The natural bonding of the Internet and Offshore stems from the fact that both, of their nature, manage to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore or low-tax jurisdictions; while businesses that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.

The widespread use of the Internet has brought a paradigm shift in the way small to medium sized business owners, or those just launching a business, can access offshore banking. Because of the nature of Internet eCommerce where servers can be physically located in any part of the world, there is a near-perfect match with the world of offshore International Business Companies (IBC) and Offshore Trusts. This phenomenon has been referred to as deterritorialisation.

One offshore expert who researches this field describes it this way:

"Among the innumerable things that the development of the internet has changed for the better, online eCommerce has had the greatest effect in freeing humanity from the concept of location, as a factor in owning and operating a business. It is now possible to run a business from cyberspace while living anywhere in the world, choosing the most preferable jurisdiction as a tax base, and using any number of jurisdictions as they may apply to manufacturing, distribution, banking, web hosting, and other related factors."

It is common knowledge that many entrepreneurs outside the U.S. have been using U.S.-based servers for some years now to run offshore ecommerce and thus by accident, became the first true offshore ecommerce enterprises. Until recently, the U.SA. was the only place where you could get a reliable web hosting account at a decent price. This was due mainly to the fact that low cost Internet bandwidth and web hosting expertise was centered in the U.S. In some countries it is very expensive, and in some cases your are simply not allowed to operate a web server. Thus foreigners had no choice but to get U.S. based web hosting to run their ecommerce shops.

Now reliable web hosting at good prices is available from many countries, this making for a much wider pool of available offshore servers. Coupled with an International Business Company or Trust, and a merchant account, a savvy entrepreneur can run an offshore ecommerce website selling anything from horoscopes, to ebooks, dating advice, matchmaking services, DVDs or whatever from any place on earth, with offshore banking accounts to capture the ecommerce revenue.

By locating websites in low-tax jurisdictions to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training and software, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation.

In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many case it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.

Online eCommerce, when correctly structured, frees commerce from oppressive legislation in oppressive jurisdictions and opens up the entire world to choice as to the most favourable economic locus. We can now freely choose how we want to run our business, where we want to locate it in the real world, and under what sort of legal system and tax basis we want to place it. And best of all, if it’s structured correctly it is absolutely legal for most citizens of the world.