Offshore Tax Havens: The World's 10 Best Tax Havens

A tax haven is of course a country or territory where certain corporate or individual taxes are set very low or do not exist at all, generally with the sole intention of attracting big spending individuals to help create a vibrant and prosperous local economy. Whilst their are many objectives to the principles of tax havens, with arguments that they take too much money out of other economies, there are also some generally unacknowledged advantages to global communities gained through their existence. One such benefit is to create an environment of tax competition between governments, thus helping to drive down taxes, although not particularly to the free spending governments of the USA and UK who like to spend more money on social policy than their tax revenues generate - but that's an altogether different topic which has been covered once too often! Of course, a tax haven simply supplies a service to the large numbers of people who seek to participate in tax avoidance.

My opinion on tax havens is split, on one hand the super rich are depriving their home countries of large amounts of much needed public money - thus placing more of a burden on those with moderate or low incomes. We have seen this for many years in the UK and the USA, where a small proportion of people control a large proportion of the wealth yet the burden of public spending is placed firmly on those who struggle. On the other hand, there is nothing to suggest that tax havens should only be the reserve of the super rich and to the contrary I know many people who relocate to these countries to run small businesses.

A real life example is a friend of mine who relocated to Bulgaria to take advantage of its low 10% income tax, and 10% corporate income tax. He runs a small underground record label with a turnover of around $150k, using modern technologies to run his entire business from a small home office and production suite. He estimates his annual savings, when all costs are taken into consideration (not just tax but also general operation costs), at around $38k. His own drawings in the 2009 financial year were around $30k, not a lot of money in the UK but a huge amount of money in Bulgaria. The efficiencies achieved through relocation effectively make the difference between him making a living overseas, or having to run a loss making business in the UK. I can see nothing wrong with this, whats the alternative for him? To move back to the UK and claim unemployment benefits? There are numerous tax havens in the world, all of which have benefits for different needs.

 

10. Andorra

In Andorra there is no income tax, gift tax, inheritance tax, or capital transfer tax. Since 2007 there has been a capital gains tax, introduced on a sliding scale to counter rising house prices which were problematic for the native Andorran communities, although this is the only government tax. Andorra also has single digit tax rates on imports, and has become a very popular destination for Spanish and French people seeking duty free or low duty goods. In fact, over 10 million people visit the country each year to buy cheap commodities and luxury goods - a big industry for a country with a population of just 83,000!

9. New Zealand

New Zealand is an unlikely tax haven, and an unintentional one too. New Zealand made the list partly on the basis of how attractive the country is to live in, with it being cited recently as the most popular destination for people emigrating out of the UK. New Zealand did intentionally attract overseas investment when it introduced zero tax on trusts, when the beneficiary and the settler are both based overseas, and succeeded in bringing in a lot of foreign money. Now for the REAL stuff.... all new settlers in New Zealand are treated to a 4 year tax exemption on money coming from overseas. The result is many individuals moving to New Zealand from countries such as the UK and Australia, and running businesses such as websites or - like my example - small record labels! Chances are that many of these individuals will move on again after their 4 years are up, but the small number who stay and begin to pay taxes are of course the governments reasoning behind the scheme.

 

8. Switzerland

Switzerland does not like to refer to itself as a 'tax haven' but, whether it likes this label or not, it is. Some 21% of the countries population are non-Swiss and most of those people are in the country because of the clear fiscal benefits. The primary prized tax break is the 'lump sum concession' which allows any resident who works outside of the country to pay tax only on the annual cost of living, rather than their income. The annual cost of living is simply calculated by multiplying the individuals annual rental expenditure by 5, and then taxing this figure at 40%. If you earn $200k per year, and pay $10k per year to rent and live in a Swiss apartment, you will pay just 40% of $50k in tax ($20k). In this hypothetical example, lets say he is a banker, he is paying just 10% in tax. It is of course also a beautiful country!

 

7. Hong Kong

Hong Kong has relatively low tax rates of 17%, plus no capital gains tax, but its fiscal policy was not originally intended to create a tax haven. Instead, it claims that its low rates are designed to attract investment into the countries service based economy. Hong Kong is not a cheap city, so it generally only appeals to the very wealthy, particularly those who can afford to purchase a property outright or the super rich who prefer a very metropolitan lifestyle. Whilst not the best in terms of financial savings, certainly a great place for the wealthy to hang about getting a little richer!

 

5. Guernsey & 6. Jersey

Guernsey and Jersey are both part of the Channel Islands, an Archipelago in the English Channel which separates England and France. The Islands are considered British Crown Dependencies but are entirely independent from both the UK and the EU, each has their own government. The small state of Jersey (population 91K) is famous for its diary products, but is even more famous for its financial services, and is one of the worlds richest countries on a per capita basis at $57000. The most famous tax benefit of Jersey is the non-existence of value added tax (VAT) for items under £18GBP, VAT is set at 17.5% in the UK. The result is hundreds of retailers, including Amazon UK, setting up distribution channels in Jersey and selling low value goods such as CDs, DVDs and lingerie to the UK consumer with a significant competitive advantage. Most major online retailers of low value goods in the UK now operate from Jersey, or the neighbouring Guernsey (population 65k) where the system is exactly the same. There are also no capital gains tax or capital transfer tax to be paid in Jersey, and many corporations are exempt entirely from taxation too. This is also the same in Guernsey. A one bedroom property in Jersey would cost you a minimum of £150k, whilst a small office building for commercial operations would cost you a minimum of £500k.

 

4. Panama

Panama has long been a tax haven for the wealthy foreigner, and is one of the principle channels of global funds into and out of latin America. The tax benefits really are simple, probably the most simple, basically an individual or corporation will only pay tax on income which is judged to have arisen from Panama. All outside income is entirely tax free, making it one of the most attractive tax havens in the world. Panama is however, unfortunately, a haven for illegal activities. A lack of transparency means that it is almost impossible for outside tax investigators to determine the value of assets or capital held by a Panama resident, this has left the system open for abuse. A luxury apartment can be purchased in Panama City for as little as £25k/$40k and the city is a very attractive place for those from the English speaking world, with English being widely spoken and the US dollar being universally accepted.

 

3. The Isle of Man

The Isle of Man is a small island just off the coast of England, and a favourite of UK multi-millionaires. There is no general capital gains tax, no tax on business turnover, no stamp duties, and no tax on capital transfer. The only significant tax is income tax which is set at a maximum of 18%, significantly lower than the 50% paid by the rich in the UK! Those based on the Isle of Man can get to anywhere in England within 30 minutes from catching a flight, meaning that many CEOs of UK based businesses choose the Isle of Man as their primary residence. The lower tax rate, for those on the island who earn a moderate or low income, is just 10%. In addition, the island charges zero income tax for certain areas of the islands economy; these include manufacturing, film, e-gaming, tourist accommodation, fishing, agriculture, insurance, fund management, and shipping. Their is a 10% tax on corporations with banking licenses or those who take income from the rental of land or property on the Isle of Man. I should also point out that the Isle of Man is a beautiful island, if you dont mind weather which closely resembles that of Britain, in other words..... invest in a brolly!

