• Offshore companies enjoy tax advantages.Corporate Building image by Bobby4237 from Fotolia.com
  
  Offshore companies enjoy several financial benefits. The clearest financial benefit is tax advantage. No matter what the company's country of origin, having the company located offshore guarantees a different tax structure.
  
  

Tax Exemptions

• Some countries waive all corporate taxes if a company is from another country. Countries that do not levy any corporate tax on an offshore company are known as tax havens. Besides the benefit of not paying taxes in the offshore location, the home location for a company also sees little taxation. An offshore company is usually classified as an International Business Company, or IBC. IBC's do not have to pay taxes in their operating country if the company is based in another country. Any corporate tax found in the U.S. or U.K. is not applied when a company is an IBC. Add in the fact that an IBC could be located in a tax haven such as Belize or Brunei, and the company pays little to no corporate taxes.
  
  

Free Zones

• Some countries have what are known as free zones. Free zones are commercial property areas that do not have certain taxes levied on a business. Usually, the location of a business affects its tax rate. However, many tax-haven countries set up free zones that do not tax certain services for a company. Taxes on operating costs for disposal, maintenance, location, or tariffs are minimal to none within a free zone location.
  
  

Labor Costs

• Labor costs vary by country. A business might have to pay a worker a low wage compared to the company's home country. Besides this cost savings, the company saves money on conventional employee taxes. The most common employee taxes are payroll taxes. In countries such as the U.S., a company matches and pays taxes for an employee's social security and Medicare, along with state taxes. In an offshore location, none of those taxes exist or are applied on the company.
  
  

LLC and LLP Benefits

• An LLC is a limited liability company and a LLP is a limited liability partnership. An LLC or LLP in a country divides profits among members proportionally. Then, the government taxes each member individually for corporate taxes. However, if the LLC or LLP is offshore, then none of the corporate profits, divided evenly between members, are taxed by the member's home country.