal, economic) to reduce tax losses.

Tax planning is the choice of the optimal combination and construction of legal forms of relations and possible options for their interpretation within the framework of the current tax legislation. In other words, tax planning is a choice between various options for methods of carrying out activities and allocation of assets, aimed at achieving the lowest possible level of tax liabilities arising in this case.

The tax planning process includes four stages (Table 8.1).

Offshore confidentiality is at the core of offshore transactions. Many offshore jurisdictions* have adopted special laws that provide criminal liability for the disclosure of confidential information to persons with official access to it.

* Jurisdiction is the legal area covered by the powers of a given government body.

Table 8.1

Stages of tax planning

	Resolving the issue of the most advantageous location (registration) from a tax point of view of the organization itself, its governing bodies, main, production and commercial divisions, etc.
	Choosing the legal form of the organization and its structure, taking into account the nature and purpose of its activities
	Correct and full use of the possibilities of tax legislation and tax benefits in determining taxable income and calculating tax liabilities, as well as their mutual coordination with the legal forms of transactions
Fourth	Rational, from a tax point of view, placement of profits and other cash savings, use of working capital

Protection of trade secrets usually comes down to non-disclosure of the name of the actual owner of the offshore company. Such protection is provided by issuing bearer shares or through the use of a trustee (ie nominee owner) of an offshore company.

A trustee (nominee owner, nominee partner) is actually a figurehead who is included among the owners of the company and holds the post of director, but under the terms of the memorandum of association and charter, deprived of almost all rights.

Confidentiality is also associated with the presence of bank accounts and an offshore company, information about which the bank can only release in the event of legal proceedings (for example, in criminal cases of drug trafficking, etc.).

TAX HARBOR (similar concepts: TAX SHELTER, FISCAL OASIS) is a small state or territory that pursues a policy of attracting foreign credit capital by providing tax and other benefits. The tax haven provides benefits to foreign and local entrepreneurs (firms, companies). Sometimes preferential taxation applies only to certain types of income received, for example, in Luxembourg there is a preferential tax regime for banks; in Switzerland and Liechtenstein - for holding intermediary and trading companies; in the Bahamas - complete exemption from income tax.

The legislation of states that have tax havens provides for commercial structures to be completely exempt from tax (Ireland, Liberia) or subject to a small lump sum tax (a single amount) (Liechtenstein, Antilles, Panama, etc.). Switzerland has a lower tax rate, which under certain conditions may not be collected.

An offshore center is a type of tax haven.

"Offshore" centers are small states and territories located mainly on sea coasts and in places of developed international tourism and pursuing a policy of attracting foreign credit (the old name for loan) capital and, unlike tax havens, providing tax and other benefits only for financial and credit transactions with foreign residents in foreign currency.

The most famous offshore centers include Belize, Panama, Liberia, Cyprus, Malta, Singapore, Gibraltar, Delaware in the USA, etc. Conducting commercial activities in the country of registration of an offshore company is, as a rule, prohibited.

Offshore centers are fundamentally different from free trade zones. Free trade zones provide tax and other benefits to all enterprises operating within the zone, while offshore centers provide only enterprises (offshore companies) operating outside their territory.

Offshore centers have a certain specialization, which is based on different types of jurisdiction.

There are banking, trust, and insurance jurisdictions. Among insurance companies, there are jurisdictions that are more suitable for intra-company insurance, and those that are more suitable for reinsurance.

In the market of one profile, several offshore centers can compete with each other. For example, registration of offshore ship-owning companies is carried out in Liberia, Panama, the islands of Cyprus, Maine and other places.

From the point of view of providing benefits, jurisdictions are divided into offshore companies themselves, which are classified as tax havens, and into jurisdictions with a “moderate” tax climate.

Offshore companies themselves are characterized by the absence of taxation and reporting, as well as their exclusion in most cases from the scope of international tax treaties. Jurisdictions of this type include most offshore centers: Panama, Cyprus, the British and Virgin Islands, where there is an agreement to eliminate double taxation, etc.

