The Changing Meaning of the Word ‘Offshore’
The phrase ‘offshore territory’ literally refers to the part of an onshore country territory (or a large island such as Great Britain, for example) that sits off the shore of the mainland. Thus, the Isle of Man is an offshore territory of the UK. When you are on the island, you are in Great Britain for legal purposes even though you are not exactly on the mainland.

Over time, however, the implications of the phrases ‘offshore zone’, offshore jurisdiction, and ‘offshore territory’ have changed. Moreover, a new expression ‘offshore country’ has emerged. This has happened for historical reasons. The British Empire once used to span over nearly half of the globe, which means that it had quite a number of offshore territories. Gradually, the country lost most of its colonies and the remaining British colonies are currently referred to as ‘overseas territories’. The decolonization processes have lasted for a long time and they are not completed yet. For instance, if you find yourself in the Caymans, British Virgin Islands or in Anguilla, you will find yourself on the territory of Great Britain, as these Caribbean islands are still part of Great Britain even though they enjoy certain levels of autonomy. The islands of Martinique and Guadeloupe in the region belong to France while the island of St Maarten is a Dutch overseas territory. International Wealth experts know a lot about the opportunities available in the Caribbean as well as other regions of the world.

Some other Caribbean islands, however, such as Antigua, Barbuda, St Kitts, Nevis, Grenada, and others chose to become independent from Great Britain. The process started as recently as the last quarter of the 20th century and it went on quite peacefully. The central Government didn’t mind granting independence to the Caribbean islands because sustaining those faraway communities actually cost the British authorities a pretty penny.

Now when financing from the mother country had stopped, the new independent states had to find some new sources of income that could keep them going. Thus, some Caribbean countries as well as former colonies in other parts of the world decided to offer weighty incentives to foreigners wishing to invest at least some capital in their economies. In particular, a number of them turned into tax havens. If a foreign entrepreneur wished to register a company offshore, he or she could do business and receive profits without paying any taxes in the country of company domiciliation. It doesn’t mean that s/he had to pay nothing to the local budget: an annual company registration was due but it was much smaller than the amount of money that the company owner would have to pay if his/ her company was registered at home.

Since no taxes were payable, the companies registered in former colonies did not have to submit any accounting reports nor any other financial documentation. So if you had an offshore company in the 1980s, for example, you could do any kind of business without anybody knowing what exactly you were busy with. As was to be expected, a number of criminals started using offshore companies for laundering money that they had obtained from drug trafficking, illegal sale of weapons, and other unlawful types of activities. This is when the meaning of the phrase ‘offshore jurisdiction’ became derogative. If the company was domiciled in an offshore jurisdiction (or an offshore country), it meant that it was highly dangerous to have business dealings with this company, as it might have been set up by criminals for the purposes of money laundering and tax evasion.

Since some offshore-registered companies were found to finance terrorists, things have changed dramatically. An active de-offshorization campaign has been started to prevent the illegal practices mentioned above. Today, all offshore jurisdictions exchange their residents’ fiscal information with the tax authorities of their home countries. In the modern world, all business operations need to be perfectly transparent.

Besides, there are no tax havens in today’s world either. It is true that you will have to pay no local taxes if you set up a company in some offshore countries but this opportunity is available only if you derive incomes only from operations in foreign countries. If you conduct any business on the territory of the country where your offshore company is registered, you become liable to taxation. We have to note at this point that the international fiscal authorities have forced all zero-tax and low-tax jurisdictions to bring their local taxes in conformity with the tax levels in well-developed states. Even if you do all your business abroad and don’t pay any taxes in the offshore jurisdiction of your company domiciliation, you obviously have to pay the taxes in the country (or countries) of your business operations. There’s no evading taxes anymore.

As time goes by, the meaning of the phrase ‘offshore zone’ continues to change. Today it usually refers to any country or territory that offers some special incentives to foreign investors. The American states of Delaware, Wyoming, and Nevada, for example, are sometimes called ‘offshore zones’. They are clearly located onshore (that is, they are on the mainland) but their tax incentives can be really attractive for a foreign investor. A new term ‘mid-shore’ has also been coined. It refers to countries and territories that offer some exciting opportunities to international entrepreneurs but not too many of them. Malta, Singapore, and Hong Kong can serve as examples of mid-shore jurisdictions. You have to realize, however, that all countries welcome foreign direct investments no matter if they are onshore or offshore. This means that you can find interesting offers in a great number of national states. What you have to do is learn about the available opportunities and use some professional assistance to find the most attractive ones.