Assignment of

Business Law

Topic:

Panama Leaks

Submitted to:
Sir Imtiaz Ahmed

Submitted by:
Ahsan Ali
(MBSE15-28)
MBA 2nd (Morning)

Bahauddin Zakariya University

Sub Campus Sahiwal.

What is offshore company?

Most business people have heard about offshore companies. However, very few are
aware of what these companies are used for and how they differ from other more
common corporate entities.
First and foremost, it is essential to define the term offshore. Offshore relates to
managing, registering, conducting, or operating in a foreign country, often with financial,
legal and tax benefits. Offshore Company is then a company incorporated for the
purpose of operating outside the country of its registration and/or the place of residence
of its directors, shareholders and beneficial owners. Again, this is typically pursued to
realize various financial, legal or tax benefits.
The term offshore company or offshore corporation is used in at least two distinct and
different ways. An offshore company may be a reference to:

A corporation or (sometimes) other type of legal entity which is incorporated or

registered in an offshore financial center or tax haven.

A company or corporate group (or sometimes a division there of) which engages
in offshoring manufacturing or business services.

In relation to companies and similar entities which are incorporated in offshore

jurisdictions the use of both the words "offshore" and "company" can be varied in
application. The extent to which a jurisdiction is regarded as offshore is often a question
of perception and degree. Classic tax haven countries such as Bermuda, British Virgin
Islands and the Cayman Islands are quintessentially offshore jurisdictions, and
companies incorporated in those jurisdictions are invariably labeled as offshore
companies. Thereafter there are certain small intermediate countries such as Hong
Kong and Singapore (sometimes referred to as "mid-shore" jurisdictions) which, whilst
having oversized financial centers, are not zero tax regimes. Finally, there are classes
of industrialized economies which can be used as part of tax mitigation structures,
including countries like Ireland, the Netherlands and even the United Kingdom,
particularly in commentary relating to corporate inversion. Furthermore, in Federal
systems, states which operate like a classic offshore center can result in corporations

formed there being labeled as offshore, even if they form part of the largest economy in
the world (for example, Delaware in the United States).Similarly, the term "company" is
used loosely, and at its widest can be taken to refer to any type of artificial entity,
including not just corporations and companies, but potentially also LLCs, LPs, LLPs,
and sometimes partnerships or even offshore trusts.

Uses of offshore companies:

Offshore companies are used for a variety of commercial and private purposes, some
legitimate and economically beneficial, whilst others may be harmful or even criminal.
Allegations are frequently made in the press about offshore companies being used for
money laundering, tax evasion, fraud, and other forms of white collar crime. Offshore
companies are also used in a wide variety of commercial transactions from generic
holding companies, to joint ventures and listing vehicles. Offshore companies are also
used widely in connection with private wealth for tax mitigation and privacy. The use of
offshore companies, particularly in tax planning, has become controversial in recent
years, and a number of high-profile companies have ceased using offshore entities in
their group structure as a result of public campaigns for such companies to pay their
"fair share" of Government taxes.
Detailed information in relation to the use of offshore companies is notoriously difficult to
come by because of the opaque nature of much of the business (and because, in many
cases, the companies are used specifically to preserve the confidentiality of a
transaction or individual). It is a commonly held view that most uses of offshore
companies are driven by tax mitigation and/or regulatory arbitrage, although there are
some suggestions that the amount of tax structuring may be less than commonly
thought. Other commonly cited legitimate uses of offshore companies include uses as
joint ventures, financing SPVs, stock market listing vehicles, holding companies and
asset holding structures, and trading vehicles.

OFFSHORE COMPANY FORMATION BENEFITS:

We would like to outline some of the key benefits for incorporating an offshore company.

1. Low Taxation: Most offshore companies pay no local taxes on the income
derived from offshore operations, i.e. from activities outside of the jurisdiction of
company formation. These offshore companies include Belize IBC, Seychelles IBC,
BVI BC and others.
Companies in some on-shore jurisdictions, where we provide incorporation services
as well, also have comparatively low taxation..
2. Anonymity: Registrars in most offshore jurisdictions do not disclose information
about directors, shareholders and beneficiaries of offshore IBC companies. Thus, the
underlying principal may carry out all relevant transactions in the name of an offshore
company while remaining anonymous. It is important to note that this applies to
legitimate operations only.
3. Asset protection: In the international business context, it is usually the laws of the
jurisdiction of incorporation that are applied, rather than those, where the company is
being sued. Many offshore jurisdictions are renowned for their favorable asset
protection laws. Complementing an offshore company with offshore banking facilities,
protects companys assets even further.
4. Ease of Reporting: The compliance reporting requirements for offshore
companies are limited, especially in comparison to companies, registered in onshore
jurisdictions. Most offshore IBC companies are not required to file annual reports and
accounts in the jurisdiction of the company formation. Instead, local authorities
charge a flat annual license fee, which is insignificant in comparison to reporting
expenses and taxes in onshore jurisdictions.
5. Operating Costs and Fees: With limited reporting requirements, offshore
companies generally have lower maintenance and operating fees. The cost of
compliance, preparation of accounts and auditing in on-shore countries is often
considerable while offshore companies save on these particular expenses.

