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It is reasonable to ask the first question: In what respect is the taxation of the offshore company favourable? And in connection with this: Why is it worthwhile for these countries to offer benefits of such magnitude to foreign investors? (We shall answer this question in the next section.) On all serious tax haven territories, tax benefits have a legal basis and foundation. For instance, this benefit is provided for the companies registered in the above-mentioned British Virgin Islands by the code of laws adopted in 1984.

Accordingly, offshore companies pay no taxes of any kind to the British Virgin Islands, other than the annual state duty of the usual amount of 300 US dollars, independent of turnover. In the case of the Bahamas and Belize, this annual duty is 100 US dollars, while in Panama it is 150 US dollars. It is obvious that these tax benefits are considerable, compared with the 30 to 50% tax on profit typically imposed in European countries.