Why is Switzerland Cleaning Up its Tax Haven Status?

Ever since the American tax authorities began a concerted crackdown on US citizens’ banking activities abroad in an effort to bring all wealth back onshore, heavy emphasis has been placed on Switzerland sorting itself out as a tax haven! Traditionally the one place in the world where everyone knows that banking secrecy is assured, Switzerland has inadvertently developed itself a negative reputation for facilitating tax avoidance.

UBS was the first bank to be accused of assisting clients to avoid tax – by the Americans. And since then, other institutions have been investigated, targeted and accused of enabling the non-tax compliant activity of clients. Employees of Swiss banks have allegedly sold off secrets about account holders, and now the German and French authorities are sifting through the records they’ve acquired looking for proof that some of their citizens have been using Swiss banks to evade and avoid tax.

However, significant change is now afoot in Switzerland, with one commentator stating: “We are in the midst of a transformational period both culturally and operationally. Tax-compliant wealth management will become the product in Switzerland, not bank secrecy and a tax haven.” So why is Switzerland cleaning up its tax haven status? Because it has to or because it can see the benefits of doing so?

There are those who are convinced that Switzerland has no choice but to bring about massive reform – after all, it has been hit from multiple angles by multiple authorities and bodies from multiple nations all accusing it of allowing non-tax compliant behaviour. Such a global and sustained attack cannot be ignored because it erodes the legitimacy of Switzerland as a place to do business and undermines the nation’s entire economy. So, perhaps it is a case that Switzerland has to clean up its act?

However, if you speak to those within the banks, they state that they are the ones taking the initiatives, and that they are tired of waiting for formal legislation to be created and brought in to regulate their behaviour. UBS is apparently forging the way when it comes to foreign tax compliance – despite the fact it has resulted in the bank losing some clients and some significant financial deposits. In explaining why the bank is taking the lead, Markus Diethelm the bank’s general counsel stated: “We have to act and cannot just wait for a political solution.”

Therefore, conceivably, the reason why Switzerland is cleaning up its act is in part because so much damage has been done to its reputation that changes are required, and in part because the changes can and will have a positive effect on the nation’s business and economic environment. The world needs a centre for tax compliant wealth management expertise – the world does not need the stress of another ‘dodgy’ tax haven.

Switzerland may have been backed into a corner and forced to make these choices and these changes – but the fact that banks are now pushing hard on the ‘know your customer’ due diligence front and working together to create legislation harmonisation is positive. Whilst banking secrecy is still high on the agenda of the institutions within Switzerland, they want to extend this right only to those clients who can prove that they are tax compliant.

It has certainly not been the path of least resistance for the jurisdiction to take – proven by the fact that UBS alone has witnessed clients withdrawing hundreds of billions of Swiss francs and taking their business elsewhere. However, if Switzerland wants to retain its status as a neutral global financial and business powerhouse, it needs to have develop this far ‘cleaner’ reputation.

Offshore Pro Group

British Offshore Tax Haven Update

The UK has a number of tax havens associated with it – from Jersey and Guernsey in the Channel Islands to the Isle of Man and even Gibraltar. All are jurisdictions closely associated with mainland Britain, but which have a certain autonomous status allowing them to make their own rules when it comes to the likes of taxation for example.

In the past these particular British offshore tax havens have been among the most well respected in the world within the financial services industry because of the degree of regulation in place protecting investors’ assets etc. However, the collapse of Kaupthing Singer and Friedlander in the Isle of Man really undermined British tax havens in general, and called into question the scope of investor protection schemes and the degree of regulation in place too.

As a result of this fact, combined with elements such as the EU Savings Tax Directive and the global crackdown on tax evasion, all tax havens around the world have been forced to reassess their position and how they handle the management and protection of invested assets on their shores. Most recently this has led to significant changes in the Isle of Man and Gibraltar. Here we present a British offshore tax haven update so you can determine where your money will be best invested and protected.

Looking at Gibraltar first, it has been undergoing a 14 year long series of changes to its taxation legislation to make the transition from tax haven to European financial services centre, and according to authorities there, it is on track for completion of this transition in due course. Among final changes being made are the reduction of corporation taxation from 22% to 10%, and the abolition of the tax-exempt company structure.

The changes within the jurisdiction have led to a significant number of companies relocating away from Gibraltar over the past few years, as they feared the scope of the changes and how they would affect their operations. However, the purpose of the changes is clear, Gibraltar wants to be respected as a financial services centre of repute rather than a tax haven with a ‘dodgy’ reputation!

Next let’s examine the Isle of Man – they have responded to the EU Savings Tax Directive by agreeing that from next year all affected individuals will be subject to the automatic exchange of information rules of the Directive, rather than the previously optional withholding tax option. The automatic exchange of information was the ultimate aim of the Directive of course, and in order to become better respected and to lose their tax haven status, the Isle of Man have complied with this requirement earlier than some expected it to.

There are still a few issues in place that hamper the Isle of Man in its progress towards achieving the position of respected financial services centre in Europe however, such as its position on corporate taxation. Certain company structures and businesses receive preferential rates at the moment – and this is a subject under scrutiny and facing debate.

Finally, an extension of the scope and remit of the EU Savings Tax Directive is currently under debate in Europe – we will of course update you as and when changes are announced. However, as it stands, there are solutions available – such as portfolio bonds for example – that can shield and protect some investors from the scope of the current Directive. If you would like to know more based on your own personal position, feel free to get in touch and we will find a wealth management adviser in your area who can advise you.

Offshore Pro Group

Why Truly Confidential Offshore Bank Accounts Are Hard To Find

The offshore banking dream is persistent. When people think of offshore bank accounts they think of yachts, fast cars and perhaps a balmy tax have lifestyle to complement it.

Maybe it involves moving to another country entirely, life in a far land supported by a swiss bank account.

One of the hardest first steps is finding offshore banking that you can trust. But offshore bank accounts are made hard to find by design, and the primary stages during offshore account opening can be treacherous.

How many investors have trouble finding an offshore bank account that really keeps their information confidential?

The solution many look for is bank secrecy. What is often overlooked is that bank secrecy can change. While Switzerland or Panama may offer extreme secrecy one year, the next year their laws might change, or outside pressure could lead to relaxed secrecy. Other jurisdictions like the Cayman Islands or the Channel Islands seem safe and private, when their secrecy is actually dependent on the generosity of high tax nations like the UK and US.

Increasingly, alternatives are developing which allow private wire transfers and offshore banking irrespective of changes in bank secrecy - just how we imagined the secret Swiss bank account. If you acknowledge that bank secrecy in individual countries can change, the requirement then is a structure which holds strongg irrespective of financial privacy laws.

Trust companies can fulfill this need because they can accept client deposits without having to reveal individual identities to anyone. In this scenario the only way confidentiality can be broken is if a customer is convicted of a real, non-tax crime. Trust company confidentiality is totally independent of bank secrecy.

While not absolutely guaranteed, (trust company law can also change) opening an offshore account this way will give you greater peace of mind, and a refuge for your wealth in a secluded place. Your options from here on in are unlimited. Invest in tax-free stocks, commodities or interest-bearing term deposits. You can shield your most important assets from the threat of frivolous litigation and corrupt administrators.

Enticingly, you can buy gold offshore anonymously, as a secret store of wealth to hedge against inflation and financial crises that never seem to end. Your safehaven for wealth will let you conduct business free of foreign exchange controls, burdernsome administrative procedures and heavy taxes.
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Do Offshore Tax Evaders Deserve Sympathy

“Offshore Tax Evaders”…

That’s how James Stewart chose to categorize those currently scrambling under the governments determination to attack offshore account holders’ privacy in his recent Wall Street Journal article. While the spurious nature of such a straw man is evident, we’ll continue to look at what he writes before editorializing his work to death.