 

2. The Bahamas

The Bahamas, like Panama, does not tax money judged to have been earned overseas. Anybody can get a permanent residence in The Bahamas with an investment of $150k or over, although real estate and the cost of living is very expensive. The Bahamas isn't really a tax haven suitable for the lower middle classes (I hate that word, in other words the non-rich), probably best suited to those with a few million to their name. I'm sure that I don't need to mention how nice The Bahamas is! It is generally recommended that those who choose to avoid income tax in The Bahamas do not put their money in the national banks, and instead choose to bank overseas.

 

1. Monaco

Legal residents of the tiny state of Monaco do not pay any personal income tax whatsoever, although you do actually have to be in Monaco for a minimum period per year to be considered a resident. Monaco is home to the super rich, with the British billionaires Sir Philip Green and Stelios Haji-loannou being prime examples. The British newspaper contacted 650 British company directors who gave their residence as Monaco, and established that the 10 richest Brits in Monaco account for $13.5bn alone. Quite astonishing for a country with a population of just 35000. A Monaco 'resident' can actually spend 90 days per year outside of the country, plus one day travel out and one day travel back, whilst it actually only takes about an hour and a half to fly from the UK to Monaco - less than the time it takes to travel from Birmingham to London on the train. This means that these businessmen and company directors can spend 4 days a week for most weeks of the year in the UK and still be considered a resident of Monaco. If you flew to the UK one day, and flew back the next, you will not have used any of your 90 days. A 30 metre squared studio flat will cost you at least $1m.

How Can I Take Advantage Of Offshore Banking?

If you are looking for:

• Offshore services
• An offshore company
• Offshore banking
• Offshore trusts
• Offshore investing

You need to look into internet offshore banking.Offshore banking or offshore bank refer to the many investment and banking institutions available in other countries and jurisdictions other than where the depositor lives. The term offshore bank is for those banks located in low-regulation, or low-taxation jurisdictions.

While you may find a few internet offshore banks that are unscrupulous. For the most part these banks are sophisticated and stable with regulations tailored toward the needs of their clients. Many of these jurisdictions depend on foreign capital held in their banks as a primary economic factor.

One of the benefits of having an offshore banking account is that they are located in tax havens that provide asset protection and confidentiality. These jurisdictions also allow a looser restrictive rules when it comes to the types of internet offshore accounts available. Offshore banking will usually allow a reduction in tax regulations.

You will need to be sure the proper jurisdiction is selected for your personal and business needs. Each depositor will have different needs when it comes to offshore accounts. If you do your homework, it will be apparent that some unscrupulous banks would not be right for you and your business dealings. Anyone who knows anything about offshore banks, already knows that banks can safeguard their money from civil, economic or political strife. They are also confident that an offshore banking account will be an effective haven for assets and funds to be safe, secure, and kept confidential.

Internet offshore banking will also allow you to check your transactions and banking account balances online. This will also allow you to arrange for money transfers online. You will have the same privileges that you would with any regular internet banking site.

Not only are internet offshore banks a way to invest and protect your money, there are also plenty of exchange companies out there. These companies usually give better rates than the banks do. They offer different transfer systems and the speed of transfer is what you will mainly need to pay for. These methods are postal, bank to bank, telex, and telegraphic. Banks and exchange houses are usually in competition. Both are speedy, accurate and reliable, but the efficiency of a transaction also depends on the speed of the institution on the receiving or sending end.

Electronic transfer is undoubtedly the quickest method to send or receive money, though there will be delays if you are sending a currency that the other institution does not normally deal with. It is simpler and quicker to send money between banks that are affiliated. Many depositors have benefited from the safe, confidential, and the low taxation environment of an internet offshore banking account.

Living and Banking Tax Free in Panama

It probably won’t have escaped you that, although we are a global wealth building and wealth management newsletter with our roots in the United Kingdom,  in recent years we have developed a distinct Latin American bias. That is no accident.

It is in Latin America that we have found freedom, wealth, and privacy – in the form of governments that have no particular interest in keeping the residents of their countries under surveillance. They say power corrupts, absolute power corrupts absolutely. Well it seems to us that Latin American governments have power, but not absolute power – because their systems are less developed than those further north. So the fact that these governments don’t have the financial resources to employ high-tech methods of spying on their citizens is certainly a blessing.

The Republic of Panama stands out in Latin America as a major offshore tax haven and financial hub. Offshore bank accounts, IBCs (Panama Corporations), Private Interest Foundations and other similar privacy tools make for a business-friendly environment. The recently elected Martinelli government promises to continue with Panama’s liberal economy at least for the next five years (whether conservatives hold power after that will depend on whether Martinelli can deliver on his promises.)

But besides being a good place to incorporate or open bank accounts, Panama is a very liveable place. Sophisticated capital Panama City has some beautiful areas and, despite a real estate boom in recent years, remains relatively inexpensive. You can still get a good meal with a local beer for $5. But if you want to pay $100 for a top-class trendy sushi dinner, you can do that too. You have the choice.

Banking services in Panama are getting better too. Traditionally Panamanian banks have had a ‘take it or leave it’ approach to new business, and pressure from the US has made it particularly difficult for US citizens and residents to open bank accounts in Panama. One of my favorite articles about Panama banks is here. In the last year or so I have seen this changing, with more product differentiation and even something that’s never been seen before – Panamanian banks such as Multibank (the locally owned bank formerly known as Multi Credit Bank) and London-based international giant HSBC competing with each other agressively in the local market, trying also to steal away market share from more expat-oriented banks like Credicorp.

So these days, it is getting easier to open bank accounts, customer service is getting better (think shorter lines in bank branches), and probably most importantly for our global readership, internet banking and credit/debit card services are becoming much more developed.

One of my clients, for example, now has an airline miles credit card linked to his Panama company account and spends tens of thousands of dollars every month buying goods for resale all over the world. The goods move through the Colon Free Trade Zone and are sold on worldwide. The credit card works in US dollars without surcharges, allows 30-50 days interest free credit, and as a bonus my client can fly almost anywhere he wants to go for free, using the miles accumulated.

