One of the main reasons for using tax havens is tax optimization. Entrepreneurs use offshore and onshore centers for their international tax planning. Motivating this is often the disproportionate level of taxation in developed countries.
Tax optimization is an activity that leads to the organization of tax matters in such a way that the taxpayer legally derives the lowest possible tax. Offshore and onshore companies are then the main tool to achieve this.
When doing business in the Czech Republic, there is often a significant paradox where some profit-making items are not considered as tax-deductible costs. With offshore business, this problem is avoided. Companies from tax havens are not required to keep accounts and file tax returns or are only formal.
The laws above all
When using international tax planning, it is necessary to ensure that all operations are carried out within the framework of the law and are not tax evasion. It is essential that all transactions comply with the laws of all countries involved in the optimization process.
For international tax planning, besides offshore companies, it is also appropriate to engage so-called onshore companies (eg United Arab Emirates, Great Britain, Hong Kong or the United States of America ). Unlike traditional tax havens, they have a better international image.
Payment with the Czech Republic
It also serves well for transactional purposes and direct payments with Czech companies. For those, traditional tax havens are not suitable because, in most advanced countries, outgoing payments to typical offshore jurisdictions are subject to withholding tax.
Stable legal background
Onshore jurisdictions are further used for their high-quality and stable legal background, a wide network of double taxation treaties, the benefits of a single market within the EU, and tax incentives, concessions or holidays. Moving businesses abroad often also preclude the obligation to apply for VAT.
Onshore companies are taxed at a rate of income tax, which is lower than the tax burden in developed countries. These procedures are used to optimize income tax, dividend profits, and license and interest earnings.
Linking companies can create international business structures that meet multiple requirements. A good combination of offshore and onshore companies can thus create a corporate structure with zero tax and good reputation.
Tax Paradise United Arab Emirates
The United Arab Emirates boasts the fastest growing economy in the world. Business in Ras Al Khaimah (RAK) – the largest of the seven emirates – is at the top level that links east to west. Life costs are significantly lower than in other emirates. A cheaper environment is positively reflected in the cost of running the company.
Bookkeeping is formally required but there is no requirement to submit or audit it. UAE has one crucial advantage over all other tax neutral jurisdictions – are not listed on the blacklist (ie. “Blacklist”) OECD – Organization for Economic Co-operation and Development.
Tax Paradise USA
The United States itself, the world’s largest anti-tax haven, can become a tax haven for non-residents. An example might be the establishment of an offshore company in Seychelles holding 100% shares of LLC company in the state of Delaware.
If US LLC employees and its own shareholders are not US citizens and the company as such will not have business activities in the United States, business profits will be taxed at the shareholder level – that is, Seychelles at a 0% rate.
The purpose of tax optimization is not just to reduce the tax burden. An important factor is also the fact that we get back from the paid tax. What other benefits can we gain as taxpayers or if it is not desirable to move the business into a much more favorable business environment?
Taxation is a cost like any other, so entrepreneurs try to limit their costs as part of maximizing profits, which logically involves the amount of taxation. Companies are therefore forced to tax at least part of their revenues by using well-designed international structures using offshore and onshore centers.