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Offshore companies are often established to take advantages in the international trade, taking into account that the flow of money in or out of most countries is still restricted or somehow regulated, and of course liable to taxes. One of the disadvantages of setting up an offshore company is that generally they can not carry on any business or have an office with staff employed within the jurisdiction of incorporation. There are certain restrictions on the types of business, mostly in the banking and insurance industries, that have the right to operate as an offshore company. Offshore companies in different jurisdictions are characterized with low or zero tax afforded by the jurisdictions with stronger privacy laws. In some cases, forming an offshore company may be ineffective, because some onshore jurisdictions have legislation preventing offshore companies from conducting business in their country. Offshore business is based on the legislation of offshore financial centres providing for certain advantages including tax, confidentiality and company structure, which can be used by non-residents establishing offshore companies in these jurisdictions.
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