At the same time, Panama banking privacy is good, and the country is one of the few that still allows offshore corporations with bearer shares, much to the chagrin of the G20. But they can’t say too much because Panama has one huge strategic card to play – the canal – which the Chinese would happily buy up at any time. But that’s another story…

Further resources: Peter Macfarlane has authored an e-book entitled “EIGHT IMPORTANT THINGS YOU SHOULD KNOW ABOUT GOING OFFSHORE IN PANAMA THAT YOUR LAWYER MAY NOT TELL YOU!” You can obtaihn this ebook free, right here and now, simply by visiting our Panama Banking for Corporations and Foundations page. You’ll also find further information on banking in Panama together with a range of other worldwide financial centres in our Practical Offshore Banking Guide.

Q Wealth Report

Why anti-tax haven legislation of evasion works

Six weeks after the bill’s anti-offshore provisions were introduced as the “Foreign Account Tax Compliance Act” (without hearings or any chance for opponents to be heard), the legislation that I warned you about at the time, was passed by the House.

The bill does not alter the fact that under U.S. law it is still legal to bank, invest and do business offshore. But it does add costly and cumbersome layers or new reporting requirements.

The greatest threat to offshore freedoms lies in the very real possibility that many more offshore banks and financial institutions will refuse to accept Americans as clients rather than submit to the highly unusual extension of U.S. laws to foreign financial businesses and advisors which in effect would force them to act as IRS spies.

Under this extremely punitive bill, all foreign financial institutions, banks, foreign trusts, private foundations and foreign corporations could be forced into providing information about U.S. account holders, trust grantors, and American owners associated with these legal entities. As if they did not exist, the legislation totally ignores the current extensive reporting requirements of federal law that already apply to all such entities.

As it passed the House bill, H.R. 4213:

• Impose a 30% withholding tax on payments to foreign financial institutions and other entities unless they acknowledge the existence of offshore accounts to the IRS and disclose relevant information including account ownership, balances and amounts moving in and out of the accounts.
• Require individuals and entities to report offshore accounts with values of USD50,000 or more on their tax returns.
• Extend the statute of limitations to six years when offshore accounts are unreported or misreported (the current statute of limitations on tax audits is three years).
• Require advisors who help set up offshore accounts to disclose their activities or pay a penalty.
• Require electronic filing of information reports about withholding on transfers to foreign accounts to enable the IRS to better match reports to tax returns.
• Strengthen rules and penalties with regard to foreign trusts, including rules to determine whether distributions from foreign trusts are going to U.S. beneficiaries and reporting requirements on U.S. transfers to foreign trusts.
• Clarify the definition of outgoing U.S. dividend payments that are received by foreign persons so they cannot be disguised as other types of distributions in an effort to avoid U.S. taxes.

Tax havens, and why you may want to use them

The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing. ~Jean Baptist Colbert

Yes indeed, but fret not as there is help for you. There can be salvation from being plucked by the greedy hand of government, and it comes in the form of tax competition. Tax competition is when national governments pursue a policy of lowering taxes with the intent to encourage the flow of investments into their country or to ensure that financial resources do not flee from their jurisdiction.

If you own a business or you’re just a regular worker in a high-tax country, you can definitely save some money by paying less tax or sometimes none at all by taking advantage of so called “tax havens.” Tax haven is defined by wikipedia as the “existence of a composite tax structure established deliberately to take advantage of, and exploit, a worldwide demand for opportunities to engage in tax avoidance.” In other words tax havens are places where foreigners can house their assets, do business and pay little or no taxes.

First I should put out a caveat to those who are thinking, “hey this is great, I can just move all my business dealings to a tax haven country and I can avoid being taxed by my government”. Not so fast! It isn’t quite that simple to easy for some people to avoid the long reach of the tax man If for example you are living in a country that levies taxes on worldwide income then a whole lot of what I am going to introduce to you in this post is not going to be of that much use to you; at least not on a personal income tax level. Even if you intend to run an offshore business you might run into nasty anti controlled foreign corporation (CFC) laws. Two countries that quickly come to my mind which tax the worldwide income of their citizens and corporations are: The United States & Canada. Most countries assess taxes based on residency, not citizenship. For Americans, however, there’s no escaping the long arm of the IRS.

Americans living outside the country are exempt on their first $82,400 of foreign earned income, but the most recent 2006 tax cuts boosted taxes by up to 20 percent for expatriates and made it possible for the IRS to dip into foreign retirement accounts for the first time. It is the highest such increase in 30 years, and ex-pats pay it on top of their host country taxes.

For Americans abroad, the only way to fully take advantage of tax havens is to renounce American citizenship, which over 500 people, almost all of very high net worth, did last year.

Take a look at this table of mean income tax rates as a percentage of income (In the year 2005)

If you live in any of those countries I bet I don’t have to tell you why it might be a good idea to look into some legal method of alleviating your tax burden. Perhaps looking into tax havens is right for you. It all depends on your unique circumstances and financial requirements and goals. You should definitely consult with a tax expert as well as an expert in the “offshore” finance arena before you embark upon this journey.

I will make your journey a little bit easier by doing a bit of research for you. I am going to go through a list of popular tax haven nations and outline the pros and cons. This should at least give you a bit of a direction as to where you need to focus your research on. Yes, I do recommend that you do some heavy research before you even seriously consider trying to outwit the tax man. For the sake of brevity I can’t review every tax haven in the world, so instead I will focus on some of the more popular ones. I will avoid tax havens countries that have so called “sold out” and given into too much into the pressures of the high-tax countries to limit you privacy and financial freedom. So without further ado, here are the countries in all their tax free glory.

Tax Havens:

Andorra

Pros:

1) Andorra has zero tax liability for both individuals and companies on internally and externally derived income. Plus it also maintains absolute discretion with foreign tax authorities.

2) The miniature state has miniature regulation and virtually no government

3) It has a high standard of living. It is the choice of those who enjoy a mild alpine climate, winter sports, and political and economic stability

Cons:

1) Immigration permits are very difficult, but not impossible, to obtain

2) This micro-state is so small that it lacks an airport. The nearest airport is in Barcelona, Spain (Adorra is located between Spain and France)

3) A minimum of two shareholders are required and at least one shareholder must be of Andorran nationality owning a minimum of 67% of the company’s share capital. This alone is a big negative, but if you intend to become a resident then it would obviously no longer be a problem.

4) High incorporation fees. I found that most incorporation services companies charge around 6000 euros or more.

5) The share capital must be fully paid up in advance of incorporation. This amount must be deposited with an Andorran bank in a designated company incorporation type account. The bank must then release a special certificate, addressed to the designated notary, responsible for concluding incorporation formalities

6) Annual board meetings should be conducted in Andorra

7) Andorra has been blacklisted by the OECD. Being black listed by the OECD for failure to cooperate is going to make using their corporations and banks difficult

In light of the above negative I would only recommend this tax haven for the “well to do.”