THE BENEFITS OFFERED BY OFFSHORE COMPANIES:

More specifically, the reasons for going offshore and utilizing offshore companies for tax
planning and offshore business include:

Free remittance of profits and capital

Access to top-rated debt history jurisdictions

Access to tax treaties

Security of property rights

Accessing low cost areas

Banking privacy

Availability of offshore experts

Access to foreign insurance and reinsurance

Enhanced privacy

Customs and duty exemptions

Exchange convertibility

Government cooperation

Fair treatment

Territorial taxation on foreign income

Fewer restrictions

Sanctity of contracts

Foreign investment inducements

Tested legal systems

Higher yields and returns

The availability of sophisticated banking facilities

Reduced taxation

The search for political stability

1. Appraisals and Financing:

The offshore concept provides you with privacy, but the major drawback to this benefit is
that it also makes it difficult for the potential financial partners or investors to determine
what your business is actually worth. In addition to this, lenders are more likely to be
hesitant in approving or granting financial assistance to a business that is out of their
reach.
2. Limitations:
Some offshore companies may be limited in their activities due to restrictions that are
placed on them by the United States as well as other jurisdictions. Trade benefits that
are designed to help US companies may not be available to you due to your offshore
registration. Again, research this issue as it can be a drawback depending on your
industry.
3. Perception:
As was mentioned above, the offshore concept is not always held in the highest regard
due to the media only reporting bad cases so incorporate with care and privacy.
4.Breaking the law through offshore investing:
The United States and Canada are well aware that some individuals and companies
use offshore investing as a way to get around their countries tax codes. Failing to report
income earned through offshore investing, however, is illegal and the penalties are stiff.
Sometimes those using offshore investing to make money break the law unintentionally.
Tax laws are very complicated, which makes it difficult for those without backgrounds in
law to understand the full extent of their responsibilities.

5. Not all offshore investing opportunities are legitimate:

Offshore investing attracts many people because of the relaxed regulations of host
countries. These loose regulations, however, can open opportunities for con artists to
prey on unwitting investors. Some countries offer offshore investors lots of protection
because they want to encourage more individuals and companies to keep their money
and assets within their borders. Others, however, are not heavily involved in protecting
offshore investors from opportunities that are not legitimate.

Conclusion:
We are not lawyers, tax accountants or offshore investment experts in any country.
Every individual's situation is different. Offshore investment is beyond the means of
most investors, and above the risk tolerance of others.
Despite the many pitfalls of offshore investing, it can still pay off to shift some
investment assets from one jurisdiction to another. As with even the most insignificant
investment, do your research before parting with your money - unless you're prepared
to lose it.

About the Panama Papers:

Over a year ago, an anonymous source contacted the Sddeutsche Zeitung (SZ) and
submitted encrypted internal documents from Mossack Fonseca, a Panamanian law
firm that sells anonymous offshore companies around the world. These shell companies
enable their owners to cover up their business dealings, no matter how shady.
In the months that followed, the number of documents continued to grow far beyond the
original leak. Ultimately, SZ acquired about 2.6 terabytes of data, making the leak the
biggest that journalists had ever worked with. The source wanted neither financial
compensation nor anything else in return, apart from a few security measures.
The data provides rare insights into a world that can only exist in the shadows. It proves
how a global industry led by major banks, legal firms, and asset management

companies secretly manages the estates of the worlds rich and famous: from
politicians, Fifa officials, fraudsters and drug smugglers, to celebrities and professional
athletes.
Countries which are Effected by Panama Papers:
1. Russia
2. Azerbaijan
3. Iceland
4. UK
5. China
6. Pakistan
7. Iran
8. Zimbabwe
9. Australia
10. Argentina
11. Syria
12. Italy
13. Norway
14. Hong Kong
15. Bangladesh
16. India
17. Israel
18. Qatar
19. Thailand
20. Canada