Most business people have heard about offshore companies. However, very few are aware of what these companies are used for and how they differ from other more common corporate entities. First and foremost, it is essential to define the term Offshore. Offshore means something is a country other than the one in which you operate. So if you open a company in overseas location it will become an offshore company for you.
However in practical sense the term is more applied to companies registered in offshore locations like BVI, Seychelles, Cayman Islands and so on. This is typically pursued to realize various financial, legal or tax benefits.

A typical IBC is effectively a corporation with a limited liability. This liability is limited only by company’s shares. Shares are owned by one or more shareholders while the company is managed by director(s).

Such a company can open bank account, enter into contracts, sue other parties or can be sued. It can buy or sell products and services and can do all activities that a typical corporate is allowed to do.

Offshore incorporation can be carried out in a number of jurisdictions, including Anguilla, BVI, Belize, Seychelles, Panama and Nevis. The main decision criteria are price, reputation of the jurisdiction and time to incorporate. BVI and Seychelles are the popular destinations currently for offshore incorporation.

Benefits of offshore company

Low Taxation

Most offshore companies pay no local taxes on the income derived from offshore operations


Registrars in most offshore jurisdictions do not disclose information about directors, shareholders and beneficiaries of offshore IBC companies

Asset protection

In the international business context, it is usually the laws of the jurisdiction of incorporation that are applied, rather than those, where the company is being sued. Many offshore jurisdictions are renown for their favourable asset protection laws.

Ease of Reporting

The compliance reporting requirements for offshore companies are limited, especially in comparison to companies, registered in onshore jurisdictions

Operating Costs and Fees

With limited reporting requirements, offshore companies generally have lower maintenance and operating fees

Disadvantages of offshore company


The offshore concept provides you with privacy, but the major drawback to this benefit is that it also makes it difficult for company to get financial assistance


Some offshore companies may be limited in their activities due to restrictions that are placed on them legally or by trading partner’s acceptance


offshore companies may not be always taken in highest regards

Strict Due diligence

Banks and other institutions/ authorities you deal with will usually engage in strict due diligence