Do you know anyone with a Swiss bank account? I don’t, which is probably no surprise since the whole point is secrecy. But evidently there are plenty of Americans who do—at least 52,000 at UBS alone—whose identities the Internal Revenue Service and the Department of Justice are trying to learn.

…. I’ve been wondering just why anyone needs or wants a Swiss bank account. For African dictators, international arms traffickers and terrorists, the answer is pretty obvious. And there are certainly citizens of countries whose own banking systems are so precarious, and the risks of persecution for any number of reasons so great, that a Swiss bank account may provide welcome security.

Here our friend has completely missed the boat. Setting aside the fact that he paints the only people who might need offshore accounts are all sociopaths and criminals, he fails to observe the most obvious reason someone might want to hold assets offshore. The absurd construction the US calls its civil court system. Anyone with more than two nickels to rub together is rightfully worried that a plaintiff(s) and a lawyer without said nickels can get together and file any manner of frivilous litigation against them.

An award system that allows the lawyers to work on contingency is great for allowing the disadvantaged to be heard in court, but it is also open license for expensive fishing expeditions. Those with assets to protect that find them in the line of fire of US courts often find it less time consuming and bothersome to merely pay off plaintiffs, right or wrong, to avoid the cost and hassle of outrageously expensive litigation costs.

But the U.S. is not one of those countries. Despite our recent banking woes, the U.S. has plenty of financial institutions with impeccable balance sheets. It has a legal system second to none that provides ample confidentiality and due-process protections. But it doesn’t offer ironclad secrecy in the face of a legitimate, court-sanctioned subpoena, which means it doesn’t lend itself to tax evasion.

I don’t even know where to begin with this one, other than to say, “we’ll agree to disagree”. The U.S. has plenty of financial instiutions with impeccable balance sheets??? Is he kidding here or what? The only reason most of the major financial institutions that accept retail deposits haven’t been declared insolvent is pure lack of oversight, regulation, and out and out fraud.

UBS says it would violate Swiss financial privacy laws if it complied. In that case, UBS (and its government) should be faced with a simple choice: continue its policy of strict secrecy, in which case UBS should forfeit the right to do business in the U.S.; or compromise, aligning its banking laws with those in the rest of the civilized world.

Here I tend to agree. If UBS and Switzerland by extension want bank secrecy within the confines of Swizterland they should be able to have it. HOWEVER, in cases where US citizens have gone to Swizterland he argues that it should align its banking rules with those of the US if it wants to serve US citizens. Here I violently disagree. To do so not only tramples on Switzerland’s sovereignty, it seriously undermines the credibility of anyone who thinks or declares that Americans are “free”. They most certainly are not.

What’s completely “unsaid” in his strawman attack of those looking to shelter their assets is that ordinary American citizens were merely looking for the same kind of tax advantages and shelters from liability that corporations, those foreign and domestic enjoy every day in the good old USA. Well, the argument stems that “corporations are different”. I reject that flatly. Nowhere in the constitution, that I’m aware of are corporations afforded protections or unalienable rights. The reality is, however, the US has become a country by and for the corporation, with individuals the only ones left to be taxed into oblivion to pay for greedy corporate pigmen, bent on breaking already lenient rules on risk taking and taxation until the paid for government declares them “too big to fail” and reaches into the ordinary citizens’ pocket again to pay for their largess.

In a corrupt and obviously unfair environment such as this, is it any wonder that an ordinary citizen would doubt the future intentions of a system bent on taxing and redistirbuting its wealth to the richest of its corporate citizens while leaving everyone else the victim of misguided growth policies?

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OFFSHORE FUNDS

An offshore fund is a collective investment scheme domiciled in an Offshore Financial Centre, for example British Virgin Islands, Luxembourg, Cayman Islands or Dublin. For the purposes of the Income and Corporation Taxes Act 1988 of the UK, an offshore fund is one which is governed by the Offshore Fund Rules] set out in that Act. The vast majority of offshore funds are incorporated in the Cayman Islands, with the British Virgin Islands being the second most popular domicile.

Offshore funds offer entitled investors significant tax benefits compared to many high tax jurisdictions such as the United States. However, where funds are repatriated to high tax jurisdictions, they are usually taxed at normal rates as foreign arising income.

Many of these tax-haven locations are considered investor-friendly and are internationally regarded as fiscally secure. Many offshore jurisdictions, notably the British Virgin Islands, offer a zero-tax regime for investment funds which are domiciled there, which allows the fund to reinvest that part of its investment portfolio's gains which would otherwise have been lost to tax. In addition, the regulatory regime in these offshore jurisdictions is deliberately light, with emphasis placed on the importance of balancing effective regulation for the benefit of the protection of investors on the one hand, with the establishment of a regime in which the conduct of investment business is rapid and straightforward.

Typically, the regulatory regime will take a two tier approach, making a distinction between funds which are offered generally to members of the public, which require a high degree of regulation because of the nature of potential investors, and non-public funds on the other (for example, in the British Virgin Islands, which applies a three-tier regulatory approach in this manner.
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10 cheapest jurisdictions to open an offshore bank account

An offshore bank account is the choice of many people who want to lower their tax burden. Are you in that boat? We have analyzed dozens of offers from offshore banks and made up a list of jurisdictions with the lowest fees.

Anyone can legally open an offshore bank account in many countries around the world. Their allure is much more noticeable during tax time, when people need to report their earnings to the IRS.

With around 50 countries in the world offering tax benefits for foreigners, it makes sense to search which offshore center is the best to open an account. However, this process can take a lot of time and efforts without a little assistance.

Offshore financial centers can considerable vary in terms of cost. There are some jurisdictions, like Liechtenstein or Austria where paying considerable fees is inevitable. On the other hand, you can find jurisdictions where tough bank competition has driven the prices down.

Generally, the amount of fees for opening an offshore bank account will depend on the offshore service provider, the level of competition in the market, the reputation of the jurisdiction and the general cost of business operation in the country.

Offshore banks typically charge fees for an account opening, internet banking, issuing plastic cards, sending documents by registered mail or courier, etc. These costs can be either paid in advance or deducted from the bank account once it is opened.

If you hire a consultant, add fees for his assistance with account documentation and processing as well as any out-of-pocket expenses (notary and apostille fees, certified copies, express courier fees, etc.). All fees should be discussed in advance.

Depending on the amount of opening fees, we have chosen 10 cheapest jurisdictions to open an offshore bank account:

• British Virgin Islands
The British Virgin Islands (BVI) is an English speaking country in the Caribbean. It is one of the oldest and most reputable offshore centers. BVI has flexible and dynamic banking sector, with a lot of strong commercial banks, for example First Caribbean International Bank, FirstBank BVI and VP Bank (BVI).
• Belize
Belize is an English speaking country located on the Caribbean seaboard of Central America. It has been in the offshore business since 1990. The financialservices sector is supported by laws passed to encourage investment in offshore international enterprises. There are several commercial banks in the country: Atlantic Bank, Alliance Bank, Belize bank, First Caribbean Bank and Scotia Bank.
• Seychelles
The Seychelles are an independent English speaking island located in the Indian Ocean. Their offshore legislation was enacted in 1994. Since then the Seychelles have become an important tax haven. While there are several banks operating in Seychelles, the most popular is Barclays Bank Seychelles.
• Dominica
The Commonwealth of Dominica is an English speaking country located in the Eastern Caribbean. It is a relatively new entry to the offshore market. The financial sector in Dominica consists of several commercial banks, including Scotia Bank, First Caribbean International Bank, Royal Bank of Canada and the National Bank of Dominica.
• St. Vincent
St. Vincent and the Grenadines is an independent English speaking country located in the Eastern Caribbean. Its international finance sector is rather small. It includes such banks as First Caribbean International Bank, Bank of Nova Scotia, Caribbean Development Bank and RBTT Bank Caribbean Ltd.
• Isle of Man
The Isle of Man is very popular for private banking services for British expats and foreign nationals living in the UK. This offshore center is well-known for the high level of investor protection. Financial institutions include Abbey National Offshore, Anglo Irish Bank, Bank of Scotland, Standard Bank Offshore, Coutts ltd, etc.
• Panama
The Republic of Panama is a Spanish speaking country located in Central America. It is one of the earliest offshore centers with approximately 150 international banks. They include Banco General, Global Bank, HSBC, Citibank and Multibank.
• Antigua
Antigua and Barbuda is an independent, English-speaking country in the Eastern Caribbean. It is a politically stable and safe jurisdiction for offshore bank accounts. The main banks are Antigua and Barbuda Development Bank, Antigua Commercial Bank, Antigua / Barbuda Investment Bank Ltd, Bank of Antigua, First Caribbean International Bank Ltd, etc.
• Cayman Islands
The Cayman Islands are well-known as a sophisticated, mature and safe financial center. There are over 250 licensed banks, including the Bank of Nova Scotia, Barclays PLC, Cayman National Bank, Royal Bank of Canada and others.
• Bahamas
The Bahamas is one of the dominant tax havens in the offshore financial world. Financial services produce about 15% of GDP. It is the second-largest industry in the country after tourism. There are over 301 banks - Barclay's Bank PLC, Citibank N.A., Bank of The Bahamas, etc.
Reasons to acquire the second passport

Offshore Elements

Authorised Agent is a bank or trust company authorized by authorities to deal in foreign currency securities.
Authorised Dealer Bank is a bank that is permitted to work with precious metals and all kinds of foreign currencies.
Asset Protection Trust (APT) is a form of irrevocable trust, usually settled in a jurisdiction other than the settler's home country, and meant to accomplish a number of estate planning goals of its settler. The basic purpose of APT is preservation and protection of one's wealth from various kinds of risks. Having established the trust, you may be sure that creditors will not find out your assets. This type of trust is usually tax neutral.
Asset manager is a person appointed by a written contract to direct the investment program, and getting his/her fees on the basis of activities performed, trading commissions, or the level of managed estate evaluation.
Authorization is the request for approval for a dollar amount from the cardholder's bank. The bank checks the account requested to make sure the money is available (does conversion of money if required) and if so, sends an approval code back to us. It is declined for any reason, it also sends us this message as well. We then interpret the reason for decline and give a message to the cardholder. If approved, this then reserves the dollar amount under your merchant number and against the cardholder's line of credit.
Articles of association are the regulations of rights and liabilities of company members in their relations among themselves. They concern such aspects as general meetings, appointment of directors, share issues, dividends, accounts and audits.
Beneficiary is the entity who receives the right to benefit from the trust property and activities.
It should be noted here that there exist different types of trusts commonly incorporated in tax havens, as one and the same form of trust cannot serve as a solution for all problems. An exception is the fully discretionary trust. Beneficiary could be represented by a charity, foundation, and/or person(s), according to their entitlement.
Board of trustees is acting as a trustee of a trust, or advisors to the trustee depending upon the language of the trust indenture.
Bearer shares are the untraceable means of offshore ownership. No formal transfer records are required to transfer bearer shares to another person or entity.
Bare trust is characterized by the absence of duties obtained by trustees, but to convey the trust property to the beneficiary after his demand.
Custodian is a bank or financial institution that has the responsibility to manage or administer the custody or other safekeeping of assets for other persons or institutions.
Chargeback is when a customer has called their credit card company and requested a full refund. The credit card companies, in order to promote more usage, have given consumers the ability to chargeback any product or service where their card was not presented for up to six months.
Current account is an offshore, personal services or checking account.
Discount rate is the rate that is charged per transaction by the acquiring bank for the privilege of accepting credit cards from the various credit card companies. This rate differs based upon the type of business accepting credit cards. Some businesses have a higher risk of their customers either committing fraud or excessive chargebacks. There are two stages in a credit card transaction.
Discretionary trust generally is settled offshore. In this type of trust, the trustee can take decisions which beneficiary gets benefit, when and how. To exercise the discretions, the settler or protector put forward their suggestions or advices. Provides flexibility and privacy to the trustee. Grantor trust is usually created by a grantor/settler (which can also transfer real property to another entity). This type of trust can legally be formed under US tax law, and income of the trust is taxed as the income of the grantor.
Debenture is a loan raised by a company paying a fixed rate of interest and secured on the assets of the company.
Family limited partnership (FLP) has its purpose family estate planning and certain level of asset protection. It is family controlled by general partners. The other limited partners are holding the balance of the interest in the partnership.
Hedge funds are managing investments for private investors (under US law, the work of such funds is unregulated if the number of investors is not more than one hundred).
International financial and banking center (IFC) is another definition for country identified as being a tax haven.
International business company (IBC). A company incorporated in an offshore jurisdiction, but not entitled to have business affairs within that country; IBC is usually used for global operations. The owners are usually members and shareholders.
Limited liability company (LLC) is the type of IBC. It combines the most favorable characteristics of a corporation and a partnership, structured as a corporation, with limited liability as provided by the state laws. The structure of LLC implies various kinds of tax advantages, and operational flexibility of partnership.
Limited liability partnership (LLP) is the type of LLC, often used for professional associations (e.g., accountants and attorneys).
Limited company (LC) is not an international business company. It may be incorporated in offshore jurisdiction, and set up under a simpler body of administrative laws.
Limited liability limited partnership is protecting the general partners from liability. Under the LLLP, an individual can be a general partner having limited personal liability.
Memorandum of Association of an IBC, equivalent to articles of incorporation.
Nominee shareholders are employed to shield the identity of the beneficial (actual) owners of the shares.
Nominee director is someone who acts on your behalf as a front director of the company. In some jurisdictions nominee director can also be presented by another offshore company. The director receives a fee for lending his/her name to the organization. Nominee directors are subject to director responsibilities.
Ordinary shares are the most common type of shares. Their holders get dividends, which correspond to company's profitability, and directors' recommendations. When you hold ordinary shares, that gives you right to the ownership of the company.
Offshore is a general international term for being in another country, but in the country where you reside or of which you are a citizen, and out of the tax reach of your country. The synonyms for offshore are the words foreign, transnational, global, and international.
Preference shares give their holders the right to receive dividends before holders of ordinary shares, but after debenture and loan stockholders.
Private company is deprived of right to offer its shares to the general public.
Pure equity trust is a special type of irrevocable trust, when the trust assets are obtained by an "exchange" of a certificate of beneficial interest in return for the assets.
Register is the register of international business companies (IBCs) and exempt companies held by the Registrar of offshore jurisdictions.
Registrar of Companies is a governmental entity of a given jurisdiction controlling the formation and renewal of companies incorporated under their company act.
Settlor is the person who creates or settles an offshore trust.
Securities serve as another term for stocks and shares of all types.
Stocks are distinguished from securities and shares in common sense by the fact that they possess fixed interest; another distinction is that stocks are denominated in money terms.
Trustee is an individual, company, another trust, or some other entity who (which) receives the property and has the responsibility to the beneficiaries, as a reasonable businessperson would do in the same circumstances.
Trust is a contract, a private offshore agreement, and offshore trust is the same. It is an entity created for effective asset protection, as well as for reserving them for the benefit of beneficiary, which is the third party in this entity. To describe the meaning of trust in a word, it may be said that the settlor transfers asset ownership to the trustee on behalf of beneficiaries.
Trading trust carries on a trade with the help of its trustee, and is often established to avoid disclosure requirements, as offshore trusts do not usually fix accounts.
Tax haven is a country or jurisdiction, which tries to attract foreign business by the adoption of secrecy and taxation laws, providing confidentiality and various taxadvantages. In such a way it becomes an international banking and financial center.
Trust protector is a person appointed by the settler to control the trust on behalf of beneficiaries. Has veto power over the trustee with respect to discretionary matters but not to the issues unequivocally covered in the trust deed. Has the power to remove trustees, and appoint the new ones. Consults with the settler, but the final decisions must be the protector's.
Unit trust is often used for the purposes of collective investment. The beneficial rights are divided into a number of units, and these units are offered for public sale. The unit trust can be also corporate entity.
Vetting is the process used by the offshore consultant for qualifying the prospective client to determine if he/she is a good candidate for offshore asset protection, as in to "vet" the prospective client.
Warrant is a kind of instruction given by the company to the holders of a particular security giving them the right to subscribe for future issues either of the same or some other kind.
World bank is intended to be the bank lender and technical advisor to the developing countries, using funds and technical resources from the member countries.
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How to Open an Offshore Bank Account: 8 Considerations Before you Start