Belize

Pros:

1) No tax on internationally earned income for IBC (International Business Corporations)

2) The only English-speaking country in South America (definitely something I like)

3) Fairly reasonable IBC incorporation fees: Roughly $1500 to incorporate with ongoing costs of around $900 per year.

4) Only one Shareholder is required. There is no public record of the Shareholder. IBCs require only one Director who could be a corporation, and need not be resident in the country. Meetings of Shareholders and/or Directors may be held in any country, at any time and they may attend meetings by proxy. No requirement to file accounts or to have accounts audited. Public filing limited to certificate of incorporation, memorandum and articles of association, registered office and name and address of registered agent

Cons:

1) Unreliable electricity as well as telephone and internet services. This would not be to much of a problem if all you need is an IBC. However if you intend to open up a bank account in Belize I could definitely see this becoming quite a pain.

2) Somewhat questionable political stability. they had a regime change in recent years and the new regime did not honor economic citizenships and passports of the previous regime. This is definitely not something you want to hear. However, it remains to be seen how things will turn out.

Costa Rica

Pros:

1) A Costa Rican S.A. (Sociedad Anonima - Translates into “Corporation”) is free to engage in many types of business activities, both in Costa Rica and in other countries and it pays nothing on what it earns outside of Costa Rica.

2) Costa Rican corporations provide a low profile alternative because many high tax countries like the U.S.A. do not consider them as offshore companies! Though a little exotic, Costa Rica is nonetheless a secure alternative that does not suffer the problems associated with membership of the high-profile offshore club.

3) Like Panama, Costa Rica’s corporate laws allow any person or entity to control a company without the name actually appearing in the public records. Just as with Panama corporations our Costa Rican law office can set up the corporation without the real owner’s name ever appearing in the record

4) Reasonable incorporation fees which generally are in the area of $1600. Shop around and I’m sure you’ll find some good prices.

5) Costa Rica has a flexible corporate regime and bank secrecy is enshrined in law. A high degree of corporate anonymity is possible; there is no legal requirement to reveal beneficial ownership of companies

Cons:

1) Bearer shares are not permitted but actual ownership of a Costa Rican corporation is invested in whoever physically has the stock certificates in their possession since the shares can be endorsed over to that person. Companies here are structured as what are known as joint stock companies which means there have to be at least two shareholders.

2) Local laws require that a yearly tax report must be filed, but if there is no domestic income to report, there are no tax consequences.

3) Corporate name choices can only be in Spanish and carry the S.A. suffix at the end. Somewhat restrictive but not such a big deal.

Nevis

Pros:

1) There are no income taxes, social security taxes, capital gain taxes, withholding taxes, stamp, or duty taxes.

2) There are no gift, death, estate, dividend, distribution, or inheritance taxes.

3) No minimum authorized capital; bearer shares permitted.

4) A business license is not required.

5) Officers, directors, and members are not identified.

6) Plaintiff bringing civil suit must post US $25,000 bond.

7) Statute of limitations for civil suits is one year.

Cons:

1) Not too many well-established international banks. There are less than 10 banks in Nevis. Most likely the bank you will deal with in Nevis has an Offshore only Banking License. This means they can only conduct transactions with non-resident of Nevis.

2) Nevis has double-taxation agreements with Denmark, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom

3) Nevis is not a modern country. It is an island subject to weather, internet outages, phone outages etc

Seychelles

Pros:

1) An International Company is exempted from local taxation

2) There is no requirement to file financial statements, but a company must keep records to reflect its financial position.

3) A Seychelles IBC need not appoint a company secretary, although it is customary to do so. The secretary may be a natural person or body corporate, be of any nationality and need not be resident in the Seychelles. Also the minimum number of shareholders is one

4) Same day incorporation.

5) There are no exchange controls.

6) Bearer share corporations are available.

Cons:

1) Seychelles IBCs are normally incorporated with an authorised share capital of US€ 5,000 with par value. This being the maximum for the minimum licence fees. The authorised share capital may be expressed in any currency. The minimum issued capital is either one share of no par value or one share of par value.

2) Seychelles Tax Information Sharing Agreements – They are involved in some twenty such agreements. They will exchange information in criminal matter relating to revenue including those relating to taxation, customs duty or trade tariff. This doesn’t speak to well for those concerned with privacy.

3) Somewhat poor IT and telecommunications services

Monaco

Pros:

1) There is no personal income tax or capital gains tax

2) Great place to live offering everything you could possibly imagine along with beautiful sea-side scenery

3) It has a highly developed banking sector catering to the well-to-do, so as you can imagine the level of service is quite high, but be warned that this level of service comes at a price. Banking secrecy is also taken serious over here.

Cons:

1) Expensive! Very expensive for the average rich man. This is the exclusive playground of the super rich.

2) Very tiny country which results in quite high real estate prices.

3) In 2004, Monaco was forced to join the EU’s Savings Tax Directive regime, and agreed to impose a withholding tax on the interest income of EU residents at the same rate as Austria, Belgium and Luxembourg (initially 15%) and to hand over 75 per cent of such revenues to the Member State of the EU resident concerned. Monaco also agreed to exchange information on request in criminal or civil cases of tax fraud or similar misbehavior. The new regime came into effect from 1st July 2005, and it remains to be seen what kind of impact it will have on Monaco’s banking sector.

*In general Monaco will not be an attractive jurisdiction for companies or people wanting to find a classical offshore tax haven. But if you’re just plain rich, and want a very civilised place to live, Monaco is for you*

Uruguay

Pros:

1) Uruguay is a much more stable democracy when compared to some of the other Latin American countries

2) Offers two quite interesting offshore structures: SAFI (low tax) and SAZF (tax free)

3) You can even start your own offshore bank for as little as $500,000. Limitations apply, such as not being able to do business with the locals. This limitation is applied to all offshore banks.

4) Uruguay does not suffer from the usual tainted appearance of a traditional Caribbean offshore haven

5) A SAFI Corporation needs to file accounts which must be audited by a local accountant, but a SAZF does NOT.

Cons:

1) As you can see above, in Uruguay your SAFI must file accounts that must be audited by a local accountant, but for the most part this isn’t so expensive and is not quite such a burden. But, this definitely cuts down on privacy.

2) SAFI & SAZF fiduciary structures are more expensive than most IBCs offered by your typical offshore tax havens.

Panama

1) Offshore-derived Income is not taxed and does not need to be reported (no tax returns to file). You can have a Panama Corporation, and/or Foundation that banks in Panama and has an office in Panama and yet will not pay any Panama taxes if all the income is derived from offshore.

