Preparing financial statements for an offshore company
In case the government would not demand you to keep draft and submit bookkeeping and annual reports, would you still do that voluntarily and what would be the quality of your company’s bookkeeping? Nowadays, numerous tax haven jurisdictions have no requirements regarding the submission of annual or monthly tax returns and reports: offshore companies have an autonomous freedom of choice to keep the documents as they wish. However, more and more offshore jurisdictions have started modernizing and updating their legislation, gradually introducing a compulsory requirement to keep financial records and documents, as the beneficial owner of such company would be the one, who benefits the most out of that. This aspect can play a crucial role, especially when an offshore company is being owned and managed by several individuals, thus providing more efficient system of monitoring assets and supervising decisions that are made.

For example, on Seychelles, companies are required to keep drafts, without providing bookkeeping records for state authorities that subsequently allows monitoring the economic status of the company, in order to provide owners with actual information at all times. However, there is no requirement to submit any financial documents publicly, as well as there are no requirements regarding statutory audit. In theory, local tax authority may request the company to provide and/or improve its records. Nevertheless, such situation may occur under circumstances provided by legal acts only and it usually can be foreseen and avoided.

As we have just mentioned, tax havens (BVI, Panama, Seychelles, Nevis, Marshall Islands, Dominica, etc.,) do not require filing annual financial statements within the local authorities. However, nowadays many offshore companies choose to prepare annual financial statements for IBCs and tax haven companies voluntarily. The reasons for such actions are as follows.

Legal provisions of many offshores require keeping proper records of bookkeeping by the company. Profit & loss statements, general ledger and balance sheet of the company must always be available upon request by the registered agent. All bookkeeping documents confirming transactions must as well be kept by the company: invoices, contracts, transportation documents, bank statements, etc. Such provisions exist in (BVI, Seychelles, Nevis, Belize and many other offshore jurisdictions. Please note that financial records of International Business Companies are allowed to be stored in any location of the world, not necessarily within the registered office.

Your bank may ask for the financial statement of your offshore company. As banks toughen their requirements towards tax havens, one of the ways to keep your corporate banks account for such company is to present accounting statements upon request. Frequently, banks require the most basic accounting reports: profit & loss statement and balance sheet.

Your own control over financial operations are the most obvious reason to maintain account records for any business.