Irreversible changes to the sphere of offshore company formation and maintenance

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2017 is likely to become a breaking point in offshore companies registration and servicing, which is attributable to a number of reasons. The key factor is that the automatic exchange of information is running at full pace, so the issues that only recently seemed remote are now becoming a crude reality. Having discussed the whole situation with Bankers and other professionals in the sphere, we were convinced that the last loopholes are closing, and banks more often complain that it is better to reject clients than to cooperate with them. What is this attributed to? First of all, compliance regulations that are constantly getting tighter. Once having been listed in a high-risk category, a client has to be checked annually, which is time and cost-consuming. Unfortunately, the profit gained from clients sometimes is not enough to compensate the related compliance expenses. But what is more important is the risk to be charged with penalties by regulatory authorities. Everyone remembers milliard-worth fines paid in the US. Some Cyprus banks were also fined. Although the penalties were not so drastic as they were in the US, a million-euro fine is capable to undermine banks’ activities and urge them to immediately stiffen compliance standards, parting ways with some clients and creating problems for others, who start complaining facing the necessity to answer intrusive banks’ questions and finding out their accounts and payments were blocked.

Small clients start to vanish gradually, as the costs associated with company maintenance are going up. Banks began to require accounting reports even for tax-haven companies, so small firms are more often to acknowledge that having offshore companies and overseas bank accounts are unaffordable for them.

Company maintenance implies the following:

Bookkeeping and mandatory accounting (for some jurisdictions).
Drafting and submitting annual financial statements required by public registration authorities.
Drafting and submitting tax returns.
Secretary’s annual fees, legal address, etc. A constantly growing cost of nominal Director’s services can also be included.