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I.O.S: Frequently asked questions

The staff of INTERNATIONAL OVERSEAS SERVICES are always pleased to receive any questions from clients about the incorporation of companies or details of our additional services. As the majority of questions are similar or identical, we have decided to add this “frequently asked questions” section to our website.

We have specifically listed those questions to which the answers cannot be found in the principal sections of our site and are also not included in the “terminology” section. In the event that you should not find the answer to your question in this “frequently asked questions” section, we shall be glad to give you a reply during a personal consultation.

  • What is an "offshore zone"?
    Traditionally an offshore zone is a country or territory that does not subject companies incorporated there to tax either in total or when certain conditions are satisfied. In the majority of cases only companies not carrying on activities in the given jurisdiction qualify for this advantageous regime.
    Many people will immediately have traditional offshore zones in mind when speaking of international tax planning, but currently these jurisdictions comprise only a minor part of the broad choice of possibilities offered to entrepreneurs by international legal practices. Currently a large number of countries including those developed countries well known as jurisdictions with standard levels of taxation offer privileges to particular types of company incorporated there, and can therefore offer the possibility of using them in a tax-free capacity.
  • Who can become the owner of a non-resident company?
    Any legal or natural person can become the owner of a non-resident company. Such persons can include a tax-free company, or a person regardless of his or her nationality, citizenship, office or employment, or other factors.
  • Do I have to travel to the country where my company is being incorporated?
    In the event that the owner wishes to travel to the country of incorporation it is possible. However, a personal visit is not obligatory. Currently, all registration and incorporation services can be efficiently provided both professionally and qualitatively by experienced company registration agents.
    The choice of the particular registration agent with whom you can develop the best mutual cooperation is an important factor. Additionally, the absence of a language barrier together with an understanding on the part of the agent of the entrepreneur's requirements and priorities will play a significant role in this decision.
  • Does having a bank account in any country give rise to a claim that the company is carrying on business in that country and is therefore liable to tax there?
    No. The banking legislation of most countries does not make any kind of distinction between the maintenance of bank accounts by resident companies and by non-resident companies. If a non-resident company has chosen a particular country in which to open a bank account and service its financial transactions, this simply indicates that this particular country or bank was chosen as the most suitable for this non-resident company.
  • Does an offshore company have to open a representative office in the country in which it operates?
    We need to define more precisely what is meant by "the country in which it operates". As an example, in the event that an offshore company supplies goods from abroad into a country, exports goods from that country or even renders consulting, advisory or other services to a resident of that country, it carries out those economic operations in its capacity as a non-resident, and this bears no relation to activity on the territory of that country. Accordingly, there is no legislative requirement for a representative office to be opened in that country.
  • How long does incorporation of a company take?
    This can vary according to the particular jurisdiction in which the company is to be incorporated. In the majority of classic tax-free countries as well as in the United Kingdom and other countries the actual process of incorporation does not take more than two to three days. However, a certain period is required for such technical procedures as, inter alia, preparing the documents necessary for incorporation, obtaining any compulsory notarial and other verifications, appointing directors, issuing powers of attorney and delivering documents. Consequently, the whole process of incorporating a company “from scratch” in most jurisdictions on average can take three to four weeks. Taking this into account, “Ready-made” previously incorporated companies can be transferred to a client within an extremely short time period. In particular, INTERNATIONAL OVERSEAS SERVICES has more than two hundred ready-made companies on its list daily which could be transferred to a client during the same day.
  • How does a “Ready-made” company differs from a company that needs to be newly incorporated?
    From an objective point of view, there is absolutely no difference. The price of a company that needs to be newly incorporated is identical to that of a “Ready-made” company in the same jurisdiction and in both cases the set of documents is the same. The only difference is in the name of the company. Where a ready-made structure is being purchased, a name needs to be chosen from those contained in the current list of “Ready-made” companies. For example, the names of companies in the I.O.S. “Ready-made” list have been carefully chosen by our legal staff and our linguistic section so that they allow for the most suitable and sympathetic choice of name for practically every client.
    From our experience entrepreneurs frequently choose to purchase “Ready-made” companies in order to save time. The incorporation of a company “from scratch” takes place in those cases where the client has specific requirements regarding either the name or the corporate structure of the company to be established.
  • How is a company's life prolonged annually?
