Offshore is a company or financial entity whose accounting is carried out outside the borders of the country where it operates , to obtain tax benefits .
To be considered offshore, the company must be registered outside its national territory (or outside the free zone), it must carry out its activity outside the place of registration and its clients must be domiciled outside the offshore financial center.
In addition to classifying the company or institution seeking a more advantageous tax regime, the word offshore is also used to describe the financial centers that offer these tax benefits . Some of the best known offshore centers are: Maldives, Cayman Islands, Bermuda Islands, Monaco and Panama.
Degrees of transparency and financial regulation measures may vary depending on the coast in question. These financial centers are often used for illicit purposes, such as tax evasion and money laundering.
Offshore financial centers are often described as tax havens , because they have advantages such as:
- favored taxes (reduced taxes or tax exemptions);
- more flexible financial regulation;
- strict rules for the protection of bank secrecy and anonymity.
According to Brazilian federal income, privileged or favored tax regimes are considered to be those that do not tax income or that taxes are lower than the 20% rate.