Generally, offshore refers to a wide range of investment strategies that all occur outside of your home country. There are several reasons why people use offshore investing as part of their portfolio:

Tax Reduction: Many countries (known as tax havens) offer tax incentives to foreign investors. The favorable tax rates in an offshore country are designed to promote a healthy investment environment that attracts outside wealth. For a tiny little country with very little resources or population, attracting investments can dramatically increase economic activity in the country. In a simplified explanation, the way it works is that offshore investors form a corporation in the foreign country, which acts as a shell for the investors' accounts. Because the corporation does not transact in local business, little to no tax is imposed on your offshore corporation. What's even better is that many foreign companies enjoy tax-exempt status when they invest in United States markets. Making investments through foreign corporations can hold a distinct advantage over making investments as an individual.

Asset protection - offshore centres are popular locations to restructure ownership of assets, whether through trusts, foundations, or an existing corporation. Many individuals who are concerned about lawsuits elect to transfer a portion of their assets from their personal estates to an entity that holds it outside of the country. This way these individuals are no longer susceptible to seizure or other domestic turbulence.

Confidentiality- Many offshore jurisdictions offer the complimentary benefit of secrecy legislation. These countries have enacted laws establishing strict corporate and banking confidentiality. By carrying out transactions in the name of a private company, the name of the underlying principal may be kept out of documentation.

Simplicity - except for regulated businesses, such as banks or other financial institutions, some jurisdictions make it relatively simple to set up and maintain companies.

Reporting - the level of information required by the registrar of companies varies from jurisdiction to jurisdiction.

Offshore corporations are similar to domestic corporations, but they are incorporated in an offshore jurisdiction and are subject to the offshore jurisdiction's laws. The offshore corporations which we are concerned about typically cannot do business within the jurisdiction of their incorporation, except for investment purposes, etc. Such corporations are often referred to as "exempt companies" or more commonly "International Business Companies" or "IBCs".

International Business Company (IBC):

An IBC is typically not permitted to engage in business within the jurisdiction in which it is incorporated. An IBC can be used in a range of ways by a variety of business types to decrease tax burdens, provide anonymity to the beneficial owner, and provide asset protection. They are generally exempt from local corporate taxation and stamp duty provided that they do not conduct any local business. The specific qualities of an IBC are dependent on the jurisdiction in which it is incorporated. The more popular locations for IBC formation are the Belize, British Virgin Islands and Seychelles.

Global Business companies – (GBC 1 and GBC 2):

Mauritius GBC1: A GBC1 is a company engaged in qualified global business and which is carried on from within Mauritius with persons all of whom are resident outside Mauritius and where business is conducted in a currency other than the Mauritian rupee. A GBC1 may be locally incorporated or may be registered as a branch of a foreign company. The business of a GBC1 Company must be conducted in foreign currency other than for day-to-day transactions; and GBC1 companies must not do business in Mauritius, other than to take professional advice, employ local labour, and to rent property. As per the Second Schedule of the FSD Act, a GBL1 can engage in the following Qualified Global Business Activities:

• Aircraft Financing and Leasing
• Asset Management
• Consultancy Services
• Financial Services
• Fund Management
• Information and Communication Technology Services
• Insurance
• Licensing and Franchising
• Logistics and/or Marketing
• Operational Headquarters
• Pension Funds
• Shipping and Ship Management
• Trading

It is the recommended structure for individuals, body corporate, trust or partnership including limited liability partnership or a societe for investment and other high profile business. A GBC1 may be locally incorporated or may be registered as a branch of a foreign company. Public companies, those engaged in banking, insurance and fund management, and companies wishing to benefit from the provisions of Double Taxation Agreements (DTAs), can only be incorporated as GBC 1 companies. A GBC 1 who wishes to access Mauritius' network of double tax treaties must have a Tax Residence Certificate (TRC). In order to prove to be a tax resident the company must demonstrate that effective management and control is in Mauritius. To satisfy this test applicant must:

• Have at least two resident directors in Mauritius
• Maintain a bank account with a local bank through which fund s must flow
• CMaintain a Registered office and all statutory records in Mauritius
• Have a local qualified Company secretary
• FHave a local Auditor
• Chair and initiate Board meeting in Mauritius

GBC 1 is mostly used by people investing in India because of the favorable tax-treaties that exists between the two countries (Mauritius and India).

Resident: The treaty applies to any person who is resident in one or both states. Resident of a state means a person who is liable to tax under the laws of that state by reason of his domicile, residence, place of management or any other criterion of a similar nature. A person includes an individual, a company, and any non-corporate which is treated as a taxable unit under the taxation laws of the respective.