Offshore banking is becoming increasingly popular as more people recognize exactly how they could benefit from an offshore bank account and because the set up process is straightforward. If you've ever wondered whether you could benefit from an offshore bank account, or you're considering opening an account but you're not sure which one to go for, this guide has been written with you in mind. Generally speaking anyone is free to open an offshore bank account. In fact, offshore banking has been widely used for many years by both individuals and organizations worldwide. Specifically an offshore bank account can also be of benefit to some expatriates residing in low or no tax countries as any interest earned on offshore bank deposits is paid without the deduction of taxation.

What is Offshore Banking?

Simply defined, an offshore bank account is an account held in a bank that is located outside your country of residence.

Asset Protection Structures

If you're going to go out now to get your offshore asset protection started, consider the best offshore banking structure: The foundation/corporation. A foundation is an offshore asset protection tool that can be used in the form of a trust. A foundation can hold all your assets and have a bank account, but a foundation can not conduct business. When a foundation owns a corporation, which owns a bank account, this is the only powerful privacy protection offshore structure you will ever need. So if you have your offshore corporation within a foundation, you can conduct your business through the offshore account and plan your income taxes accordingly.

Panama has a number of unique attributes that make this a great asset protection jurisdiction for corporations, foundations, banking and stock brokerage accounts. It is also known as one of the world's greatest haven for keeping and securing the cash assets of corporations, businessmen and individuals.

Tax Considerations

Most countries have no restrictions on where your business interests, investments or bank accounts are located; it is simply your responsibility to report any income you earn to the appropriate tax authority. You will need to establish a suitable structure in a tax friendly country to gain access to some of the better opportunities available, which is reason enough to go offshore for some even ignoring the tax benefits. Any business that is conducted outside of Panama is not taxable through Panamanian income tax.

Offshore Banks

Virtually all offshore banks want to receive some form of evidence of the account signatories' identity. Many offshore banks, but not all, request that letters of reference from another bank is provided by account signatories. Some offshore banks go even further: they demand that a bank reference each be given by all directors and shareholders of the company. Sometimes an introduction by a party known to the offshore bank (such as an existing customer) is accepted instead of a reference. A fair number of offshore banks still happily open company accounts without any references at all. Some offshore banks provide their own resolutions for the directors to sign.

Internet Banking Security Concerns

You can shield your internet movements using an anonymising service. Privacy, on the internet, is created by technological means. In fact, the internet has become the global, no barriers, free market.

Privacy

Most (maybe all) traditional jurisdictions are no longer suitable for asset protection, privacy and confidentiality. When a foundation owns a corporation, which owns a bank account, this is the only powerful privacy protection offshore structure you will ever need.

Jurisdiction

Usually such an account is located in a low tax jurisdiction and offers certain financial and/or legal benefits to the holder of the account. If you believe that an offshore bank account structure could benefit you, the next step is selecting the right bank, the right jurisdiction and of course the right account type. There are jurisdictions where banks are under legal obligations to seek references, and there are banks that request references despite any legal obligation to do so. Policies vary greatly across offshore banks and jurisdictions, so make a choice that is acceptable to you.

Belize

Offshore banks in Belize provide their customers with various services including internet and international banking services. You don't have to worry about confidentiality though; Belize banks will strongly protect any information you provide. The government has created banks secrecy laws which provides harsh penalties for anyone who would violate the secrecy provisions, except when a client is under a criminal investigation in Belize.

Panama

Panama has a number of unique attributes that make this a great asset protection jurisdiction for corporations, foundations, banking and stock brokerage accounts. Any business that is conducted outside of Panama is not taxable through Panamanian income tax. Panama is the most secure banking jurisdiction today, because Panama backs up its strong bank secrecy laws with real life enforcement. Other jurisdictions like Belize (mentioned above) have been known to be lax in their enforcement. Its one thing to have strong banking secrecy laws and its quite another to enforce them.

As a general guide it is often more discrete to establish your offshore structure in a location far from your residential jurisdiction. Panama has a number of unique attributes that make this a great asset protection jurisdiction for corporations, foundations, banking and stock brokerage accounts. Some call Panama the Switzerland of Latin America but this is not fair, Panama is far better than Switzerland and any other jurisdiction. With regard to reliability and stability make sure to investigate the laws and regulations for each jurisdiction you are investigating. Stable governments help to keep investor trust which in turn further adds to the credibility of the banks in that jurisdiction. Some offshore jurisdictions, such as Panama, have rock solid privacy laws governing banking while others such as Switzerland no longer protect their clients in the same fashion as in the past.
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Jersey Bank Accounts

Andrew Coyne reports on why Jersey is confident it can overcome threats to its future

It is sometimes said that when people become rich and money is no longer a concern they start worrying about their health. Whether the human condition needs something to worry about or not is a matter of conjecture. What is more certain is that Jersey as a finance centre has not had a period over the last few years where there hasn’t been a nagging uncertainty in the background.

First it was the Edwards Report - the UK government-commissioned audit into the regulations and practices of the UK sterling area offshore centres which came up with a number of recommendations.

Then came an attack from the OECD - the Organisation for Economic Co-operation and Development - on what it saw as harmful tax competition because of the fiscal advantages offered by centres such as Jersey.

And then came news that a planned withholding tax on saving income within the European Union was threatening to engulf the Channel Islands and the Isle of Man, as well - or at least if EU centres such as Luxembourg had their way.

Jersey Bank Accounts & The Edwards Report

With hindsight, the Edwards Report - attacked as the UK government riding roughshod over the independence of the sterling centre offshore islands before the review was carried out - is now being seen as something which was to the island’s benefit. Edwards, a former UK Treasury official, was largely complimentary about Jersey’s financial regulations and practices and, to a certain extent, the island has been able to use this as a marketing tool.

However, Edwards did have some criticisms - he suggested there was a need for an offshore ombudsman, that a deposit compensation scheme such as the one that exists in the Isle of Man should be considered, and he said there was a general need to tighten up the regulation of trusts and companies. ©

To its credit, Jersey has acted on many of Edwards’ recommendations. A consultation paper has already been sent out to the industry asking for comments about the possibility of a compensation scheme for depositors and a new trust regime has become law (see the information panel on page 46).