Jurisdictions with a “moderate” tax climate include Austria, Belgium, Luxembourg, the Netherlands, and Switzerland. The legislation of these countries contains rules that allow tax reductions, sometimes even to zero, when conducting offshore operations.

In offshore centers, the requirements for mandatory reserves of commercial banks are relaxed compared to other countries, and in a number of centers the creation of reserves by banks is not required at all. There is also no direct relationship between the cost of credit resources and the discount rates of the countries’ central banks.

In offshore centers, financial and credit institutions (national and foreign) carry out transactions with non-residents and in currency foreign to the country. The domestic market for credit (loan) capital is isolated from the international (external) market by separating the accounts of residents from the accounts of non-residents, providing the latter with tax benefits, exempting them from exchange controls, etc.

These financial centers are attractive for foreign exchange transactions because the interests of intermediaries in transactions with foreign currency are not infringed.

Offshore centers are sometimes called tax havens. Countries that create such zones gain a number of socio-economic benefits. Namely: they attract foreign capital, receive an additional source of tax payments, fees and other contributions, increase employment of the local population and, above all, lawyers, accountants, secretaries, employees of banks, communications, insurance companies, etc.

The negative side of creating offshore centers is that these centers can serve as a place for laundering “dirty money” and carrying out various types of financial scams.

The offshore center can create a regime that provides tax and other benefits for non-resident shipowners. This mode, as well as the “offshore” center, is called the flag of convenience.

FLAG OF CONVENIENCE (from the English convenience - convenience, material benefit, interest) is an open registration of sea vessels in order to obtain additional profits from tax benefits, classification, etc., received by non-resident shipowners in the countries of this registration.

Flags of convenience are provided by the Antilles, Bahamas, Burma, Cyprus, Liberia, Lebanon, Malta, Panama, etc.

The main criterion when determining the register of flag of convenience is the difference between the nationality of the shipowner company and the national fleet. In other words, when the right to own and control a ship is vested in a person whose nationality is different from the nationality of the flag under which the ship flies, the ship is said to be flying a flag of convenience.

The "Rodchell Rules" of the Commission for the Supervision of the Flag of Convenience (JET - International Transport Worker's Federation) established additional criteria for determining the flag of convenience.

These additional criteria include:

1) the state allows the registration of ships owned by non-residents of the country;

2) ease of changing the register and registering the ship’s flag;

3) preferential taxation;

4) the state is not interested in the use of the vessel, but only in the income (taxes, fees) received from the tonnage of the cargo transported;

5) the hiring of foreign workers on ships is allowed;

6) the state is not interested in establishing a strict national and international regime for shipowners.

A non-resident shipowner registers his ship in a country that provides a flag of convenience. The ship and its crew subsequently bear the flag and nationality of that state. The legislation of these countries does not force the ship owner to comply with global standards of social security and trade union rights of seafarers. The tax reporting regime for such shipowners has been simplified.

The flag of convenience generates significant revenue for the country that provides it. For example, Cyprus earns $22 million annually through this regime, Panama - $40 million. etc.

The income received by each flag of convenience registry depends on the types and sizes of ships: the larger the ships included in the registry, the more profitable it is for its administration and the state. Currently, flags of convenience make up 30% of the world fleet and have an increased accident rate. For example, in 1991, flags of convenience accounted for 48.2% of all ship losses, or 1,708,464 register tons, of which Panama owned 26 ships with a total gross tonnage of 238,513 register tons, Cyprus - 17 ships (229,513 register tons) , Malta - 12 ships (96,647 register tons).*

* Navy. - 1993. - No. 7-8. - pp. 34-35.

A flag of convenience increases the risk of loss in connection with a marine insurance contract. Many countries that provide a flag of convenience have not acceded to the international Convention for the Safety of Life at Sea, which allows shipowners to save about $5 million. on failure to comply with the requirements of this Convention.

In the Russian Federation, two zones similar to offshore ones have been created - in Ingushetia and Kalmykia.

