Offshore is not a tax strategy any more

The substance rules were the structural change. The British Virgin Islands introduced economic substance requirements through the Economic Substance (Companies and Limited Partnerships) Act 2018, and comparable regimes were introduced across the traditional offshore jurisdictions in the same period.

The principle is that an entity carrying on a relevant activity has to demonstrate genuine activity in the jurisdiction rather than a registration. Which activities are in scope and what has to be demonstrated is jurisdiction-specific and genuinely technical, so it is a question for a qualified adviser in that jurisdiction — but the direction is uniform and it removed the core of the old proposition.

Alongside substance came routine reporting. In the British Virgin Islands, section 96A(2) of the BVI Business Companies Act requires a company to file an annual return with its registered agent in the form specified in the BVI Business Companies (Financial Return) Order 2023, with limited exceptions including regulated entities, companies filing tax returns with the BVI Inland Revenue, and companies in liquidation.

This matters practically rather than philosophically. A company that files nothing has no ongoing cost and no deadline to miss. A company that files annually has both, and a registered agent who will chase it. The offshore company became an administered thing.

The obligations are manageable. Banking frequently is not. Compliance teams assess offshore structures as higher risk, and the practical outcome is longer onboarding, more documentation, more questions about beneficial ownership and source of funds, and a meaningful chance of refusal without a stated reason.

This is where offshore plans most often fail, and the failure is expensive because it happens after incorporation. A company that cannot open an account is not a cheap company; it is a company you have paid for and cannot use. Establish the banking route before incorporating anywhere, not after.

None of this makes offshore structures improper. They remain used for holding assets across multiple jurisdictions, for joint ventures where a neutral governing law suits the parties, for ring-fencing liability, and for succession planning. Those are real purposes and they survive the reporting changes intact, because none of them depended on secrecy.

What no longer works is choosing offshore to make income invisible or to remove tax obligations that follow you personally. If a plan depends on nobody finding out, the plan has already failed — the reporting exists and it operates automatically.

The UAE is frequently discussed in the same breath as offshore jurisdictions, and it should not be. It has corporate tax, a tax authority, registration and filing obligations, and a substantial real economy. A UAE company is an onshore company in a low-tax jurisdiction, which is a materially different thing from an offshore vehicle.

For most operating businesses that difference works in the UAE's favour, because banks treat it as an operating jurisdiction rather than a red flag and the company can actually trade. But it is not a secrecy tool and it does not remove obligations you owe where you live. Anyone presenting it that way is selling something, and personal tax residence is a question for a qualified adviser where you are resident.