Jersey Bank Accounts - Edwards Suggestions

Another of Edwards’ suggestions was that there should be greater co-operation between industry and government and the formation of the Jersey Finance Industry Association (JFIA) should help to facilitate such co-operation. Made up of bankers, lawyers and accountants, it is intended to be the senior body representing the island’s finance industry and it will have a close relationship with the Financial Services Commission, in particular, and the Jersey government in general.

What is irritating to both the island’s professionals and its authorities, however, is the fact it is receiving mixed signals from world bodies about its status as a financial centre. Praise from Edwards and from a new Financial Stability Forum Report (see the information panel below) have to be balanced against the ongoing campaign by the OECD against offshore centres.

At the time of writing, a report in The Times newspaper suggested that Jersey was set to defy the OECD over regulatory and disclosure standards and may as a result be ‘outed’ by the OECD as an ‘unco-operative’ tax haven.

The report goes on to say that Jersey and the Isle of Man, which has taken a similar stance, could face punitive sanctions if they continue to resist worldwide moves to clamp down on tax avoidance. Such measures could include OECD countries revoking double tax treaties with the centres.

Bank Guaranties

You might already think that you know all you need to about private offshore banking, but if you’ve got a fair bit of capital to manage and could do with re-structuring your finances, then it is probably right up your alley.

Private Offshore Banking is designed to offer a personalised, tailor-made service which will optimise your existing assets, preserve your wealth and generally make your financial life a lot easier.

Offshore private banks cater for a wide variety of clients; from expatriates and international executives, to those looking to establish an effective way to transfer wealth to their heirs. It’s ideal for people looking to diversify their funds internationally while guarding against unnecessary taxes and minimising financial uncertainty, alongside those who need the flexibility and freedom of efficiently dealing in more than one currency.  

The background

Historically, private Banking has tended to be seen as quite elitist, with certain institutions imposing stringent criteria when it comes to choosing their clientele. To some extent this is true and certain banks ask for a minimum deposit of around £500,000 – £1 million, but in recent years most banks have begun to offer similar services to customers with just a tenth of this kind of cash in their back pocket.

Private banks pride themselves on offering a diverse range of services to their clients including wealth management, savings, estate planning, trusts, and all kinds oftax planning. Private Offshore Banking means that you will benefit from all of these, alongside the assurance that your account will be based in a tax haven.

Similarly, if you wish to move a certain amount of money onshore, your personal relationship manager (RM) is already aware of your individual circumstances and can suggest the best way to mitigate against any unnecessary Capital Gains Tax (CGT).

One thing is for certain; private Banking means that there is no mis-selling and no fobbing you off with products that you don’t really need. RMs are there to help you structure your finances appropriately, and not simply earn commission based on the specific products you invest in. You also benefit from the close-knit support network surrounding each RM; if you are looking to invest in a fund, they will first consult an investment specialist to advise on the most appropriate decision for you.

Decisions, decisions…

If you’re set on the idea of channelling your fortune into an offshore private bank account, then the next question is which one to choose.

Looking for the ideal bank might seem like looking for a needle in a haystack, but if you are serious about your investments and have a large chunk of money to deposit, it’s worth familiarising yourself with the winners of Euromoney’s annual global private Banking awards.

The awards rank the best private banks according to their wealth management services, profitability, ratio of clients to relationship managers and services offered – so you know if it’s sitting pretty at the top of the list, as UBS was at the 2007 awards, then it offers a top notch, all round service.

General consensus is that the bigger the bank, the better your funds will be taken care of. This is to some degree rooted in truth considering an international financial institution with a steadfast reputation has an exceedingly slim chance of going bust, meaning your funds are in very safe hands. With this in mind, the best choice for most expats will probably be a global private bank with a well-established branch in your chosen jurisdiction.

The Isle of Man, Jersey and Guernsey all play host to a wealth of offshore private banks, although the stereotypical Swiss bank account still lives on. Switzerland currently controls an estimated 35 per cent of the world's private and institutional offshore funds, equating to a monetary value of 4.6 trillion Swiss francs or around £1.9 trillion.

Certain types of offshore account, such as the Dual Currency Deposit account offered by Royal Bank of Canada (RBC), will protect against currency fluctuations, allowing expats to deposit capital at a fixed exchange rate and, as long as the desired currency has not seen a marked depreciation in value, investors can then withdraw it at the agreed rate.

The inner workings

Offshore private Banking in the 21st century is regarded as more of a bespoke gateway into investment management rather than the traditional ‘family’ relationship built on generations of trust, however it undoubtedly still offers a highly personalised service.

As a result, relationship managers have assumed the position of objective Financial adviser and sounding board, rather than just the service provider. In addition, RMs will only work with a handful of other clients – lower net wealth individuals Banking with RBC will share theirs with an average of 50-60 others – meaning that you don’t end up getting a watered down service.

Individuals opening an offshore private bank account will not have to compromise on the usual, tangible benefits either. Offshore clients will be granted universally accepted debit and credit cards, cheque books in different currencies and global ATM access, as well as interest paid gross and favourable foreign exchange facilities.

What should I look for?

Moving from your comfort zone can be daunting so make sure you know what you want to achieve. Familiarise yourself with the average annual management fee, as well as the cost for any extras – remember that although extras are great, you shouldn’t skimp on the services you really need in order to obtain them.

If you are serious about investing, it will also be of benefit to find out how well equity managers have done over the past 5-10 years, alongside the range of bespoke services offered and how far the specific advisory services extend. 

Panama Incorporation

Offshore Banking in Singapore

Today offshore banking in Singapore is one of the Republic’s fastest growing industries and according to industry analysis the country will be the fastest growing offshore private banking centre in the world within the next five years.
Since the government of Singapore announced significant changes to its laws of taxation back in 2004 the Republic has grown rapidly as an offshore centre of note.
Today offshore banking in Singapore is one of the Republic’s fastest growing industries and according to industry analysis the country will be the fastest growing offshore private banking centre in the world within the next five years.
The success of the offshore banking centre in Singapore stems from many factors, not least of which is the fact that Singapore has some of the lowest taxation rates in Asia. In 2004 when the government announced far reaching changes to its taxation rules it became an even more attractive offshore centre. Today residents of the Republic are not taxed on income earned overseas and any gains one generates from investments made in Singapore itself remain tax exempt.
Singapore is also one of the few remaining grade A offshore centres that has not signed up to the EU’s Savings Tax Directive, which is probably why the amount of money moved from tax havens within the remit of the Directive to Singapore in 2005 surged. Financial assets of non resident investors managed by private banks in Singapore in 2005 rose by 25% which is believed to be the world’s largest gain.
Many of the major international offshore and financial players such as Credit Suisse, Citigroup, UBS and Societe Generale are increasing staffing numbers in Singapore to manage the influx of private funds, and the Republic is definitely making a name for itself as one of the most secure, private and well regulated offshore banking centres unaffected by the EU Savings Tax Directive in the world.
It’s not just European money that’s flowing into Singapore; with India and China rapidly expanding economically and more wealth than ever being generated in these two countries the amount of millionaires in China and India looking for an offshore financial haven in Asia is increasing rapidly. Within the offshore financial industry Singapore is referred to as the Switzerland of Asia, and while the Republic trails the European offshore centre by five places in terms of its size as an offshore private banking centre, it is rapidly gaining on Switzerland in terms of the assets it has under management.
In 2004 the amount of assets held offshore in Singapore jumped by a staggering 40% and as previously stated in 2005 the amount rose by 25%; predictions for 2006 indicate that the Republic will enjoy another successful year and the short to medium term future of offshore banking in Singapore therefore seems assured.
Singapore bank accounts registration

Advantages Of Singapore As An Offshore Jurisdiction

Experts agree that finding suitable instruments for investment holding has been a long and on- going struggle. To make matters worse, recent world economic events have lead many global financial institutions to take more stringent and preventive measures to screen the simple acceptance of funds from undesirable sources. Internal policies implemented by many banks now stand as obstacles for offshore companies that wish to open new bank accounts. As a result, opening new offshore bank accounts can be an arduous process.