2) There is far less red tape and less interference from local authorities. Panama has one of the freest economies in the world and the freest in all of Latin America.

3) The government of Panama and its laws actually encourage foreigners to invest and live there.

4) A stable economy with the US dollar as currency. No currency conversion costs. No currency devaluation problems or issues like most of the little tax haven countries have. In Panama the ATM machines spit out US $20 bills. Even USA coins are used in Panama

5) Government investment incentives that slash tax rates and fees for entrepreneur.

6) Panama enjoys a stable, democratically elected government. Panamanians love to vote and turn out is usually very high.

7) No tax treaties! Yes, Panama is not a signatory to any tax information sharing treaties. This is a big bonus for privacy because foreign governments cannot use “fishing expeditions” to pry into your financial privacy.

8) Great banking system. Panama is home to many very large multi-national banks. It also has an excellent inter-bank clearing system very much like the “ACH Fed Wire” (automated clearing house) .

9) Bank privacy is written into Panama’s laws. That means that if a bank employee discloses confidential client information without a Panamanian court order they can go to jail. Panama’s bank secrecy laws are even more stringent than Switzerland’s - some say.

10) Bearer share corporations are allowed. That means that whoever physically holds the share owns the corporation, hence the term “bearer share”. This one is a no-brainer; definitely a plus for those concerned about privacy.

11) A diverse geography from mountain ranges to tropical islands, from a booming metropolis to vast jungle. This makes Panama a great place to retire to. In fact Panama has an excellent program for foreign pensioners who wish to retire there. It is called the “Pensionado program” and it gives numerous perks to foreigners who chose Panama as their place to retire.

12) Cheap real estate. Although some experts say that this is no longer true, it can still be debated, and you probably will be able to find reasonably priced properties, it just may no longer be the case for the Panama City. Also Panama has a low cost of living.

13) Panama has an excellent telecommunications and IT infrastructure.

14) The world’s best discount programs for retirees, with up to 50% off everything from public transport to movies, mortgage rates, doctor’s visits, electricity, restaurants and airfares. No doubt this makes Panama a very attractive place for the baby-boomers who now face retirement problems and increasing expenses at home.

Cons:

1) Due to its ostentatiously “offshore” status it is possible that many businesses may refuse to do business with you if they knew that your corporation is registered in Panama.

2) Big disparity between the poor and the rich. This country definitely does not such a strong middle class when compared to your typical Western Nations. Whether this is changing or will change with time I cannot say as I am not an expert on Panama’s social structure and dynamics. But one thing is sure, Panama does have a proportionally large population of poor people, some of which make less than $300 per month. Naturally this disparity in wealth and income can cause social tensions and is a breeding ground for crime.

3) Panama’s infrastructure is heavily pressured by extremely rapid progress and it is uncertain whether it can bear this heavy demand put upon it.

4) Left over stigma of “political instability” due to the whole Noriega affair.

5) Frankly, the traffic in Panama City just sucks! Then again if you’re not going to be traveling to, or living in Panama this isn’t going to be a problem for you.

Other than that I can’t find anything else wrong with Panama, and believe me I’ve tried. If you can suggest anything worthy of being added to this list, please give me a shout. As with all people I have my biases, and out of all the above mentioned tax havens I’d say Panama presents the strongest offering. However, I strongly recommend you consult with offshore specialists and a tax adviser in your own country before you make a move.

In case you’re thinking why I left Switzerland, you should know that Switzerland is NOT a tax-haven, not even by a stretch. The Swiss have strong bank privacy laws and low taxes, but I don’t think you can classify their country as a “tax haven”.

Ok, I think that does it for this very, very long post. I may introduce another post where I will add some other tax havens, but I believe I covered a pretty good range. I skipped over some of the typical high profile Caribbean tax havens as, well, these days it may not be such a good idea to use them because so many of them have “sold out” and have given into the demands of high-tax countries and international organizations such as the OECD and IETF. As you can probably guess the membership these two organizations (and others) contains mainly high-tax countries who abhor the tax competition.

SETTING UP OFFSHORE COMPANY

Offshore Formation - Offshore Company Formation and Set UpHello, i am a freelance translator based in Spain sick of having to pay almost 50% of my income in taxes. I have discovered this site as I am looking forward to setting up an advice to clients regarding the advantages and disadvantages of forming an in any possible global jurisdiction. Setting Can an accountant set up a on behalf of a UK national living in Thailand? Shez Hamill Bottom line is Branch office is not meant for setting delivery/development centers either for IT Services or BPO. Yes if a forign is providing these services in Free Formations . Offered to Accountants, Legal New Company Registration // New Set // Off The Shelf Limited Company // Offshore Company Formation Whether you are planning to set up an off-shore company such as an IBC (International Business Corporation) or an LLC (Limited Liability Corporation) you will find help and advice companies from $450 - Professional Center specializing in companies/IBC's and TrustIn challenging economical situation optimization of business becomes vital for survival of a company.

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Both are to my entire satisfaction, and Financial Management) are the experts in offshore business: contact us for Set-up and annual fees. Set-up fee includes : Preparation and filing of all necessary Because it is really difficult to find a better offer, maybe its time to set-up an offshore and enjoy Banking? Incorporate OnlineDo I still have to pay for this service if I decide to open an bank account myself? 10. Do you set up Bank accounts as a separate service?Contact us to Set up an in most major jurisdictions including BVI, Dubai, Liechtenstein, Singapore, Mauritius, Bahamas, the Cayman Islands, Isle of Man, Panama How long does it take to set an (IBC)? Once the payment and all the required information are received from our clients, the documents will be dispatched the next is so much more difficult to run a business and succeed with reasonable profits, many consider moving their existing business or assets offshore. Setting up your with .

The Advantage of Incorporation To You Is Even Greater If It Is Done Offshore

Ok, I realize that I am not clear…so here goes.

Normally, your taxes are calculated on your income, wealth, and any ‘capital’ gains you have made over the tax year. This calculation is easy to do when every thing is in your name or the joint names of you and another person e.g. your wife.

And if you have taken a loan, then the lender can take all your possessions if you don’t return the money on time. Now, what about the advantage of incorporation?

However if your income was being received by a LLC incorporation company instead of by you directly, then the calculation of how much you were earning becomes a bit muddled. What if your house, car, furniture and yacht were owned by a limited liability corporation? Now the calculation of your wealth – what you own is a little muddled.

