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What is Offshore Web Hosting?

You’ve heard of offshore bank accounts. Almost anyone with a bit of extra money can open an offshore account to have a more privacy in their money handling and enjoy certain tax benefits. Even Fortune 500 companies form their corporation “offshore” away from U.S. regulation and taxation, saving them millions of dollars in taxes each year. Now offshore web hosting is making an entrance into the web hosting arena providing privacy and new ways for small and medium businesses to gain financial and tax advantages by operating their websites outside U.S. borders.

Offshore web hosting companies are often “anonymous,” meaning they do not report to U.S. government regulation and restrictions. Many countries like Panama, Belize, Singapore, and Malaysia all have very little internet restrictions and little or no government taxation. Thus, many enterprising entrepreneurs are finding that they can locate their web servers in these countries and offer web hosting solutions for others to enjoy these benefits.

Web companies in the U.S. or European nations find that locating their web hosting offshore makes it easy to operate gambling or illicit websites since there are no international restrictions. However, besides underhanded and questionable business forms, there are many legitimate U.S. businesses that can benefit from offshore web hosting.

Any business with an e-commerce setup has the potential to make more money by setting up their companies offshore and having their websites hosted in another country. Take Panama, for instance. Panama’s telecommunications infrastructure has grown considerably over the last decade and is now becoming one of the world’s main hubs in international communications. Panama has built a fiber-optic network link through the continental Americas, with relays to Europe and Asia.

Not only do they have a solid web technology infrastructure, but Panama also offers many other advantages such as a US dollar based economy, privacy protection laws, favorable taxation, and certified bi-lingual technical specialists. With this kind of network they are poised to take the lead in web hosting solutions for companies around the world.

With the advantages offered by Panama, it is an ideal location for businesses to host their websites there. Companies that might benefit would be internet service providers, e-commerce businesses, software application providers, and broadband and media content providers.

For instance, consider a retail business located in Denver. The retail store owner makes most of his money by actual live customers in his brick and mortar store., however, a small percentage of his sales, say 20%, is made through online sales of his products. By establishing a separate company in Panama and using their local web hosting providers, the retail business owner can avoid paying U.S. taxes on income made through his internet e-commerce business.

Offshore web hosting still raises ethical and responsibility questions. Setting up web hosting outside the U.S. to avoid paying taxes is nothing new. Most large corporations do it, so why shouldn’t the small business owner save a little money? But the key is to utilize offshore web hosting in a way that helps keep you in business, while still remaining responsible to your customers.

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