What is an offshore, an offshore zone, an offshore account in simple words - definition and meaning of terms
If the words “off shore” are translated from English, then literally it will sound like “off shore” .
Offshore is a territory (country) with special economic conditions for doing business for foreign companies.
An offshore zone is a state that creates a preferential corridor for various types of business and its subsequent exemption from taxation.
An offshore account is a bank account that is opened outside the country of registration of the company or location of the individual.
Institutions operating on a commercial basis can participate in a preferential scheme for transferring funds to other countries in the currency of the destination country.
This term can also refer to international companies carrying out any commercial activities in territories exempt from taxation.
In the economies of different countries and states, this is a fairly common and sustainable practice, with the help of which commercial organizations get a chance to maneuver in a free economic space.
The thesis “open an offshore” means redirecting financial flows or your business project to the territory of other foreign countries.
Offshore or offshore - which is correct?
Take note! The word “offshore” should be correctly written not with one letter “f”, but with two. But in some scientific articles the term “offshore” appears only with a single “f”.
What is “offshore” in simple words
The term “offshore” (from the English offshore - “offshore”). The literal translation well reflects the essence of the business registered in this way. Business is “moved to the islands” and becomes inaccessible to the supervisory authorities of the Russian Federation. In countries that provide the opportunity to register companies, government fees are the main source of budget replenishment. This is typical for island dwarf states.
Offshore companies can reduce the tax burden on an enterprise.
It will become easier to understand what the meaning of “offshores” is if you familiarize yourself with the list of key advantages:
- Simple registration of a new company.
- Low level of taxation up to working without paying taxes.
- The ability to maintain the anonymity of the real owner of the company.
- Independence from the political system of the state where the activity is carried out.
The state is not very interested in the activities of such structures, because taxes are paid in the country where the enterprise is registered. If the company is established in Cyprus, then it will pay them there. This is the main feature of “offshore zones”.
History of the term
This phenomenon has its roots deep in history, when trade routes were laid through many countries with exorbitant taxes and fees.
For example:
- Wealthy merchants traded wool in Flanders, today's France. Although they could sell their goods in England. But high taxes left no chance of making a profit.
- The first entrepreneurs from North America chose Latin American countries for their transactions in order not to fall under financial dependence on Britain. At one of the trials in England, the concept of “offshore” in our most modern sense was used.
In the second half the 20th century there was a rebirth of this term. One of the British newspapers dubbed the commercial activities of one successful company, which transferred all its assets to a foreign zone, “offshore”
After the fall of the USSR in 1991 , Russian companies were able to gain access to the offshore territories of foreign countries. At this time, a Swiss company appeared on our market, the first offshore representative. Today, our entrepreneurs have received the legal opportunity not to spend money on taxes in their country.
Working under the offshore scheme is extremely popular today, although our state is extremely wary of such activities. But sometimes, in order to maintain an established business and not lose it in their own country due to exorbitant taxes, entrepreneurs have to transfer their assets abroad.
For example: When appeared 2014 regarding gambling and bookmaking establishments , such establishments legally quickly moved their business outside the Russian Federation.
Players throughout Russia continue to place bets in gambling establishments and bookmakers, but such companies are registered in a variety of exotic countries: Greece, Indonesia, the Netherlands Islands and other countries.