The first official offshore zone - the economic favored zone "Ingushetia" operated in the country from 1994 to 1997. It was created in 1994 in accordance with the Decree of the Government of the Russian Federation of June 19, 1994 No. 740 "On the economic favored zone on the territory of the Ingush Republic "* and ceased to exist with the Decree of the Government of the Russian Federation of July 3, 1997 No. 821 "On the termination of the economic favored zone "Ingushetia".**

* Collection of legislation of the Russian Federation. - 1994. - No. 9. - Art. 1023.

The main reason for the cessation of the existence of this zone is the complete violation of the principles of functioning of the offshore zone.

Thus, instead of creating governing bodies for the offshore zone "Ingushetia", the government of the republic transferred all powers to JSC "Financial Corporation "BIN", and its founders were JSC "Industrial and Financial Company "BIN" and the commercial bank "BIN". An alarming symptom was the emergence of the “Tax Inspectorate of the Economic Favored Zone “Ingushetia”, which was not included in the system of the State Tax Service of the Russian Federation. Of the total number of enterprises registered in this zone, only about 1% were located on its territory, the rest operated on the territory of other constituent entities of Russia and, Naturally, they did not pay taxes to their budgets.The Stavropol Territory and the Rostov Region suffered the most.

In 1996, the Russian Federation Law “On the Center for International Business “Ingushetia” was adopted*

International business is considered to be any activity of non-residents of the Russian Federation permitted by Russian legislation on the territory, from the territory and through the territory of the Center with settlements in foreign currency with non-residents of Russia outside its borders in registration, tax, currency and administrative regimes. Foreign operations of transactions concluded by international business companies registered with the Center are considered international business.*

Russian residents do not have the right to be founders (shareholders) of international business companies. An international business company is a legal entity registered and operating in the Center in accordance with the norms of the Law of the Russian Federation "On the Center for International Business "Ingushetia". The register is the registration chamber of the Center, the official representative of which is called the registrar. A legal entity, a resident of Russia, performing the functions of the company secretary international business, registered in the Center, is a secretarial company.

An international business company must have an authorized capital of $1,500 for a limited liability company, and $15,000 for joint stock companies. The Law of the Russian Federation “On the Center for International Business “Ingushetia” guarantees the regime of activity of international business companies for 20 years from the date of their registration. Companies pay to the register a one-time registration fee and an annual fee, the rates of which are established and changed by the Government of the Ingush Republic in agreement with the Government of the Russian Federation.

Foreign operations of international business companies are not subject to taxes of the Russian Federation, including taxes of the Ingush Republic.

On the territory of the Center, international business companies are provided with the following benefits:

Accelerated and simplified procedure for registering with the Center as international business companies within three days after submitting all correctly executed registration documents to the register;

Full exemption from all taxes of the Russian Federation, with the exception of registration and annual fees;

Currency autonomy of companies and exemption from Russian currency control of operations of international business companies, the right to open and maintain bank accounts in agent banks, in authorized Russian and foreign banks;

Exemption from customs duties and taxes on goods imported for the needs of maintaining secretarial companies;

Maintaining the anonymity of owners of international business companies;

Maintaining commercial secrets and confidentiality of commercial activities of international business companies, except in cases of violation of the laws of the Russian Federation and the laws of other countries;

Guarantee of re-registration in the Center for International Companies registered in other states.

As international business companies, limited liability companies and joint stock companies with the right to issue ordinary and preferred shares are registered with the Center. The par value of shares is set in freely convertible currency.

In Kalmykia, enterprises - non-residents of this republic, who do not use the raw materials, natural and financial resources of Kalmykia, including through barter, rent, collateral, as well as those that carry out investment activities in the territory of Kalmykia, received tax benefits. For example, the income tax rate for revenues to the local budget has been reduced from 20 to 5%. These enterprises are exempt from many local taxes (road user tax, etc.).

The institution of mandatory nominee directors (or shareholders) from among local residents with a minimum salary of 24 minimum wages per year is provided.

A republican law on maintaining bank secrecy was adopted in Kalmykia.

Kalmykia development and cooperation agencies have been opened in Moscow and other cities. Their goal is to collect taxes from such offshore enterprises, conduct an examination of the compliance of the enterprise’s activities with the criteria for providing tax benefits, etc.