Many countries have lower tax rates and different methods for the valuation of shares – which you would now own in the incorporated company – instead of your wealth directly. Also, any one who has lent money – will now do so to your company. Not to you. And so will not be able to take your other assets except those that are owned by this company! That’s a benefit of incorporation. And that is how businesses go bankrupt and the shareholders only lose the value of their shares in that company – not everything they own.

For another level in the veil of incorporation, we do an offshore business incorporation. Once you form tax saving offshore companies, there are additional levels of confidentiality also. You can nominate on your behalf, directors or even shareholders, who will do as you say so that your name does not appear on any documents filed with the offshore tax haven’s government.

So not only does your tax calculations become beneficial, but you only need to let your family, friends or any one else know what you own or earn – by your choice. An offshore company incorporation or an offshore IBC [International Business Corporation]saves and protects wealth because:

1. What you earn and what you own are not easily identifiable.

2. Tax rates on shares of companies are often lower.

3. If in an offshore company, even your ownership of the company’s shares is mostly – depending on the tax haven’s disclosure laws – confidential. So conceivably you may not be taxed on those assets – unless you chose to do so.

4. Lastly, any lender to your incorporated company, or any person who is suing your company can only take what is owned by the company. Not all your assets.

The advantage of incorporation is big, even if you are a startup incorporation. A registration offshore company has even more advantages if you:

* Offer Professional Services
* Trade
* Own Investments
* Want a Holding Company
* Are Starting a Dot Com Business
* Own Property
* Are a Shipping Business
* Are an Employment Company
* Own Intellectual Property & Earn Royalty
* Own Assets e.g house, yacht, buildings, jewelery
* Work Abroad

Offshore Considerations. Erosion of Offshore Tax Secrecy

 Offshore Considerations

2009 was dramatic in the offshore world.  The IRS’ success against UBS eroded Swiss banking secrecy, effectively ending “going offshore” to hide money from the IRS.  Going offshore for asset protection from civil creditors, however, is still viable and effective, but must be tax complaint.

 Erosion of Offshore Tax Secrecy

• Facing a criminal indictment for encouraging and facilitating tax fraud, UBS settled with the US Government and paid a $780 million fine in 2009.  The US then served a “John Doe” summons in a parallel civil case, and UBS settled again, revealing the names of some 4,500 Americans with accounts they were assured were “secret”.
• The IRS is also investigating HSBC, Credit Suisse, Bank Julius Baer and others.  Banks in other countries will also be targeted.  The IRS announced that it is establishing field offices in Panama, Australia and China.
• The OECD (Organization for Economic Co-Operation and Development), a multi-governmental organization based in Europe, is pursuing its own campaign against “tax havens”.  In March, 2009, virtually all of the formerly “secret” tax haven jurisdictions, including Switzerland, Liechtenstein and Monaco, agreed to the exchange of banking information with foreign governments, including the US.  This ends decades and in some cases centuries of banking secrecy.
• Domestically, President Obama and prominent Senators have introduced proposed legislation targeting foreign accounts and Americans who own them.  President Obama’s legislation seeks to increase the IRS budget and manpower to pursue undeclared money offshore, including hiring 800 IRS special agents to investigate foreign accounts.
• Government officials of Caribbean and Central American jurisdictions have advised us that the Obama administration has already indicated to them that Tax Information Exchange Agreements (TIEs) are on the way and are non-negotiable.  Under these TIEs, the US Treasury Department can request assistance directly from foreign banks in cases of IRS civil audits.

What Are Offshore Banking Accounts?

Offshore Banking Accounts refer to opening an account in one of the many banking or investment institutions in another country or jurisdiction. Any bank can be considered an offshore bank if it is located in a low-regulation, low-taxation, haven, jurisdictions.

Since they began, offshore banks have had a bad reputation. They have been accused of being involved in everything from tax evasion, to money laundering. The careful examination of where illicit funds are really held shows the truth of the situation. Other false accusations about offshore banks are-unsafe environments and poor regulation are untrue. Most Offshore Bank account jurisdictions are very sophisticated, with stable banking regulations. It is in their best interest to attract depositors. The regulations are bent toward meeting the needs of a depositor.

One of the benefits of having an offshore banking account is the fact that they are usually located in tax havens that provide great asset protection and confidentiality to the bank holder. This often allows for relaxed restrictions with regard to the types of accounts available to depositors and investors, there is generally a decreased tax liability. Offshore banks can be located in actual island states like, the Caymans or Channel Islands, or landlocked countries such as Switzerland. It is not imperative that the land is surrounded by water.

There are still a number of misconceptions associated with offshore banking accounts, but as a would be offshore bank account owner, you will need to take many of these statements with a grain of salt. You should also do a bit of homework on any offshore bank you are thinking of opening an account in. Most offshore banking accounts offer a confidential and secure environments. While there are a few offshore jurisdictions that do a poor job of managing and regulating their banking institutions, if you are informed you will know these offshore banks are unsuitable for you.

Europeans have always been subject to heavy tax burdens. In the British Isles, as well as on the continent, they were faced with the burden of huge tax bills. The solution came when the small, island nation known as the Channel Islands convinced the European depositors that opening a banking account in their banks would make their deposits free from the heavy handed taxation. The European taxpayers agreed and soon the idea of offshore banking accounts became quite popular. Other jurisdictions became aware of this idea and they began changing their banking institutions, adopting banking rules and regulations that eased the concerns of investors and depositors. This was the start of the offshore bank.

Soon Offshore banking institutions were started in smaller, haven jurisdictions that offered safe, secure, practical and confidential banking regulations. Soon the rest of the world got the word and began looking into these havens as solutions to their banking needs. Unlike conventional banks, are not subjected to economic or political strife. In the past few years they have a greater use and more visibility, it has become widely known that offshore banks can be havens for funds and assets in need of secure, safe, confidential keeping.

Offshore Debit Cards and Offshore Bank Accounts

The global financial crisis has gravely hurt the financial status of all governments around the world. As a result, governments have put far more effort to having control over their finances. And with the governments intensified efforts, those who before were able to hide the money they got from activities outside of their normal system are now having difficulty keeping their funds out of the governments knowledge. These people are now facing the risks of large penalties and huge taxes.


With their hidden bank accounts in danger of being found and subsequently frozen, people are now desperate on finding more secure ways to hide their money. As anxiety was taking its toll, the Panama laws have provided more opportunities for keeping money undetected. The Panama laws state that money kept in foreign lands are safe from being frozen and are kept confidential from government knowledge. And so hiding money offshore to remove any risk of it being frozen and at the same time avoid bulky taxes has now become the new trend.


An offshore bank account is a bank account at a foreign bank. As the offshore bank is located beyond the sovereignty of the offshore bank depositors home government, it is completely safe of state meddling and intervention. The offshore bank accounts functions the same way as a local bank account, though there are some who do not offer interests. These interests however, are immaterial compared to the tax savings the offshore depositor will benefit from keeping his money out of his governments knowledge.