A viable investment holding option would be to make Singapore an offshore jurisdiction by incorporating a company in Singapore. A Singapore company can be viewed on par or even better than many other offshore companies. Services and products offered through a Singapore offshore international centre provide clients with wealth maximization and tax minimization benefits.



Many clients believe that it is impossible for Singapore to achieve the same results as other well known offshore jurisdictions, however this is a misconception. Following are some key considerations to support choosing Singapore as an offshore jurisdiction.



1. Incorporate Offshore for Substantial Tax Savings



One of the attractive features of going offshore to Singapore is that it has minimal tax. Recent developments in tax and corporate law in Singapore have made it easy to use a Singapore incorporated company to achieve the same results as that of a traditional tax haven company. Some of the tax and corporate law changes in Singapore include:



1.Singapore has abolished the two-tier tax system. Income of a corporation is only taxed once at the corporate level. Dividend payments by a Singapore company are not taxable to the recipients.

2.Income that is sourced from outside of Singapore is not taxable in Singapore.

3.Capital gains are not taxable in Singapore.

4.The corporate tax rate is 17%. 

5.A company (of not more than 20 individual shareholders) with annual turnover of S$2.5 million or less (revised to S$5 million after one year) is exempt from annual statutory audits. 

6.Singapore has a wide network of tax treaties. In certain cases, tax treaties can be used for the reduction of taxes in treaty countries where investments are held.

In summary Singapore offers many benefits for an offshore company. Individuals can open bank accounts with ease and hence carry on with financial transactions associated with the company without facing any problems. Singapore is regarded as a jurisdiction of a "premium stature" when compared to other offshore jurisdictions. This "premium stature" gives the investor a competitive advantage with regards to the clients, potential investors and business authorities.

 

2. Government incentives to support incorporation in Singapore

The Singapore government plays a keen and active role in developing a conducive environment for enterprise growth, nurturing innovative startups, developing key industry clusters, and growing dynamic and innovative growth-oriented enterprises. The government has implemented numerous schemes in line with developing and upgrading infrastructure and creating new market opportunities. For example the SME Management Action for Results (SMART) initiative provides Singapore based incorporated companies with consultancy advice and monetary support to develop enhanced management systems and processes. 

The government provides assistance schemes in attaining an Employment Pass for foreign Entrepreneurs who are ready to incorporate a company in Singapore. They also provide Entrepreneurship Training for professionals, managers, executives and technicians.

To alleviate the financial burden, the government has financing schemes to support the growth of SMEs. The Bridging Loan Program (BLP) provides loans of up to $5 million for local and foreign SMEs with a minimum 5% interest rate for loan tenure of 4 years and below. The Business Angels Funds provides Singapore-based companies a co-investment financing option from pre- approved angel groups, up to $1.5 million in matching capital. SPRING Singapore is a government department tasked with growing innovative companies and fostering a competitive SME sector.

It is apparent from the numerous government initiatives that Singapore provides a potentially profitable platform for company incorporation. The assistance and financial schemes help to create an environment conducive for company set up. Entrepreneurs who fulfill the stipulated criteria can easily attain government assistance to set up and grow their business operation.

Eligible financial introduction

How To Set Up An Offshore Company

Whether it is to save taxes, achieve greater business freedom, protect assets, minimize reporting, or maintain privacy, having an offshore company (a company that conducts business outside the country of incorporation) can be an optimum business solution. Offshore company formation is popular amongst international entrepreneurs, independent contractors, consultants and traders.

Setting up an offshore company is simple with the help of a corporate services company. The typical set up procedures are as follows:
1)The hired consulting company collects the required due diligence from the client.
2)The consulting company provides the client with a detailed project plan, which includes steps to incorporate the potential offshore company.
3)The consulting company proceeds to register the offshore company with the suitable corporate structure. This requires minimal client involvement.
4)After registration is complete, the consulting company will provide the client a complete company kit including i) original Certificate of Incorporation ii) a bound copy of government-approved Memorandum & Articles iii) original share certificates iv) an extract from the Public Register illustrating company details available for public viewing (if applicable) and v) an original government receipt as evidence of payment of annual offshore company registration license fees.
5)For invoicing purposes, the consulting company will provide the client with a reputable international business address, telephone and fax line.

It is important to note that exact offshore company set up procedures and the duration vary according to the jurisdiction. It is important to choose a respectable jurisdiction that is free of any negative stigma of illegal activities, such as money laundering and tax evasion.

Examples of popular jurisdictions in which to set up an offshore company smoothly and relatively quickly are Singapore and Hong Kong. These two ideal offshore jurisdictions boast excellent international reputations to customers, suppliers, investors, banks and other organisations. For example, Singapore and Hong Kong have strict client confidentiality and bank secrecy laws and are not listed on OECD black or grey lists. This is important, as they are not given any tax haven stigma. Singapore and Hong Kong also have investor-friendly business environments and are economically and politically stable.

Regardless of jurisdiction, after offshore company incorporation, it is advisable to consider the additional ways your corporate services firm can assist your offshore company to prosper. Services may include financial services, such as assisting corporate bank account opening, business website design and Search Engine Optimisation (SEO), marketing services and human resource services, such as staff recruitment and obtaining employment visas.

Setting up an offshore company under the guidance of a corporate services firm will help to ensure smooth company registration and also provides the strategic advice for successful business operation.
Offshore bank accounts

Is Offshore Business The Right Business For You?

Offshore business has attracted significant attention recently including the highly publicized case between a bank in Switzerland and the US government who actively pursue individuals, or companies, suspected of tax evasion activities. The effect has been a snowball of TIEAs, better known as Tax Information Exchange Agreements, especially between the jurisdictions often labeled with the tax haven image and the larger nations who suspect tax evasion.

So how can offshore business still be useful in the face of such risks?

The important thing to note is that information being withheld by the account holders to evade tax obligations, would be considered illegal. However, it is still possible to conduct offshore business in tax friendly jurisdictions, in compliance with the law. The key is to identify and choose the best jurisdiction for your business type and structure your company accordingly. This is obviously more tedious than most entrepreneurs initially imagine, and for that reason the use of consultancy firms and offshore specialists is both a logical and common practice.

Still, offshore may not be right for everybody.

Who conducts offshore business?
Offshore business is popular with the following professionals: successful, independent contractors, consultants especially in IT and global financial services- and traders -especially global commodity traders-.

The following types of business can also make use of an offshore company: import/export companies, international trading companies, asset holding companies, property investment/intellectual property holdings.

Businesses that are located in unstable jurisdictions or economies can benefit from an offshore company in a secure jurisdiction or economy. Similarly, expatriates who would like to protect their assets from home country taxes and inheritance laws can do so through offshore business.

If that is you

What advantages does offshore business provide?
Offshore business is a way to potentially achieve the following: (i) minimize international taxation legally (e.g. Singapore has legally low tax rates), (ii) provide a reputable image for business (e.g. if the original country of business is untrustworthy or unpopular in a specific industry), (iii) protect global assets (e.g. if in original country asset protection laws are inadequate or badly implemented), (iv) facility company incorporation procedures (e.g. offshore business set up procedures are often simpler, faster and cheaper for entrepreneurs than their home jurisdiction),(v) provide confidentiality (e.g. some offshore jurisdictions do not publish shareholder/owner information to the public), (vi) fee exemption (e.g. business license fees, stamp duties and various taxes), (vii) no exchange controls (often the case in offshore jurisdictions), (viii) no accounting/audit requirements (some jurisdictions do not require financial statements or annual audits).