Permanent Establishment: A person resident in a state and carrying on business in the other state will be taxed in the other state only if he has a permanent establishment there. Permanent establishment essentially means substantial presence, e.g. a place of management, a branch, an office, etc. It also includes a building site or construction or assembly project lasting more than 9 months.

Dividends: Dividends may be taxed in the source country at rates not exceeding: 5% if shareholding is at least 10%; 15% otherwise. However, Mauritius does not levy tax on dividends paid by resident companies.

Interest: Interest may be taxed in the source country at the rate applicable under its domestic law but is tax free under certain conditions, e.g. if paid to the government of the other state or its agencies or to a bank resident in the other state or if the debt-claim is approved. Under Mauritius tax law, interest paid by a company holding a Global Business Licence Category 1 or a bank holding a Category 2 banking licence to a non-resident not carrying on any business in Mauritius is tax exempt.

Royalties: Royalties may be taxed in the source country at the rate not exceeding 15%. However, under Mauritius tax law royalties paid by a company holding a Global Business Licence category 1 to a non-resident are exempt from tax.

Capital Gains: Gains from the sale of shares are taxable only in the country where the shareholder is resident. While Mauritius does not levy capital gains tax, any gain or profit from the sale of securities or units is specifically exempt from Income tax.

Relief from Double Taxation: Double taxation is avoided by means of a tax credit allowed for tax paid in the other state. The treaty as well as Mauritius tax law provide for credit in respect of underlying tax relating to dividends and tax sparing relief for tax exemption or reduction granted by a state.

Mauritius GBC2: A Company holding a Category 2 global business licence (Global Business Company 2) must be incorporated under the Companies Act 2001 as a private company, it must not conduct business with any Mauritian resident (a Mauritian resident cannot have any beneficial interest in the company) and must not conduct business in Mauritian Rupees. GBC2 companies are relatively cost-effective, very flexible and completely tax-exempt offshore vehicles. Information relating to a GBC2 is confidential and not available for public examination. A GBC 2 company can carry out the following business: Non-financial consultancy, IT services, logistics, marketing, shipping, ship management, non-financial trading, and passive investment holding. A GBC2 Company is prohibited from:

• Undertaking business transactions with Mauritius residents or in the Mauritius Rupee
• Owning any interest in real estate situated in Mauritius.
• Having as beneficial owner an individual or resident in Mauritius.
• Holding shares or debentures or any interests in a Mauritius domestic company.

The GBC2 Company shall be a private company and have a registered agent, and a registered office in Mauritius. We provide these services when we incorporate your company and we are available for the transfer of existing companies to our registered agent service in Mauritius as well. The application for a Category 2 Global Business Licence has to be processed by a registered agent to the Financial Services commission, 'FSC'. The application should ideally identify the beneficial owner(s), otherwise the FSC will accept the names of the members, however the registered agent must have full details of the beneficial owner maintained at their registered office and this information must be made available to the FSC on request.

There are many variables which need to be considered in order to choose the best offshore solution. The two main variables are location and type of entity. Each offshore location has its own law which regulates both the type of business entities which may be formed within the jurisdiction, and the specific structure and commitments of such entities. In order to make the best choice, you must first clearly define the type of business you conduct now, and may wish to conduct in the future, and your objectives for going offshore: different offshore structures work better for certain types of businesses than others and the best structure and jurisdiction is contingent upon what you hope to achieve. The geographical location is also important. By forming an offshore entity you will also be forming a relationship with a place; you may be required to visit there to open a bank account, and to conduct meetings. It is therefore important to consider whether it will be expensive to travel there, whether you will be able to communicate with the local community, whether there is sufficient infrastructure present to support your operation.

Each offshore tax haven has different strengths and weaknesses with which we are intimately familiar, and so can make appropriate suggestions in respect of your stated objectives. Fides Partners Limited provides offshore company formation services and the subsequent support required for their smooth operation and maintenance. Such services include provision of the registered address, agent and resident secretary, provision of company management and administration services, offshore bank account, mail forwarding, custody of documents, preparation of corporate documentation, general administration and a range of further. As a regulated offshore service provider, we are required to comply with strict standards of staff competence, quality of the internal procedures and accountability. We work with individual clients and professional clients, such as other offshore company agents, tax consultants, accountants and attorneys worldwide. If you have an idea for a business, we can also assist you in start-up your new business directly in offshore countries.