With about 50 countries in the world offering tax benefits to offshore business, it is quite reasonable to ask which offshore country is the best to incorporate in. Some of those countries are very popular and have a natural image of offshore tax havens - like British Virgin Islands, Panama or Belize. It is less known that some attractive tax benefits are on offer to some types of non-resident businesses in countries that do not ring the bell as "tax-havens" - for example, UK, US, Holland, Iceland or Denmark.

There can be no standard reply as to which is the best offshore jurisdiction. That answer actually depends upon the anticipated use of the offshore company, upon the personal and business circumstances of its owners and upon variety of tax regulations in force in the countries where the offshore company will engage in business.

Before going into the particular detail, it would yet be useful to define what is a tax haven, anyway?

Political and economic stability

The most important condition for those who want to set up their business interests in an offshore financial center is to select a jurisdiction that provides both political and economic stability, so that business can be conducted with certainty, confidence and corporate security.

A good offshore jurisdiction should not be subject to violent political swings or the possibility of military coup or invasion. A historically bad example was the African state of Liberia, whose well intentioned offshore legislation was overrun by a military conflict and political turmoil. Most of the offshore tax havens, however, have good track records as regards their political and social stability.

A similarly important factor is economic stability. The ideal offshore jurisdiction should have transparent economic policies, a sound economic system, a stable currency with no restrictions on investment repatriation, low inflation and the main economic liberties strongly protected by the rule of law and an independent judiciary.

One should stay away from any offshore jurisdiction that has an image of corruption, dictatorship, social tension and economic instability.