What are the risks to be aware of?
If you decide these advantages are relevant to you and you choose to incorporate a business offshore, be aware of the following: (i) OECD pressure on certain offshore jurisdictions many popular jurisdiction are bigger targets of OECD pressures for TIEA (ii) certain offshore jurisdictions have a negative reputation that affects business image (iii) concealing information about offshore investments is illegal in most countries.

What exactly can an offshore business do?
Offshore businesses can do a variety of things dependent on the offshore jurisdiction it is incorporated under. A few examples to note are:
(i) Have limited liability status, thereby limiting director and shareholder liability to the amount of money invested i.e. share capitalization, and separating the company as a legal entity from its owners.
(ii) Conduct business in any country, just like a local company. Note: like a local company it is also subject to each of the rules and regulation of the jurisdiction in which business is conducted.
(iii) Buy, sell, hold securities, certificates of deposit, open savings and other bank accounts, transact in multiple currencies, stocks, bonds, mutual funds, other banking instruments, real estate and valuables.
(iv) Open a bank account in an international or local bank and borrow or lend money.
(v) Hold international meetings of directors and shareholders via telephone, fax or any other electronic or virtual means of communication.
(vi) Trade its own shares, hold treasury shares, and conduct mergers, acquisitions and/or joint ventures.
(vii) Transfer assets to a trust or foundation.
(viii) Trade licenses and royalty rights without paying taxes on royalty income.


Many businesses miss out on legally available tax efficiencies that can be achieved through incorporating an offshore business. It is important for any entrepreneur or director to properly research the practices that exist and that are legally viable, in order to conduct business in the smartest way possible. If offshore business sounds like a relevant practice for your business, consider your options and seek advice and approval from a well-informed reliable source, in order to take full advantage of what the globalized business world provides, and avoid becoming another news headline for tax evasion.
Offshore Tax Havens samples

Practical Business Forms of using an Offshore Corporation

Panama, BVI or Belize corporations are useful for several main purposes:
1. Investment Holding Corporation

Both corporations and individuals make substantial use of offshore companies as vehicles to protect and hold investment portfolios. Such portfolios may consist of stocks, bonds, cash, and other investments. Cash assets held by offshore companies may earn deposit interests free of tax.

Personal offshore holding companies are often used by high net worth individuals to hold investments made in different markets and countries. Personal holding companies also provide the confidentiality required by the sophisticated investors; while at the same time, saving in professional and other fees associated with other structures. In such a structure, tax is not payable on income generated from the investment holding company’s assets, thereby increasing the amount available for other purposes.

2. Finance Corporation

Offshore finance companies can be established to fulfill a personal or corporate group treasury management function. Interest payments from group companies to the offshore finance subsidiary may be subject to withholding taxes usually lower than corporate taxes levied otherwise. On the other hand, the interest paid would be a deductible cost, for taxation purposes, and so consolidating interest payments in the offshore finance company may provide a tax saving benefit.

Offshore finance companies are often utilized as part of structures for acquiring foreign entities, real estate and other investment related projects.

Other benefits of such a company to the multinational entrepreneur are:

Protection of capital funds introduced from abroad to foster a self-owned project.
Tax relief on the cost of borrowing the funds.
Freedom to return interest on funds lent to the tax haven, so they can be reinvested at the best tax-free advantage.
3. Real Estate Holding Corporation

The ownership of overseas real estate and land by a Panama company can often create many tax advantages. Additionally, using a Panama Private Foundation or another offshore company to own the shares in the offshore company can give rise to additional tax advantages in the client’s country of residence and simplifies procedures in the event of the client’s death.

The main benefits are:

Avoidance in most cases of local inheritance taxes on the property in the event of death of the beneficial owner.
Avoidance in most cases of local succession laws which can, in certain countries, stipulate to whom the property must pass.
Elimination in most cases of local transfer and capital gains taxes upon resale of the property.
Simplification of procedure upon resale of the property through the sale of the real estate holding company to the buyer saving both time and costs.
Exclusion of foreign exchange controls restrictions, in certain countries, in the event of the beneficial owner taking up residence in the property.
Ease of transfer to heirs in the event of the beneficial owner’s death.
Confidentiality of ownership.
4. Trading Corporation

Offshore trading companies are a proven efficient vehicle to expatriate capital and eliminate exchange controls restrictions through over-invoicing or under invoicing export/import transactions. If a Panama trading company were to procure products from one country, and then sell them to another country, the profits arising our of the transaction may be accumulated in the offshore company, free from taxation in the offshore centre.

Another common use of a offshore trading company is for bulk purchasing. Such a structure is typically established by a group of associated or unrelated companies to benefit from economics of scale and reduced administrative costs, plus significant tax savings. Significant benefits achieved by this arrangement, include receipt of bulk buying discounts and accumulation in a tax-free area of the net mark-up on resales to the manufacturing units.

5. Venture Capital Corporation

Offshore companies are regularly employed to raise venture capital through equity or debt issues in capital markets. Many corporations have sough to mitigate risk by accessing markets through offshore companies while at the same time reducing certain taxes. This technique is a refinement of the Panama offshore investment holding company. With prudent management, it can prove very profitable by itself, apart from accumulating tax-free profits.

7. Plant Rental Corporation

If a company in a service industry operates affiliated companies in various countries, the formation and financing of an offshore company to acquire capital equipment used in its operations could prove beneficial. The equipment is rented to the affiliate at market rates, and net income is left to accumulate in the offshore company. Alternatively, it can be attractive for a company in a high tax area to purchase the capital equipment, claim the usual allowances, and lease the equipment to the offshore company at commercial rates. Hence, profits are generated, which are not liable to tax assessment, while rental payments in most cases are tax deducible in their countries of origin.

8. Personal Services Corporation

Many individuals engaged in the provision of professional services in the construction, engineering, aviation, finance, computer, film, and entertainment industries can achieve considerable tax saving benefits through the establishment of a offshore personal service company.

The offshore company can contract to supply the services of the individual outside the country in which he/she is normally resident and the fees earned can accumulate offshore, free from taxation in the offshore centre. Payments to the individual can then be structured in such a way to minimize income tax.

9. Employment Corporation

Many companies utilize offshore companies for the employment of staff working on overseas assignments. This helps to reduce the costs associated with payroll and travel expense administration, and may provide a tax and social security saving benefit for the employees.

While not providing any specific legal or tax counsel, nevertheless for some individuals or companies, Panama companies may offer specific tax advantages over other jurisdictions. Any potential client seeking legal or tax advice should consult with their individual legal or tax advisor.
Offshore Pro Group

Panama Foundation Tax Information

Panama Foundation Tax Information
Panama is a 100% "tax haven". Panama Foundations offer the following tax advantages:

No tax reporting requirements.
No income tax.
No capital gains tax.
No interest income tax.
No sales tax.
No tax to beneficiaries.
No beneficiary transfer tax.
No capital tax.
No property tax (for non-Panamanian property).
No estate tax.
No gift tax.
No inheritance tax.
No stamp tax.
No succession tax.
No inventory tax
Flat Annual Panama Corporate Franchise Tax

The only tax paid by Panama Corporations (or Panama Foundations) is the flat annual Panama corporate franchise tax of US$300.

