Offshore and their features.

Probably no people left who would not have heard of offshore. This topic has often been raised
in the media over recent years. A special information surge triggered the release of confidential
information about the offshore company Mossack Fonseca, more commonly known as
"Panamanian documents", or "Panamanian paper". To get an idea of ​​the scale of offshore in the
world, you can quote a quote of a British journalist Nicholas Shakeson from his book: "More
than half of the world trade goes through offshore. More than half of the world's bank assets and
a third of foreign direct investment by multinational corporations have their roots in offshore ("
Treasury Islands, Tax havens and stolen people").
A bit of history
Offshore jurisdictions in their present form began to form at the end of the XIX century. A rather
interesting case took place in the United States. One lawyer persuaded the governor of New
Jersey to create on their territory a liberal business environment, in particular, to set low taxes.
For the possibility of registering business in this state, it was necessary to pay a small deductible
tax. The next state that went the same way was Delaware, in which by the beginning of the XX
century, there were registered nearly 1,500 companies. Registration fees and deductible taxes
gave these states considerable profits. At the same time, offshore jurisdictions in Luxembourg
and Panama were formed. In the 70s of the same century there was a real boom – more than 70
offshore centers around the world appeared, and already in the 90's, according to experts, about
half of foreign exchange operations were conducted through offshore.
Geography
Currently, the following dislocations are most distinguished:
1) Caribbean (Aruba, Bahamas, Belize, Bermuda, Anguilla, etc.). Much of these offshore is the
former possessions of the British Empire.
2) African (Seychelles, Mauritius).
3) European (Malta, Cyprus, Ireland, Liechtenstein, Monaco, Andorra and some others).
4) Asian (Singapore, Hong Kong, Nauru, Samoa, Tonga).
Types of offshore
In general, it is possible to distinguish two main types of offshore:
1) "Classic" offshore (BWI, Seychelles, Belize)
In these jurisdictions, an organization-legal form that used to create offshore is an international
company. There are no special requirements for a newly created company; as a rule, managers,
shareholders or secretaries may be physical persons and companies, residents of any country. As
a rule, there are no requirements for the amount of authorized capital. There are no taxes for such
companies, only a small registration fee is payable. Also, most of them are not accountable
(Although Seychelles, for example, introduced it in 2016 with the adoption of a new law act on
international companies).Mostly, the registered companies here under the legislation of these
countries don`t have the right to conduct business in their territory. Information about owners is
usually only available in local registers, which is beneficial to the latter, since as a rule most of
them want anonymity.
2) Jurisdictions with low tax rates (Malta, Cyprus, Andorra)
Some of them are on the offshore lists, some appear on the lists of states that refuse to cooperate
with the EU in the field of taxation, or in other lists that can be equated with offshore. Often, the
organizational form of such companies is limited liability company. Such forms as joint-stock
companies, cooperatives are possible to use. Tax rates in these countries are much lower than in
others, as well as numerous tax benefits such as exemptions from dividends, interest, and
foreign-earned profits used by businesses to minimize tax payments. This is negatively perceived
by the EU and the states in which the tax rates are higher, but these jurisdictions don`t hurry to
change anything. Owners of offshore companies can do business in the territory of these states.
Some have requirements for the amount of authorized capital, residence of founders,
shareholders or secretaries. But there are also advantages, such as the existence of a large
number of double taxation treaties, which allows offshore owners not to pay taxes in the state
they are tax resident.
Requirements for offshore companies.
But the requirements differ in each case. For example, in Singapore, it is imperative that the
company's director and secretary are residents of that state, to report each year, which is
approved by the local auditor, holding an annual meeting of shareholders of the company. And in
Belize it's very simple – there's just one person who can be both a director and a shareholder. In
addition, it does not matter which country she is a resident of. There are no requirements for
paying the authorized capital, but you must have an office in the territory of this country, as well
as keep a register of shareholders. If summed up, the requirements for company registration in
one or another offshore jurisdiction are generally rather liberal and registration of the company is
not a complicated task. But, of course, to create a company only on paper is not will not succeed
– it will be necessary to invest at least in the office and several employees (director, servictor).
How does it work?
The property, assets of the owner / owners are registreted on offshore company, and also one or
another business is did through it is. As a result, property, profits, dividends are taxed at a low
rate or are not taxed at all. Thus, the owner and the state in which the offshore is established
benefits, since the first minimizes taxes, and the latter receives the appropriate fee, in the form of
registration fees and taxes. And while the EU and other states are struggling to fight this
phenomenon, it's hard to call this a successful one.
The attorneys at law "Bachinsky, Kolomiets & Partners" will provide you with detailed advice
and assistance.]]>

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A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. 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Together with an application, the following documents must be prepared: The access code to the copy of the Statute of the company (or the foundation agreement) kept in an electronic file in the database of the Unified State Register of Enterprises and Organizations (USREO);  Funding sources of the statutory capital (where the money are taken from);  confirmation of the actual injection of money;  information about beneficiaries (special attention must be paid to business reputation);  the information about the director and founders;  the check about payment of state fee;  the internal regulations, in accordance with which ones, the privacy policy rules are regulated. In the terms of volume of necessary documentation of licensing is very alike with complete registration of legal entity. It is understood that the state wants the severe adjusting of activity of organizations that will engage in virtual assets. Is it already possible to get a license? 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20/01/2022

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