Commercial enterprises established in offshore centers are called "OFFSHORE COMPANIES".

The term "offshore company" is not a legal term. The concept of an offshore company and its status are determined by a special law or other similar regulations.

An offshore company is a company that is non-resident in relation to the country of registration and is completely exempt from taxes. However, such a company is required to pay a fixed fee annually for this exemption.

In offshore companies, accounting and reporting is kept to a minimum (Ireland, Switzerland). In some centers there are no accounting requirements at all (Antilles and Channel Islands, Liberia, Liechtenstein, Panama). Offshore companies are given complete freedom to manage their funds both in the interests of their participants and in the company’s own interests. They can carry out any financial and trading transactions around the world. The great advantages of offshore companies are the possibility of concluding trade transactions on preferential terms, carrying out international financial transactions in the shortest possible time in accordance with the currencies of the buyer and seller, writing off on the spot all costs associated with concluding transactions, anonymity of owners, which for various reasons can be of great importance. importance in issuing licenses and granting exclusive rights to a certain company, without excluding the possibility of selling goods to other countries or under a different brand in the same country.

An offshore company is created with clearly defined goals. Such goals could be:

Reducing tax payments to a minimum;

Carrying out special business functions of career guidance, such as flags of convenience;

Organization of holding companies;

Creation of image (national or international);

Acquisition and maintenance of real estate on behalf of an offshore company;

Ensuring the confidentiality of the creation of an offshore company, i.e. confidentiality of the owner's name, bank accounts, etc.;

Commercial necessity associated with bypassing various organizations and embargoes on certain types of activities or goods;

Increasing the efficiency of financial and trading operations.

Forms of registration of an offshore company (Table 8.2) are determined by the presence of two global legal systems in the world:

Insular, or Anglo-Saxon;

Continental, or Franco-German.

Local legal nuances depend specifically on the system adopted in a given jurisdiction.

The basic principles underlying the classification of forms of doing business and determining the activities of an offshore company are largely similar in insular and continental jurisdictions.

These include:

1) the principle of a legal entity, which means that the subject of legal relations exists independently of the founders. The owner of an offshore company enters into legal relations not directly, but through a legal entity controlled by him, which is liable only within the limits of its assets;

2) the principle of “limited liability”, which means that all organizational and legal forms of entrepreneurship are divided into enterprises with full liability and enterprises with limited liability of owners. There may also be combined forms of entrepreneurship: limited partnership (limited partnership), company with additional liability;

3) the principle of “open/closed”, meaning that a “closed” company is a private company, and an “open” company is a public company with open sale of shares.

Table 8.2

Forms of registration of offshore companies depending on the legal system

Offshore company registration forms
Continental	Ostrovnaya
Individual enterprise
General partnership	Full partnership
Limited partnership	Limited partnership
Closed joint stock company	Private company
public corporation	Public company

The tax status of any company is determined by the residency criterion and the territoriality criterion.

The residence criterion assumes that a company is resident if its ownership, management and control are exercised in a given territory. Resident companies of a given country are subject to taxation in respect of all their income derived both within the territory of this country and abroad.

The territoriality criterion assumes that income generated only on its territory is subject to taxation in a given country.

Most countries, including the Russian Federation, apply various combinations of these two criteria: the residency criterion is taken as a basis, supplemented by a system of taxation of income at source.

A foreign company intending to conduct active activities in the country is required to register with the tax authorities.

If in most countries a company must register only if it has a desire to do so, then in the CIS countries it will not even be able to open a bank account without registering with the tax office.

If a foreign company does not intend to conduct active activities in a given country, but will receive any income in it, then it is subject to withholding tax, which must be withheld when this income is paid to it. In Russia, in addition to tax regulation of the activities of a foreign company, there is also currency regulation.

For example, to receive preferential taxation in Cyprus, Liechtenstein, Switzerland, you must meet the following conditions of non-resident in relation to the state of registration:

1) the permanent place of business and management of the company is outside the country of registration;

2) the founders of the company are non-residents of the country of registration;

3) the source of income is outside the country of registration, i.e. The company does not conduct any commercial activities in the territory of the country of registration.

