What Are The Major Benefits Of Offshore Investing?

What do you mean by Offshore Investing?

Offshore investing is a general approach to investing that allows the investor to take advantage of tax benefits outside of their own country. There is no shortage of money market, equity, or bonds offered through genuine, trustworthy offshore investing companies that are financially stable, legal, and time-tested.

What Is Offshore?

homepage_humanresourcesOffshore refers to repositioning of an entity in a trade process from one country to another. It is typically an operational process, and usually done for support and manufacturing processes within a company. Even government entities use offshore investing to help increase their internal growth. Recently, it has been found that offshoring benefits can be massive contributors to economic growth. Offshore investing has been connected with sourcing of administrative and technical service in order to support global and domestic operations from outside of the home country. As consumers, this is seen through customer support, in most cases. However, internally, companies have been outsourcing various support roles within the company, such as human resources, data production, and administration.

Using these offshore companies, commercial and personal taxes can be mitigated within a business. Since these companies are taxed by the country in which they reside, taxes are typically lower because costs are typically lower in the foreign market. In many cases, these offshore investments are legitimate and completely tax free. Approximately half of the worlds assets related to these types of businesses reside in foreign shelter companies, allowing companies to increase their profits and decrease their operating costs.

These foreign companies are rooted in proper legality, proprietary privacy, and stable relationships with outside companies. Each company can establish their own customized contract with an offshore investment.

Benefits of offshoring investment: There are many reasons for companies to take advantage of offshore investments. Two of these are tax reduction and confidentiality.

  • Tax Reduction:

homeimage_over1Many countries are recognized as tax-shelters. These countries offer tax incentives to foreign investors through offshore investments. These lower tax-rates in offshore-investments liable countries are put in place to attractive dynamic, and consistent, offshore investments in order to increase their own wealth. For smaller countries with smaller populations, offshore investors can radically impact the local economy, and can make or break that country’s GDP for the year. Offshore deals happen when offshore investors design their outsourced portions of their companies in a foreign country. The business acts as a shelter for the investors finances, sheltering them from the higher taxes of domestic sourcing and production.

Because businesses do not engage in local operations, minimal, and sometimes even no tax is imposed on the offshore investment company. Many offshore companies also reap advantages by falling under tax-exempt categories when put in the US marketplace. This can make creating an offshore enterprise through offshore shelter corporations advantageous for all parties involved.

  • Confidentiality

Most offshore investment authorities have privacy policies that make it illegal for an employee to disclose any information about company ownership to their customers. In cases where illegal dealings or disclosure can be proved, the identities of those offshore businesses are disclosed, which can significantly damage that offshore investment.

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Mexico’s Dual Markets

Mexico’s economy has been climbing steadily over the last several years and with continual growth comes the attention of people that are in the business of making money.

Dan Restrepo, a senior partner at the Center for American Progress who served as special assistant to President Obama on issues related to Latin America, explains that companies are seeing enormous opportunity not only with the Mexican market but the growing U.S. Latino population.

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Shelter Companies

Restrepo says, “You’re seeing U.S. companies recognizing the value of being part of, in essence, two emerging markets: Both Mexico as an emerging market and U.S. Latinos as an emerging market.” He continued, “If U.S. Latinos were a standalone economy, we would be the world’s 12th largest economy, we would be a member of the G-20. That’s 55 million people, roughly a trillion and a half dollars in purchasing power. Companies are starting to realize that there are plays into Mexico that are also plays into this kind of shared economic space.”

With more than $5 billion spent on advertising in 2015, Mexico is the most important advertising market in Latin Americas Spanish-speaking countries, according to e Marketer.

You turn on your television and you see the T-Mobile ads about free roaming in North America or call packages that include the U.S. and Mexico as a single cellular market,” said Restrepo. “That’s an example of where we’re headed.”

Do You Know What Nearshore Outsourcing Is?

Nearshore outsourcing is a technique that businesses and governments use to outsource IT contractors. Many companies are finding that it is more cost effective to outsource certain portions of their business or services. This method of outsourcing has become more and more popular over the last decade. Now that we have established what nearshore outsourcing is, we need to look at why this method is so popular.

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Nearshore Mexico

There are many benefits to using nearshore outsourcing. This method of outsourcing eliminates time zone issues, which helps make interactions with your customers much easier. No matter what time it is, whenever it is needed, outsourced employees are there to respond. This helps reduce stress on you and your business. You will be able to better coordinate between the employer and Mexican labor using this method. You will also be able to arrange travel to the countries that you are outsourcing to. You are essentially hiring employees through a middle man, and visiting these employees to make sure they are properly trained is beneficial. This type of outsourcing also requires no visa formalities in order to travel. You just need a passport and your ticket. This becomes beneficial to both companies involved.

The biggest drawback is the jobs that will no longer exist at your home country’s location. The pay scale drops, which eliminates competition. US workers will not work for the wages paid by many of these other countries. Confidentiality issues may also arise from this type of outsourcing. Generally, these outsourced companies serve many other companies, not just yours. Sharing information could become a problem. There are many web portals that can get you in touch with nearshore outsourcing companies. Most companies find that using a hybrid nearshore model that combines the best of both worlds is the best option. A Mexican laborer provides your business with great benefits. With the help of nearshore outsourcing, you can make your business much more efficient and effective.

Nearshore Manufacturing Operation in Mexico Offers Many Benefits

When you’re talking about nearshore manufacturing operations in Mexico the key is location, location, location! The proximity to the US border can’t be beat, in Baja California alone, there are 6 border crossings, two of which are set up for major commercial traffic. And that’s not all.

Putting manufacturing operations nearshore in Mexico, Baja California, as opposed to offshore in China or other far flung countries, also gives companies nearby access to four airports, an international railroad line, and two commercial seaports that offer worldwide shipping capabilities.

 

And the region is well established with all the infrastructure and support systems needed to provide successful operations. In Tijuana and Mexicali alone there is over 83 million sq. ft. industrial space in Mexicali and Tijuana. It also has the added nearshore benefit of Mexico being in a similar time zone as the US and Canada unlike the 13 hour difference between the states and China.

Costs Are Lower When It Comes To Mexico vs China

There was a time when hands down, it was cheaper to manufacturer in China than almost anywhere else in the world. But times have changed and what was once a manufacturer’s paradise is now a land of cost overruns. One of the hottest countries right now for offshore or nearshore manufacturing is Mexico, and when you look at Mexico vs China, the reasons are clear.

According to Forbes, manufacturing costs in Mexico are now about 20 percent lower than in China. Industrial space leases are also a major cost factor with China’s rate being triple that of Mexico. And don’t even mention shipping costs which have risen from just under $3,000 in 2000 to $7,000 in 2014 for a standard shipping container.

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IVEMSA  – Nearshore Mexico Manufacturing Solutions

And while cost is a key factor in choosing a manufacturing location, Mexico offers other benefits over China as well. The culture is western and much more familiar to American and European companies. Travel time for both product development and product shipping is greatly reduced to Mexico vs China. The government and private sectors are very pro-business and have created an environment that welcomes foreign investment.

So if you are considering offshore or nearshore manufacturing consider lowering costs in Mexico.