Wealth protection: For protecting one’s self from impending or future litigation, individuals as well as organisations may choose to setup their operations as an offshore entity.Business: Likewise, in businesses where the revenues less costs and/or commission is remitted directly into the jurisdiction of the principal offshore company, they are not treated as income realised within the tax residency, and hence not assessable.Example: A construction firm based in Turkey could leverage an offshore principal based in the Seychelles, and execute projects in the EU, through an agent and avail of the low-tax regime of the jurisdiction of the principal.For example, in the UK, a landlord who is not a tax resident is not subject to taxation on capital gains from the sale of properties.Similarly, the landlord as a lessor is not subject to withholding tax on the rent remitted directly to the non-resident landlord.Hence for a person interested in investing in property, the UK becomes a favourable tax jurisdiction that allows them to enjoy the low-tax regime of the residency of the principal, as well as the exemption of tax as a non-resident in a high-tax regime such as the UK. Hence the returns on the investment as well as the proceeds of the liquidation of such investments are usually beyond the boundaries of taxation in most jurisdictions. For investment:When a business entity invests money into a foreign jurisdiction, it does so through locally present agent.Hence establishing an offshore entity that manages the entire gamut of investment on behalf of the beneficiaries has typically been an effective and popular business practice. Over the years, as the possibility of investment transcended the regional and continental boundaries, the opportunities to enhance returns have grown manifold. Typically, an offshore entity is setup for the following business models. Most offshore entities are created to take advantage of low-tax or favourable tax regime jurisdictions.
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