According to the Law, the Panama corporate franchise tax payment deadlines are as follows:

Incorporation Date ..................Tax Payment Deadline
From 1 of January to 30 of June 30 : July 15
From 1 of July to 31 of December 31 : January 15

Late Payment Penalty:

If the flat annual Panama corporate franchise tax ("taza unica") is not paid on or before the due dates mentioned above, the entity be charged a late penalty of US$50.00 per year that the tax is not paid.

Second Late Payment Penalty:

If the flat annual Panama corporate franchise tax ("taza unica") is not paid after 1 "deadline" period, the entity will be charged a second late penalty of US$300 for every additional "deadline" period missed thereafter, a US$300 late fee will be incurred.

The above applies to all "entities" (corporations, foundations, or trusts) registered at the public registry of Panama.
Offshore Pro Group

JERSEY TAX HAVEN

Stability and security will be the watchwords in offshore financial centres in the months ahead. Offshore banking has been and will remain at the cornerstone of the offshore finance industry. In the months ahead, the stability provided by the leading jurisdictions in the offshore environment will be the most important feature.

International investors share the same concerns as resident savers who have watched the dramatic events that have hit the global banking community unfold across the world. Investors generally have had their confidence deeply shaken by events in New York, London and other leading markets and going forward there will no doubt be a demand from investors for greater economic stability and security.

An international financial centre such as Jersey provides a relative oasis of calm in these turbulent times. The Island has a huge pool of liquidity available from deposits placed locally. More than £200bn has been attracted to Jersey over the years. These funds do not lie idle in the bank vaults of Island offices, but are circulating amongst the onshore financial centres, particularly London.

As stability becomes an essential commodity for international investors the Island’s long- held reputation as a safe, secure location in which to shelter assets from global turmoil is gaining special significance.

Banks in Jersey are subsidiaries or branches of world-wide financial institutions, but tend to be far more capitalised in Jersey than is the industry norm. This is because the Island is a centre for deposits, giving further comfort to investors.

Alongside the need to demonstrate stability, offshore jurisdictions are also competing more aggressively than ever for international investment business. Many new opportunities are arising from the emerging markets in the Far East, particularly in China and India.

Jersey Tax Haven - Financial future

Jersey recently commissioned a long-term study into the future of financial services, undertaken for the Island by the London Business School. One of its main conclusions was that greater resources would need to be devoted to the markets in China, India and Eastern Europe. These areas were identified as markets where, alongside London, most new business would be acquired in the future. The events of the last few months have not affected those trends.

Jersey professionals have been encouraged by the increasing numbers of legal and finance professionals based in the emerging markets turning to Jersey in support of their investment planning and asset structuring. In China, for example, there are many instances where institutional investors have been able to tap into the investment opportunities available in the European markets through the formation of Jersey companies which are then listed on European exchanges. A delegation from Jersey Finance has already made two successful visits to China this year and further visits are planned.

Also it is clear from a recent visit to India by a delegation from Jersey that the Island is an attractive location for Indian holding companies looking to diversify business interests into the UK and Europe. Indian nationals are now able to invest up to $200k per annum outside of India. This has opened up the opportunity for a range of private wealth management work.

Finance centres have also needed to embrace the requirements of international bodies such as the OECD which has been engaged in its ‘harmful tax competition’ initiative, the objective of which is to achieve a global level playing field based on high standards of transparency and effective exchange of information in tax matters. In response to these international moves, Jersey has, for example, been committed to the principles of exchange of information on request and transparency since as far back as 2002.

However, this international pressure on jurisdictions to provide greater information on their client’s financial affairs has led to widening concern amongst high net worth clients that the privacy of their affairs may no longer be guaranteed. This has, in turn, led to considerable debate amongst those who advise wealthy clients about the threats to confidentiality posed by the demands for greater transparency from tax authorities.

But it is possible for jurisdictions to adhere to international standards and to co-operate with international moves to combat fiscal crime, whilst maintaining a client’s right to privacy and confidentiality.

It is worth considering the differences in the rules that exist between jurisdictions. There are some financial centres that rely on banking secrecy laws to uphold the privacy of financial affairs.

However, such centres are attracting an increasing level of negative publicity regarding assets linked to illegal activity which hide behind a cloak of secrecy. As a result, there is mounting pressure for them to abandon the secrecy barrier.

There are other centres which do not rely on secrecy laws, including many jurisdictions which are familiar to British expatriates. In this respect, Jersey is not a secretive jurisdiction, as it protects the rights to privacy and confidentiality of financial information relating to law-abiding citizens without the need for banking secrecy laws.

Jersey Tax Haven - Client confidentiality

Jersey embraces the concept of transparency in its regulatory practices and it is acknowledged for doing so by international bodies and law makers. This does not mean, however, that private and confidential data about clients held solely by institutions in Jersey is accessible and will be disclosed. On the contrary, Jersey has always upheld the principle of confidentiality of client affairs.

Some may question whether the Island can continue to do this when the HMRC has been seen to increase its powers to obtain information about offshore bank accounts, most notably following the Court ruling won by HMRC in 2007. This case related to information held about clients in the UK with offshore bank accounts.

The industry believes that HMRC would not generally be able to compel information to be disclosed by Jersey subsidiaries and/or branches of UK institutions, providing always that the relevant information was not held in the UK. Although the position has not been tested in the Island, this is the view of Jersey legal experts familiar with an understanding of Irish and English civil case law.

Jersey Tax Haven - Tax transparency

In the fight against money laundering and fiscal crime and to meet OECD principles of transparency a new model agreement has been created, known as the Tax Information Exchange Agreement (TIEA).

Many financial jurisdictions are signing agreements with individual countries and Jersey is amongst them. To date, the Island authorities have negotiated agreements with the USA, Netherlands and Germany. It is important to recognise that tax authorities can only use TIEAs in specific cases where the requesting authority is able to demonstrate that there is a need to obtain information, and that all other means to discover the information they require has been exhausted in their own territory.

It is possible in Jersey’s view to support the concept of greater transparency in financial affairs, whilst at the same time adhering to original and long held principles that the financial affairs of legitimate, law-abiding clients are sacrosanct.

Alongside the need to demonstrate stability and the challenging issues of transparency and information exchange, financial centres will continue to compete on their ability to innovate and enhance their commercial environment so that they are more attractive for international investors.

Jersey Tax Haven - Foundation formulation

Already this year in Jersey the Island has introduced enhancements to its company laws, launched rules that enable promoters to set up unregulated funds which complement the hugely successful regulated funds regime, and finalised new legislation which will enable foundations to be formed in the Island for the first time.

Foundations, which will be available in Jersey alongside existing vehicles such as companies, trusts and limited partnerships, may be of particular interest to international investors and their advisers in respect of long-term financial planning.

Unlike a trust a foundation is a distinct legal entity similar to a company, although it has no shareholders. The powers of the foundation will be exercised by a council, one of whose members must be registered under the Financial Services (Jersey) Law 1998 to conduct financial services business of this type. The foundation’s charter will need to be lodged with the Registrar’s department of the Jersey Financial Services Commission, setting out the name and broad objectives of the foundation.

We anticipate that the foundation vehicle will appeal to clients based in civil law territories where they are less familiar with the trust concept. It will also be an effective financial planning vehicle for those clients who want to maintain more personal control of the assets. It has some of the attractions of a trust vehicle and some of the benefits of a company structure, including separate legal status. This should enhance its appeal to private clients and their advisers who may not previously have considered Jersey as a location to shelter assets.

Whilst the need for a stable and secure environment will be paramount, investors also need choice. The flexibility of regulation, the widening scope of legislation and the growing specialist skills prevalent in jurisdictions such as Jersey help to provide the choice that investors seek. Diversity and specialization are also essential ingredients in successful international finance centres.
Offshore Pro Group