Section 7

Types of Vehicles That Can
Be Chartered and Licensed

Corporations

Several types of corporations can be chartered in most tax havens. One type of corporation has limited liability and can issue various classes of stock. Generally, this corporation is preferable, although other varieties can be found offshore.

The three principal types of corporations that will be encountered include the regular corporation that residents of tax havens use for doing business within their country. This corporation is subject to local taxes.

Then there is the corporate animal created to attract offshore business. It is exempt from taxes on income produced outside the country. This corporation is usually restricted from doing business onshore or with the locals. This type of corporation is often referred to as a non-resident or exempt corporation.

The hybrid of the non-resident or exempt corporation is the International Business Company (IBC) which is purely an offshore creation. It does not pay local taxes and has many features not found in most corporations, although some features are not entirely exclusive to it. The IBC is the product of modern corporation laws enacted by progressive tax havens to compete with other popular offshore financial centers.

There are other odd types of corporations, but these are less desirable for offshore purposes.

Aside from the nuances of limited liability companies, the IBC sports some snazzy modifications. Take a look at these features found in a Bahamas IBC:

• Permits the issuance of bearer shares, no par value shares and unnumbered shares.
  
• Minimum of one director.
  
• Telephonic or electronic board meetings are permitted.
  
• No business license fee, income tax, corporation tax, capital gains tax or other tax required of an IBC.
  
• No exchange control regulations between shareholders, their shares and their IBC. IBCs are granted 20 year exemptions from the date of incorporation.
  
• Incorporation is swift, usually 24 hours.
  
• No minimum capitalization.
  
• Nominee directors are acceptable, providing anonymity to beneficial owners.

In other tax havens there may be variations on the benefits of IBC, but these are typical.

Insurance Companies

Insurance companies can be incorporated in many tax havens. Certain tax havens are more desirable and promote offshore insurance companies. These can be underwriters of all types, captive insurance companies, such as reinsurance and others. They are licensed by a local government body. Beneficial owners usually must meet qualification requirements to obtain licensing.

Mutual or International Funds

These are merely offshore corporations engaged in the investment business. Luxembourg is the most popular place for forming such funds. But the Bahamas and British Virgin Islands do a brisk business. Generally these do not require special licensing.

Ship Registration

Offshore corporations are frequently used to own and manage private yachts, chartering operations, cruise ships, merchant fleets, etc. Often they choose to register in Liberia or Panama so they can fly under their "flag of convenience" which provides certain liberal advantages when in international waters. Other tax havens have their benefits too. A vessel owned by a Gibraltar corporation will fly under the British red ensign and gain instant prestige and the benefits of being offshore.

Trust Companies

Trust companies can be incorporated and usually require the beneficial owners to meet certain criteria. Trust companies administer trusts and in every tax haven well established and reputable trust companies can be found. These concerns are managed by local professionals and imports from Britain, Canada and elsewhere. They often provide incorporation services too.

Offshore Banks

Offshore banks have attracted considerable attention in the past 20 years. They have been the source of gray hair for regulators in the U.S., U.K., Canada and elsewhere. Regardless of publicized abuses, there are thousands that operate perfectly legally from tax havens worldwide. Tax havens take precautionary measures in screening applicants for a bank license, investigating their reputation, qualifications and financial standing. Popular havens for offshore banks today started by individuals include Antigua, the Bahamas, Cayman Islands, St. Vincent, Turks & Caicos, Western Samoa, Vanuatu, Nauru, Anguilla and other watery locales.

Tax havens have favorite financial vehicles they like to promote. One tax haven may lean toward IBCs, another toward offshore insurance companies. Preference is determined by how they perceive these activities to benefit their economy.

If you would like to learn more about chartering and licensing your own offshore trust company or insurance company, consult our affiliate's website. Charters International, Ltd. at : http://www.banksoffshore.com or telephone (775) 841-7181 or fax (775) 883-2273.