There are three types of offshore companies:

Non-resident company (Non-Resident);

Exempt company;

International Business Company.

A non-resident company is a company whose owner is a non-resident. The main (head, central) office of this company is officially registered in another country. Tax benefits are introduced for such a company. It is obliged to conduct an annual audit, based on the results of which taxes are paid.

A tax-exempt company is a non-resident company that receives preferential tax treatment (or is completely exempt from paying taxes, or pays a small percentage rate of income tax) and is required to conduct an annual audit.

An international business company is, in essence, an offshore company. It is also non-resident, completely exempt from taxes, but is required to pay a fixed fee annually.

Large companies with international assets organize their ownership by creating an offshore holding company. The main function of an offshore holding company is to manage foreign subsidiaries as an intermediate link between them and the ultimate owner. Such a financial center can minimize the impact of various tax systems and political risks, accumulate profits of subsidiaries; control their condition, reinvest accumulated funds. This form of holding is optimal for investing abroad not directly, but through your own intermediary, in the authorized capital of a company, in real estate, etc.

Offshore companies often engage in trade reinvoicing.

RENVOYING is the process of moving goods from a supplier to a buyer, in which an offshore company is used only to issue contracts and invoices.

The parent (i.e., parent) company enters into a contract with the offshore company for all goods at a single price, and the offshore company enters into contracts for quantities of this product with buyers in different countries.

The parent company receives a fixed profit, and the difference received from individual contracts remains in the account of the offshore company, which is completely tax-free.

Offshore companies do more than just trade reinvoicing. They own a fleet of ships, create their own offshore insurance branches to insure their own risks (if they have the opportunity to include insurance premiums in the cost of products or their transportation), create offshore leasing companies (if the investment resources of the offshore company are used to purchase equipment for the parent company).

In a number of countries (Ireland, Gibraltar, etc.) there is offshore legislation that allows you to register international business companies without the right to operate in the country of registration, and on this basis exempt from taxes and reporting.

In these companies, all documentation required by the laws of a given country is maintained by a secretarial law firm. Such a firm will register the offshore company and will subsequently pay annual registration fees and tax exemptions for it, as well as provide other secretarial services.

Secretarial services are a set of administrative services, including the provision of a legal address and the organization of formal registration of the office, the storage of statutory documents necessary for presentation to local authorities, the receipt and dispatch of correspondence, the preparation and submission of tax returns and annual reports, as well as the services of a lawyer who, in the event if necessary, represents the interests of the owners of the offshore company in local authorities, informs the owners about current changes in legislation, reporting procedures, etc.

Secretarial services are required specifically at the place of registration of an offshore company, since its owners most often never come to the country, but manage the company, carrying out business activities and taking advantage of its benefits outside its territory. However, the offshore company announces its legal address, to which correspondence, telephone inquiries, etc. can be received. The company's main seal must be kept at its head office.

A secretarial law firm can serve a large number of registered offshore companies. The owner of such an offshore company can limit himself only to worries about maintaining a bank account.

To open a bank account, you need to apostille the registration certificate. Apostille documents is a government certification of documents after they have been notarized. A document confirming the legalization of a registered company in accordance with international standards is called an apostille. Essentially, an apostille is a certificate from a government agency in the country where the company is registered, such as the Secretary of State of the state, further confirming the legality of the company's registration documents.

To recognize the validity of documents in Russian departments, the presence of an apostille is often insufficient. Therefore, additional legalization at the embassy according to affiliation and then additional registration with the Ministry of Foreign Affairs are required.

In some countries, apostille can be replaced by legalization at the Russian consulate in the country of registration. The certificate of registration in the state register is sometimes replaced by an extract from the trade register.

In offshore business there is also a nominee service. This service is needed for increased confidentiality when working with offshore companies or when registering in one’s own country a representative office of a branch of an offshore company, an enterprise with foreign investment, etc., when the owner submits the company’s charter documents to the registration authorities of one’s own country. In this case, employees of the registrar law firm are appointed as nominee managers or nominee partners, who give a power of attorney certified in the name of the owner to enter into contracts on behalf of the company, register representative offices, open bank accounts, etc.