    This depends upon the jurisdiction in which the company is incorporated. In most traditional tax-free countries a company continues its existence simply by paying an annual registration fee to the government. The local registered agent will also need to be paid for his services and for providing a registered office in the country of incorporation.
    A different situation takes place where the company is incorporated in a taxpaying jurisdiction such as in most European countries, Australia and others. In such instances, the required financial statements and tax returns have to be prepared and filed, and the corporate tax has to be paid, in addition to the aforementioned procedures.
  • What is needed in order to file an auditor's report?
    The audit requirements differ between jurisdictions as well as between particular auditors. In any event, the provision of bank statements detailing the financial transactions of a company, as well as provision of related documents which would normally include, inter alia, copies of contracts, invoices and explanatory letters will be required.
  • My power of attorney has come to an end. How do I extend it?
    Extension of a power of attorney is carried out at the same time as the general extension of the company's life which is when annual payment is made for continuing its registered office, for the services of the registered agent and on account of the annual duty payable to the state. The power of attorney is a type of certificate confirming the fact of the company's continuation, and cannot be issued without the payment of the corresponding renewal fees.
    Consequently, a power of attorney is issued without any additional fee during the period of the company's existence and serves to confirm the fact that the company continues to exist.
  • Can a company continue to operate without being in “good standing”?
    An offshore company will lose its “good standing” status if it fails to pay the fees for the annual maintenance in good time, or to file the financial statements required by law. In the event that these requirements are not met the company will not be immediately struck off the register of enterprises in the majority of jurisdictions but it will forthwith lose its “good standing” status. For a company to continue its activity in such a situation would be dangerous, since any business partner, bank or other institution may suspend the cooperation with a company which does not have the appropriate status. For more information, please refer to the section certificate of good standing.
  • What should I do if I no longer need a company and my work with it has come to an end?
    Possible methods of discontinuation of existence of a company depend on the jurisdiction in which the company is incorporated and bear significant differences between offshore and taxpaying jurisdictions. For more information about the methods of discontinuing of a company please refer to the section dissolutions.
  • Is it possible to sell the company to another person ?
    Yes, but the non-resident company is a very personal tool and the secondary transfer can be made only between entrepreneurs very familiar with the business of each other. There otherwise exists a risk that the new owner acquires a company having significant financial debt.
    For this reason, I.O.S. are always happy to assist in the procedure of technical transfer of the ownership rights to the company by mutual consent of the "old" and "new" owners, but do not have the right, for whatever reasons, to take a company that has ever been at the hands of an entrepreneur, for secondary sale.
  • On what does the price of a company depend?
    This depends on the chosen jurisdiction as each country has its own established rules concerning fixed duties and other payments due by companies incorporated there. The cost of a company in a particular country is determined by the cost of the services of a local agent in the place of incorporation such as a licensed lawyer who is directly entitled to incorporate companies in that country as well as local duties and other fixed charges. In reality the secure and stable maintenance of the company's future activity, the issue of powers of attorney at the correct time and the absence of errors in the corporate documents will entirely depend on the accumulated experience of the local agent as well as his reliability combined with his competence.
    Experience shows that excessively low rates charged by an agent should give cause for concern as for example, there are cases known to us where it became necessary to transfer companies originally incorporated by a “cheaper” agent to a more “expensive” but more reliable agent.
  • What relationship does my offshore company have with the legislation of my home country?
    There is no relationship whatsoever. An offshore company is a foreign legal entity incorporated in another country and carrying on its activity in accordance with to the legislation of that particular country.
  • Is it correct to assume that restricting the activities of tax-free companies to the maximum possible extent is in the interests of any country?
    Not necessarily. On one hand, it is true that the offshore sector has always operated to defend the interests of entrepreneurs rather the state apparatus, and the interests of the latter are diametrically opposed. The self-evident desire to collect as much tax as possible and to know the maximum about the taxpayers always was, is and will be unchanged in every state. Therefore, certain officials would even consider that it would be better if the offshore sector had never existed at all.
    However, any rational thinking country understands perfectly well that by giving its entrepreneurs the opportunity to operate under favourable and competitive conditions, hence allowing them to improve their strength and positions in the international market, means that the country in the long run wins. Certainly, the most active sector of society, being the entrepreneurs, is the financial bulwark and the main source of revenue of any state. Accordingly, the more powerful the entrepreneurs of the country, the more affluent the state itself will be.
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