Offshore Incorporation is Not Just for the Wealthy Anymore

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Reputable offshore financial centres play a legitimate and integral role in international finance and trade, and that their zero-tax structure allows financial planning and risk management and makes possible some of the cross-border vehicles necessary for global trade.
In addition, incorporating a company offshore is not just for the wealthy anymore. Small business owners and individuals can protect their assets and enjoy substantial tax benefits by incorporating offshore. The offshore jurisdictions have strong privacy laws in place to protect your identity and your financial transactions. The company reporting requirements are more streamlined and less expensive compared to Canadian corporations.

Tax Benefits

As a Canadian resident, you must pay tax on your income. When you assets are owned in the name of the offshore corporation, the person with legal ownership and control is the offshore corporation. The offshore corporation will not be subject to Canadian taxation, except to the extent of non-resident withholding tax on investments in Canada. Many offshore jurisdictions offer "gross roll-up" wherein asset growth is not taxed or taxed at a very low rate, giving you a far better return than you could get at home.

Convenient Reporting Requirements

Offshore corporate reporting requirements are significantly low compare to those of Canadian corporations. Most offshore jurisdictions require corporations to pay a low annual license fee instead of the required annual reports and registration fees. The company does not have to produce audited financial statements or file financial documents with a regulatory agency.

Please note that although the assets may be held in the name of an offshore corporation, it may not necessarily be creditor- or judgment-proof, contrary to what some may believe. In the recent supreme court ruling Prest v Petrodel Resources Ltd and Others [2013] UKSC 34, an ex-wife won the right to force offshore companies owned by her former husband, to turn over offshore assets as part of a divorce settlement. This landmark case could indicate that the offshore courts may pierce the offshore corporate veil and honour Canadian judgments.

Prior to launching Landmark Law Professional Corporation, I worked in Hong Kong for as an offshore investment funds lawyer. I assisted asset managers in launching funds domiciled in the Cayman Islands and British Virgin Islands.

Here in Ontario, I am pleased to provide offshore incorporation and corporate secretarial services for the jurisdictions of Cayman Island, British Virgin Islands, Mauritius, and Samoa.

Disclaimer: This article does not contain legal advice and only provides general information. It is not intended to replace advice from a qualified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this article before making decisions. Use of this article does not establish a lawyer-client relationship.

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Winnie J Luk, BA, JD, MBA, founder of Landmark Law, is a seasoned Ontario lawyer practicing in Wills and Estates, Real Estate, and Business Law and frequent speaker of free legal education seminar.