A nominee manager is an administrative person who performs minimal functions to represent the interests of the company and shareholders at the place of registration of the company.

A nominee shareholder is actually a figurehead who is included among the owners of the company and holds the post of local director, but under the terms of the memorandum of association and charter, deprived of almost all rights. The nominee manager (director) is obliged to submit an annual report to the actual owners on the company's activities. Such a manager must be aware of all the affairs of the company and, in essence, be a fiduciary.

In the Russian Federation, the activities of a foreign company can be conducted on its behalf with or without registration of a permanent representative office.

The term “permanent establishment” is used only to determine the tax status of a foreign legal entity and has no organizational and legal significance. A branch, representative office, or any other place of activity of a foreign legal entity may be recognized as a permanent establishment, depending on whether such activity falls under the definition of “permanent establishment” in accordance with the legislation of the Russian Federation and international agreements on the avoidance of double taxation. For tax purposes, the presence or absence of accreditation of foreign legal entities does not matter.*

* Instruction of the State Tax Service of the Russian Federation dated June 16, 1995 No. 34 “On taxation of profits and income of foreign legal entities.”

In this case, the foreign company is subject to ordinary income tax rates.

To obtain VAT exemption benefits when leasing office and residential premises to foreign representative offices, this representative office must be officially accredited by the Chamber of Commerce and Industry of the Russian Federation.

If a foreign company is the owner of goods only before they cross the Russian border and does not conduct activities in Russia, then it does not pay taxes. The operations carried out by it after the goods cross the border are already associated with generating income in Russia. Many types of intermediary agreements also fall under such operations, when at first glance the foreign company is not present in Russia.

Foreign permanent establishments pay VAT, tax on profits received from sources in Russia under contracts in their own name, property tax and all other taxes and fees to various extra-budgetary funds, just like Russian business entities. The only difference is that foreign companies pay income tax at the end of the year.

Permanent representative offices of a foreign company are not themselves taxpayers, since they are non-legal entities. But the heads of these representative offices bear full responsibility to the tax authorities for the activities carried out by the foreign company through this representative office.

After registering for a permanent representative office, foreign currency accounts, ruble accounts of types “T” and “I”, and personal accounts of their foreign and Russian employees can be opened.

Accounts of type "T" (current) are opened in the name of representative offices or branches to service their export-import operations and for the purpose of maintaining representative offices and branches.

“I” (investment) accounts are opened to carry out investment activities on the territory of the Russian Federation.

Activity through a Russian intermediary company, for example under a consignment agreement, has its own characteristic features. The intermediary firm is the source of income for a foreign legal entity in Russia and must withhold and transfer to the budget tax on its income received in the form of the difference between the assigned selling price and the actual price. If there are no documents confirming the import of goods sold from abroad, then the profit of the foreign intermediary company is considered to be all gross revenue with the corresponding mandatory taxation.

The activities of a foreign legal entity without registering a permanent representative office include activities to obtain income from sources in Russia in the form of interest from deposits in Russian banks, from the use of copyrights and licenses, from the sale of goods imported from abroad under the terms of trade intermediation agreements with Russian businesses entities, from lease payments, sales of securities, etc.

Control questions

1. What is double taxation?

3. Name the types of offshore operations.

4. Describe the tax planning process.

5. What is a tax haven?

6. What is the difference between an offshore center and a tax haven?

7. What does the term “flag of convenience” mean?

8. How do offshore centers differ from free trade zones?

9. What offshore zones have been created in the Russian Federation?

10. What are the goals of creating an offshore company?

11. Name the types of offshore companies.

12. What is reinvoicing?

13. Describe a secretarial law firm.

14. What is included in the concept of “secretary services”?

15. What is nominee service?

16. Who is a nominee shareholder?

17. Name the sources of income of a foreign legal entity without registering a permanent representative office in the Russian Federation.

An offshore bank is a credit institution registered in an offshore zone, for example, in Cyprus, the Channel Islands or Luxembourg.