The downsides of keeping money at an offshore bank account are the difficulties and costs of managing its funds. Such problems however, can be solved by simply getting an offshore debit card. The offshore debit card will serve as the key to allow you to open your bank account at almost any ATM outlet all over the world. There are even those offshore debit cards that allow you to keep track of your account through your mobile phone.


The offshore debit card has already replaced the credit card as the number one in the electronic payment system. The offshore debit card offers almost all the benefits a credit card has to offer, with minimal costs. The offshore debit card does not have high monthly charges or high interest rates. Offshore debit cards also do not encourage extravagant spending as unlike credit cards, they do not allow the cardholder to spend money that he does not have. Unlike credit cards in which all spending is charged to the card provider to be later paid by the cardholder with interests, offshore debit cards charge the spending to the cardholders own offshore bank account. The limit of what the holder can spend with his offshore debit card is the balance of his offshore bank account.


At the cardholders choice, the debit card may be named under the holders company, the card providers company or simply a number code, thus providing utmost protection against identity theft and fraudulent use of the offshore debit card. Applying for an offshore debit card is also very quick, easy and less costly, as screening procedures are not that tight.

Are You Looking For A Secret Numbered Bank Account?

For many, numbered accounts are shrouded in mystique. What could be more exciting that having an associate wire money direct to your secret Swiss numbered bank account?

 Get greeted by your personal banker (although he doesn't know your name), be guided past nuclear security systems like the President himself into the vault, where a numbered box lies waiting for you, filled to the brim with fresh pressed notes.

It's a dream, and one we can all indulge in for a moment, but how does it work in the real world?

Until quite recently it was still possible to get your own ''numbered account'', and if you had opened one up in the 1950's, you would still be the proud owner of such an anonymous bank account.

Swiss banks used to offer anonymous bank accounts, numbered bank accounts or even the legendary 'sparbuch' savings account, where the owner of a secret passbook was identified as account holder. These would be protected by razor sharp Swiss bank secrecy, and perhaps slotted in to a larger asset protection structure which included offshore companies with bearer shares, trusts and nominee directors.

Times have changed. Governments have grown ever more aggressive in the collection of taxes since the 1970's heyday of offshore banking, and wizened up to the tax avoidance methods promoted by offshore service providers and asset protection specialists.

Part of their campaign against tax havens has been to associate bank secrecy and secret numbered accounts with money laundering. This concept was cemented in government ideology after the 9/11 attacks after which governments could claim that secret bank accounts were used not only by drug lords but terrorists too. Following creative logic they could then claim that all offshore money was 'soiled' by criminal hands and would not be 'cleansed' again until in the hands of the Government.

In 2004 Switzerland was forced to introduce new money laundering regulations which spelled the end of the numbered account, obliging all account holders to be properly identified.

Now numbered accounts still exist, but only if the bank knows exactly who the account holder is.

Do you still want a secret numbered account?

Although the Swiss numbered account as we know it has officially gone, you can still get an alternative much cheaper which protects your privacy in the same way.

For example you can use a trust company to open a secret account for you at a bank in a safe and private jurisdiction in their name, denominated with your own special reference number. All transactions will show only a number and the name of the trust company. The bank doesn't know who you are.

Interesting...?

Offshore Tax Haven Privacy Update

What the Financial Times of London calls "a cascade of concessions on tax secrecy by some of the world’s leading private wealth centers" is being hailed by some as "a breakthrough in a decade-long international assault on tax evasion."

To some degree that may be true, since the pursuit of specific tax evaders by foreign countries will be made easier by greater co-operation from Switzerland, Austria, Luxembourg, Hong Kong, Singapore, Liechtenstein, Andorra and others.

In recent days each of these leading offshore jurisdictions has bowed to pressure, announcing that they will adopt international standards on tax information exchange, although they insist they will continue to protect investors’ privacy under their own laws.

Tax Havens For Bailout Recipients

A new Government Accountability Office (GAO) report shows that many of the largest companies receiving bailout billions have set up hundreds of off-shore tax shelters to avoid paying taxes. Major scofflaws include Citigroup, Morgan Stanley, AIG, and Bank of America.
A majority of America's largest publicly traded companies and the U.S. government's largest federal contractors -- including some receiving millions in federal bailout money -- use multiple subsidiaries in offshore tax havens to conduct business and avoid paying U.S. taxes, a new report finds.

The new Government Accountability Office (GAO) report, released today by Sens. Byron L. Dorgan (D-N.D.) and Carl M. Levin (D-Mich.), lists Citigroup and Morgan Stanley as having set up hundreds of tax haven subsidiaries, along with American International Group and Bank of America. Also in the tax-haven list are well-known companies and such federal contractors as American Express, Pepsi and Caterpillar.

GAO, searching publicly available data filed with the Securities and Exchange Commission, determined that 83 of the 100 largest publicly traded corporations and 63 of the 100 largest federal contractors maintain tax havens in 50 subsidiaries. Dorgan and Levin said they requested the updated report from one several years ago because they are focused on combating offshore tax abuses, which they estimated cause $100 billion in lost U.S. tax revenue each year.

"This report shows that some of our country's largest companies and federal contractors, many of which are household names, continue to use offshore tax havens to avoid paying their fair share of taxes to the U.S. And, some of those companies have even received emergency economic funds from the government," Dorgan said. "I think we should take action to shut down these tax dodgers, and we will be introducing legislation to do just that."

To illustrate the problem, Levin said the report found that Citigroup has set up 427 tax haven subsidiaries to conduct its business, including 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands. He said other havens include Switzerland, Hong Kong, Panama and Mauritius.

Why Multi-National Corporations are Choosing Panama

Corporations are always searching for great opportunities. Panama has been a great opportunity for decades; global Fortune 500 companies - Coca Cola, Sony, HSBC, Nestlé, Roche - all know this. Where they go, others follow. Foreign investment capital inflow continues as potential becomes reality, and reality becomes profit.

The Republic of Panama stands apart from other Latin American countries. The Economic Liberty Index for 2007 ranks Panama 47th of 157 countries. A major consideration in making the choice to do business in Panama is quality of life. Panama City is cosmopolitan and offers excellent living conditions. Office, commercial, industrial and housing spaces are available, as are skilled, multilingual employees.

Some of the key attributes of Panama are: a stable government; a dollar-based economy, without currency exchange restrictions; the Canal and the Colon Free Trade Zone; an international financial center with a well-developed infrastructure including a top notch telecommunications system; an excellent legal framework that allows 100% foreign owned investments; a strategic location with access to the entire western hemisphere.

