What is Offshoring?
According to www.theinvestorsbook.com, offshoring is the process of relocating the business operations unit (production or services) to a different country where cheap labour or resources are available. However, the company does not intend to transfer operations to another jurisdiction; instead, it seeks to minimise the cost of manufacturing and other supporting processes.
So, is offshoring legal? Absolutely, when done properly. If you have questions or concerns, make sure you consult our trusted experts to determine the proper and legal ways to protect your wealth. Foundations, trusts and international business companies, among other financial vehicles, legally afford high levels of protection, when set up properly.
Consequences of the Panama Papers leak
According to much of the leaked confidential information, famous entrepreneurs, politicians, athletes, artists and others were implicated in potentially illicit activities. The records go back about 40 years, to 1977, and constitute a leak that is believed to be even larger than the infamous leak of top-secret documents by the American whistleblower Edward Snowden in 2013 and WikiLeaks in 2010 combined. Much of the information pertains to offshoring efforts by various individuals, families, and organisations.
Following the Panama Papers leak, the world shed a new light on corruption; investigations were launched in many countries which unveiled how individuals and corporations shielded their wealth.
Due to the enormous public pressure and protests, international enquiry was also launched into the offshoring industry. As part of this investigation, OECD also decided on the tougher tax transparency standards and submitted new proposals to G20. These measures led to the introduction of a new global standard on automatic exchange of information (AEOI) [link to 4.1.] and the Inclusive Framework on BEPS [link to 4.2.], among other things.
The legal and ethical implications for offshoring
So, if crimes were committed, is offshoring itself illegal? Let’s think about it this way: Money has been (and, sadly, will be) used in way too many different illegal activities. Bribery, drug dealing, theft – the list could go on. Yet money itself isn’t a bad thing, right? It’s what people do with money and how they acquire it that matters.
The same principle applies to offshoring. There are many different legal ways to utilise offshoring, and the benefits can be tremendous. Yes, saving on taxes is one reason why people set up offshore companies, foundations and trusts. There are many other reasons to offshore as well.
The global economy has been hit by unprecedented instability. The Covid-19 pandemic has been a global shock. International markets were rocked by real estate bubbles, slowing economies, disruptions to both supply and demand and various other issues. In this global landscape, would you really want to park all of your assets in one country, under one financial system? Nope. And offshoring can help you diversify.
Is offshoring legal and a viable option nowadays? Absolutely. Do some people abuse the system? Unfortunately, yes. For businesses, however, offshoring is not only legal, but vital. If you don’t offshore, there is a risk that you will lose your competitive edge as you spend more money on taxes and other burdens, such as high labour costs. In a competitive global economy, it is essential to seek out every advantage you can, and offshoring is an important, legal way to gain a competitive advantage over sluggish competitors.
Is offshoring safe?
We are often asked this question. Every entrepreneur must be sure that their assets will truly be protected and their information kept confidential. Nothing is completely safe, and there will always be risks, which is why it is important to consult with trusted experts who know the field, and who know the safest and most confidential routes for setting up international companies, offshore trusts, foundations, and bank accounts.
By consulting with Dipton Business Solutions experts, you will greatly decrease the risk of suffering a confidentiality leak or other issue. Trusted professionals can also help ensure that everything is done legally and above the books.