“Offshore banks” are commonly referred to as financial institutions and credit institutions established in various offshore territories used for offshore business.

In the offshore market, these financial organizations are characterized by a number of features:

They do not have the right to work with residents of the state of their registration.
The amount of authorized capital is lower than that of banking organizations in most countries.
The bank may be able to be exempt from paying taxes.
They are subject to the laws of offshore zones, which impose requirements on the availability of bank reserves and compliance with the issuance of loans, no less, or even more stringent, than those of banks in other countries.
Setting up a bank located offshore takes a little time.
When establishing a bank, you can use the services of nominee directors with shareholders, provided that local authorities have information about the real owners.
Offshore banking business conducted outside the country is largely unregulated.

Conducting offshore operations

Offshore credit organizations are established in the following cases:

• When offshore operations related to foreign trade are carried out by the parent company.
• Expanding the range of services offered.
• To provide lending to trade and financial organizations.
• Providing access to the activities of international financial structures.
• For the purpose of issuing.
• To improve the efficiency of interaction of cash flows in an existing company or holding.

Typically, offshore banks are brought into the offshore market by representatives of those states whose tax standards are characterized by high rates and where exchange control schemes operate. However, such a credit institution becomes only one link in a whole chain of financial institutions.

These include investment, trust, insurance companies and foreign trade organizations.

The structure is a holding, and an offshore credit organization was created to provide financial services to them - parts of the holding.

The concept of offshore zones was first mentioned in American journalism in the 50s of the 20th century. The text was about a certain organization that had completely moved its activities to a country with a more optimal tax environment.

The term “offshore bank” means a financial organization that is a credit institution with a state license to carry out banking activities. An offshore bank has its own office and staff. The owners of such banks can only be non-residents of the jurisdiction where the offshore bank is located.

A banking license can be general or limited (two types). According to the rules of a restrictive license, servicing a small circle of clients is allowed. These banks do not have an office or staff in the jurisdiction where they are registered. They have the right to interact with other banks and carry out certain banking operations, and operate on the basis of a resident bank with a general license.

A resident bank may be endowed with such functions as: administrative (ensuring interaction with government authorities), ensuring accounting, performing transactions, issuing certificates of deposit, conducting credit and other offshore operations in accordance with the license.

Offshore banks can be established in any offshore zone. In order to register a bank in an offshore jurisdiction, it is necessary to prepare all documentation about its activities and information about shareholders.

Payment and amount of offshore duty

After consideration of the application by the central banks of countries with offshore jurisdictions, a decision is made on the possibility of registering an offshore bank. An offshore fee must be paid upon registration. The amount of the offshore fee depends on the specific jurisdiction.

The bank must have an office at its registered address and appoint a registered agent and secretary. The listed entities must submit to the central bank each year a list of the following documents: copies of financial statements, copies of profit and loss statements, copies of receipts for royalties made.

Storage of business correspondence is carried out by companies providing secretarial services.

There is no mandatory accounting requirement for offshore companies. The company may not have full-time employees at the place of registration, but it may use the services of secretarial organizations.

Offshore schemes for Internet business are the most important component of success. Why is this so difficult and important? There are two reasons: taxes and personal safety.

The fact is that the specifics of the Internet are such that by registering a company, for example, in Belize, you can install servers there and provide services or trade virtual goods around the world. It would seem that this is an ideal option that allows you to run a business without paying any taxes. Its implementation is elementary - just contact any organization dealing with offshore companies and in a couple of hours they will register you as a legal entity, open a current account and provide you with a director. But, unfortunately, this scheme will not “work”.

Offshore operations

"Underwater rocks"

Firstly, any Internet business is tied to, that is, accepting payments from credit cards. The problem is that VISA and MasterCard almost directly prohibit banks from connecting legal entities from the offshore blacklist. And payment systems either do not work with such companies or charge “draconian” commissions for offshore transactions.

Secondly, the most interesting offshore technologies, such as hiding the names of beneficiaries or truly anonymous bank accounts, work only with the most odious subjects of international law, and it is not by chance that the vast majority of medium and large companies refuse to deal with these jurisdictions.

Thirdly, hosting a server in remote parts of the world is impossible due to poor Internet access, and locating “fixed assets” from any other country leads to corresponding legal and tax consequences in that country.

The list of troubles that independent attempts at “tax planning” lead to can be continued for a long time. Just think about the possibility of being arrested when crossing the border of countries such as the United States, which believe that taxes should be paid on profits received from their citizens to their treasury, regardless of where the company is registered. Of course, when running an online business, such questions become especially relevant.

For these and many other reasons, the development of a high-quality offshore scheme is a prerequisite not only for minimizing the tax base, but also a matter of personal safety for the owners of Internet companies.

The right offshore technologies

The correct method when solving problems of minimizing the tax base for offshore operations is another method. Offshore companies are united into structures with firms from prestigious jurisdictions. Each legal entity in such an offshore scheme is selected and registered to solve one or two problems in the state whose legislation allows them to be solved in the best possible way.

Such offshore technologies require the conclusion of a large number of international agreements to operate. Developing these agreements in itself is a non-trivial task even for a specialist. In addition, in the process of developing offshore transaction schemes, one must always take into account the possibilities of tax planning when conducting international activities.

Considering the imperfection of legislation in the field of Internet commerce and its inconsistency even within such entities as the European Union, the development of a high-quality scheme for conducting business using specific offshore methods is a task that is best entrusted to professionals.

Our services:

Legal justification for the diversion of financial flows to offshore zones

Writing contracts in any languages ​​according to developed schemes

Registration of companies and opening of bank accounts according to the developed scheme

Opening accounts in foreign banks for established companies

Assessment of risks arising at each stage of business

Creating legal entity structures for your business model

Dear sirs, we are ready to take on the full range of work to implement your project. If you want to independently carry out all legally significant actions, we are ready to provide you with an experienced consultant who will accompany you on all trips related to the registration of companies and the conclusion of contracts. Contact us.

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Main stages of cooperation.
Cost and procedure for carrying out work.

At the initial consultation, the customer presents his business model, and our consultants offer preliminary options for project implementation. The customer is told about the possible structure of legal entities, options for financial flows, individual agreements with dispute resolution jurisdictions are outlined, licensing issues and the tax component are discussed. Justifications for the proposed solutions are given. The total cost of the project is preliminarily estimated. The price for an hour-long initial consultation is 5,000 rubles.

The second stage is the creation of a detailed project diagram on paper in legal, tax, payment and IT aspects. As a rule, the result of work at this stage is one sheet of A1 or A0 format with high detail and several A4 sheets with a phased implementation plan, costs and deadlines. The development of such a scheme and accompanying documents, depending on the complexity, costs from one to ten thousand euros. Terms from one to two to three weeks.

If necessary, at the third stage, individual elements of the scheme can be worked out “in depth”. For example, in the case of purchasing traditional medicine products somewhere in Malaysia, our company’s specialists may not have accurate information on accounting rules and taxation in this state. In this case, to clarify the information, it may be proposed to order a study of these issues from a local audit company. And get information from local lawyers about the need for licensing with realistic deadlines and costs “from practitioners.” As a rule, the cost of such work abroad is tens of times higher than in the Russian Federation and ranges from 3,000 to 50,000 thousand euros. However, this stage is not mandatory.

The last stage is the actual implementation of the project. In accordance with the developed scheme, we carry out the following work for our clients:

Registration of legal entities
Obtaining the necessary licenses
Opening accounts in offshore banks
Development and maintenance of contracts
Connecting companies to payment systems
Trademark registration
Protection of intellectual property
Other necessary steps to start a business

As a rule, the cost of work at this stage ranges from 5,000 euros for typical trading schemes, to several million when launching large international projects.

Forgive me for my directness, but running an Internet business from a Russian legal entity is, to put it mildly, not reasonable.
Alexey Zarin
Specifics of business on the Internet

An example of an offshore Internet business scheme

The model is legal, tax losses ~1%, the beneficial owner is not determined