The U.S. - Panama Free Trade Agreement (2007) passed the Panamanian legislature and is awaiting U.S. approval. Its purpose is to provide legal security for business, trade and investments between both countries, and increase opportunities available to investors from the United States. Law 41 (2007), based on successful models in Switzerland and Singapore, was passed with the intent to ensure that Panama becomes an attractive center for multinational firms. Benefits given to multinational companies establishing their headquarters in Panama include tax exemptions, and special labor and migration status, with simplified and streamlined visa, residence and work permit requirements. There are already special considerations for industrial parks, call centers, and ecommerce to facilitate trade and investment.

Income tax laws permit taxation only on income generated from trade entirely within Panama. Foreign source income, generated outside Panama, is 100% exempted. Income from the following activities is not considered domestic activity within the territory of the Republic of Panama, and is specifically exempted from taxation:

-Invoicing, from an office established in Panama.

-The resale of merchandise or products for an amount greater than had previously been invoiced against the office in Panama, provided the goods transit solely outside Panama.

-Directing transactions that are executed, completed, or effected outside Panama.

-Distributing dividends or participations from the tax exempt activities.

A corporate regional headquarters with offices and employees based in Panama does not pay any income tax, if the office merely directs operations from Panama; that is, it performs only international operations from Panamanian territory.

For manufacturing or assembly operations, the existing law for Export Processing Zones designates them as 100% tax-free areas. Both the developer and the export item will be 100% exempted from national direct and indirect taxes, duties, levies, right and charges.

It is plain to see that there are tremendous benefits to doing business in Panama.

How to Start an Offshore Fund

Starting an Offshore Fund has its complexities.  If you are a super trader with an impressive track record, it is likely that you will be seeking to enter the international investment fund arena for the first time, with a 'seed capital' of between US$500K to US$1 million.  This requires starting a private fund, preferably offshore. To start an Offshore Fund, you need to know the types of specialist services that are available:

INITIAL FUND START UP SERVICES

- Incorporation of an Offshore Company

- Preparation of Private Offering Memorandum (Prospectus), Shareholders' Agreement and Share Subscription Agreement.

- Facilitation of Offshore Administration services, Private Offering Memorandum (Prospectus), and Subscription documentation.

- Preparation of investor documentation and letters.

-Vendor Due Diligence documentation

FUND ADMINISTRATION SERVICES

- Providing the Offshore Fund a management office and non investment manager-trader operations personnel (if required)

- Due diligence checks on the Investor under the Anti-Money Laundering (AML) regulations.

- Risk Management and Data Recovery services.

INVESTOR MANAGEMENT SERVICES

- Provide prospective investors with memorandum, shareholders' agreement, and other necessary materials

- Managing subscription documents

- Processing and notifying an investment manager and a general partner for subscriptions, capital contributions and withdrawals

- Distributing financial reports, mailings and electronic communications

- Responding to investor inquiries.

ACCOUNTING SERVICES

- Calculation of monthly capital account balances on an economic and tax basis.

- Calculation of management fees and performance allocation.

- Preparation of monthly financial statements.

- Calculation of fees due sales agent.

- Interaction with investment managers and traders, banks, counsel and auditors.

- Facilitate and manage the preparation of financial statements and year end audit.

- Facilitate and manage tax preparation, planning and consulting.

PROCEDURE FOR RECOGNITION OF A BVI INVESTMENT FUND 

THE PROCESS, THE SERVICES & START UP COSTS

REGULATION UNDER THE BVI MUTUAL FUNDS ACT,1996 (BVI MFA)
The BVI MFA defines a mutual fund as a company, partnership or unit trust which:
a. collects and pools funds for the purpose of collective investment; and
b. issues shares (or similar interests) that entitle the holder to receive on demand or within a specified period after demand an amount computed by reference to the value of a proportionate interest in the whole or part of the net assets of the company, partnership or unit trust.

The BVI MFA does not cover funds with only one investor (where that investor is a mutual fund that is regulated by the BVI MFA); or closed-ended funds (because the investors do not have the right to receive the NAV of their interest on demand).

The BVI MFA distinguishes between two types of non-public funds:

PRIVATE FUND - constitutional documents specify that either it will have no more than 50 investors or that an invitation to subscribe for interests is to be made "on a private basis".

PROFESSIONAL FUND
- the initial investment in which, in respect of the majority of the investors, is not less than US$100,000

THE PROCESS
1.  Formation of a BVI Company with a customized Memorandum and Articles of Association (M&AA).

2. Decide on the contents for the Offer Memorandum or Prospectus.

3. Decide on the Fund Manager, Company Administrator, Auditors (KPMG) and Bankers (Barclays International)

4. Prepare the fund's constitutional documents to reflect the terms of the offering. In other words, the Offering Memorandum.

5. Prepare the service agreements

6. Prepare the form of subscription agreement, which must include appropriate representations on the status of the fund (whether it is a private fund or a professional fund).

7. Approve the fund documents.

8. Submit the following documents to the BVI FINANCIAL SERVICES COMMISSION(FSC):

i. a certified copy of the fund's Certificate of Incorporation;
ii. a certified copy of the fund's constitutional documents'
iii. a copy of the fund's subscription agreement;
iv. an application form for recognition;
v. a statutory notice detailing the address of the fund, its registered agent in the BVI and the fund's business address.

When all the above criteria is satisfied, the Certificate of Recognition (labeled as either a private or professional fund) will typically be issued within a week following submission of these documents to the BVI FSC.

The BVI MFA does not require a recognized fund to have an offering memorandum.

STRUCTURING A BVI OFFSHORE FUND 

It is worthwhile to consider the following structure:

1. An 'open-ended' investment fund, which enables the fund to receive subscriptions on a regular basis. Therefore, you need to have month-end valuations, which will enable the fund to receive subscriptions monthly;

2. An independent administrator carries out the valuations, and accountants from an established firm (such as KPMG) audit the fund.

3. BVI is a tax-free jurisdiction for 'non-resident' investment funds. Although the profits of the fund are not taxable in offshore bank accounts in the BVI, individual investors may be taxed on their investment in the fund when the profits are being credited to a bank account in their home country. Some countries tax on worldwide income and the investors are obligated to declare all of their income sources.

4. BVI adopts very strict confidentiality laws, and so investor details are not open to public scrutiny.

ONGOING REQUIREMENTS OF A BVI RECOGNIZED FUND 

An investment fund which can be recognized as a private or professional fund must:

- Notify the BVI FSC of any changes to the statutory notice with regard to the address of the fund, its registered agent in the BVI, and the fund's business address within 21 days.

- