International corporations such as oil companies and banks have a genuine need to incorporate new companies in many different parts of the world. It would not be practical for them (and in most cases illegal) for them to trade throughout the World via one company,located in their home country.

These Multi-national corporations engage the services of expensive tax advisers, with the aim minimizing global taxes. This is achieved in many cases using by utilizing a complex corporate structure making the best use of double taxation treaties and legal loopholes. In today's competitive world this has become a pre-requisite for survival.

Most of us are not the owners of multi-billion corporations. Most of us, are small business persons seeking to survive in an increasingly competitive world. So what can we do to ensure that our businesses do survive in the long-term. How can we compete with countries with much lower labour costs?

Offshore Tax Planning

The nature of our businesses will determine the strategy taken. A manufacturer for example may wish to sub-contract a process to a country with lower wage costs. Or may even consider setting-up a subsidiary in this country.

Tax-panning should take into consideration many factors, not solely the desire to save on taxation. These may include:

• Relocation of the entire or part of the business to a country with lower labour costs (to save on overheads)
  
• The establishment of an overseas branch to market products in a new region of the world (to increase sales)
• sale of part of the business to overseas companies ( to deter hostile takeovers)

Governments in onshore locations have passed legislation to deter businesses from moving abroad for the purported reason that they are doing so to avoid paying taxes. In fact, this blanket legislation not surprisingly restricts genuine companies from diversifying their businesses ( moving part of their business abroad) in order that they may remain competitive, internationally, in their related fields.

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