Offshore companies exist in every part of the world and are one of the products of globalization; the internationalization of business. Going offshore ultimately means being able to transact business without any geographic boundaries, that is anywhere in the world, except in the country where the offshore company is incorporated.
Globalization, as most of us are fully aware, has enriched the dynamic character of technology advancement and has revolutionized offshore industries throughout the world through the development of highly advanced telecommunications systems. Gone are the days of sitting several days and weeks at the public library in search of information. Today, we delve in the luxury of surfing the internet, a means by which we are able to access tons of updated material. Hundreds of online dictionaries, news broadcasts, colorful imagery and live videos are at our disposal at remarkable speeds with just a simple click.
Also gone, are the days when foreign investors solely searched for large deposits of natural resources such as petroleum or gold to invest in a foreign country. Rather, today capital and labor mobility, affordable labor, highly specialized professionals, friendly business environments and developed communications infrastructure are the features within a society that attract foreign investment. And even more so, foreign investment and business are incredibly sensitive to taxes.
Over the years, the use of offshore companies has become increasingly popular due to capital mobility, technologically advanced telecommunications facilities and the implementation of regulatory measures through progressive legislation that comply with international requirements.
Stringent measures taken by regulatory authorities such as the Paris based Organization for Economic Cooperation and Development (OECD) in the early 90’s seemed to have put an end to several developing offshore industries, but on the contrary, allowed brilliant governments to revise their respective offshore legislations, implement strict offshore measures and in so doing, strengthen the supervisory and regulatory framework for offshore activities.
Some of these measures included the formation of the Financial Services Commission, the enactment of the Anti-Money Laundering Act in 1999 and, for Caribbean countries, becoming a member of the Caribbean Financial Action Task Force, an organization that was created to combat money-laundering and other illegal financial activities through the offshore financial centers. In 1999, CARICOM member states had already made several modifications to their tax regimes in order to satisfy international standards. A Policy Advisory Committee was created for the revision of the legislative and administrative framework of various member jurisdictions, and in 2000, the Caribbean Association of Regulators of International Business (CARIB) was formed in order to propel the reform process forward.
Dominica enacted the Money Laundering (Prevention) Act, 2001 and the Exchange of Information Act in 2002. Other measures also included the closure of the offshore banks that operated on the island, which resulted in unemployment and economic hardship for the country since it was forced to implement measures knowing that a substantial amount of revenue was going to be lost.
These moves by the OECD and FATF did not only shed light on the vulnerability of the economies of the Caribbean islands, but brought about the question of sovereignty and independence. For indeed, the hands of the Caribbean islands were twisted into surrendering their sovereign right of implementing their own laws and policies that are considered as necessary for the growth and development of the islands’ respective societies and economies. Will Caribbean nations be always made to give in to superior nations whenever their economic advancement is regarded as a threat to G7 countries in one way or the other?
All of this goes on to explain the reason why some authors prefer to use the term ‘low tax jurisdiction’ rather than ‘tax haven’ due to the negative conations and parameters that are used for characterizing tax havens. However, whether identified as a tax haven or low tax jurisdiction, Dominica offers excellent and secure offshore services within a framework that is closely monitored and adheres to international norms.
As a tax haven, Dominica provides a full range of offshore services such as international (exempt) trusts, international (exempt) insurance, offshore banking, mutual funds and International Business Companies incorporation. The offshore services allow persons to have access to efficient and legal vehicles for asset protection, tax savings and accumulating wealth.
The key to offshore company tax savings in Dominica lies in conducting all business outside of Dominica and ensuring that revenue earned by the Dominica offshore company is not generated from any source within Dominica. This also establishes the fundamental difference between an “off – shore” entity, characterized by conducting its business in any country other than the country where it is registered and “on – shore” company, which conducts business within the country where it is registered. Both concepts speak for themselves.
Dominica guarantees corporate confidentiality and privacy to persons incorporating offshore companies in Dominica by keeping its “registry closed”. This means that the information concerning the beneficial owners of any offshore company incorporated in Dominica is not published nor forms part of any public record that is kept at the Companies Registry. In fact, the only documents of an offshore company that are filed at the Companies Registry are the Dominica IBC’s Certificate of Incorporation and Memorandum and Articles of Association, which are required by the Dominica IBC Act to state the company’s By-Laws and constitution before company incorporation can take place.
Maintaining the privacy of the beneficial owners of Dominica IBC’s is the least that can be done with regards to protecting persons forming offshore companies. The majority of the correspondence between the client and the offshore service provider is done via telephone and internet, and physical contact is hardly ever established. Thus, providing privacy under such circumstances, particularly in a country that is unknown to the client is of fundamental importance. The basic act of providing one’s personal details – name, address, place of birth and passport details to a total stranger on the other end is an act of unquestionable trust; maintaining and respecting that trust is invaluable.
All Dominica offshore companies and IBC’s are required to have a local registered agent and registered office. Registered agents in Dominica are offshore service providers that are licensed by the Government of Dominica to offer offshore services and are comprised of lawyers, law firms, specialized and highly trained professionals that have over the years gained valuable experience and efficiency in rendering offshore services. The Dominica offshore legislation requires all registered offshore service providers in Dominica to conduct the relevant due diligence on every client before approval of offering any offshore service can be given. This is to ensure that Dominica’s offshore clientele is an honest one, with genuine interest to explore and expand its business potential through offshore means.
Offshore companies registered in the tax haven of Dominica are exempted from corporate taxes, capital gains taxes, inheritance taxes, estate taxes and transfer taxes. This enables Dominican offshore companies to conduct business in a tax free environment, whereby they are better enabled to accumulate their profits and explore new horizons without slashing huge amounts of their earnings so as to meet tax obligations. Tax exemption also strengthens the ability of Dominica offshore companies to provide a secure means of tax and estate planning as funds accumulated can be used for providing funds for education and a sure source of income that will ensure one’s welfare during retirement.
Caribbean Land and Property Financial Services have all the expertise and security you need to form an IBC in Dominica and are pleased to be your trusted service provider in this highly profitable endeavour.
(c) Caribbean Land and Property October 2008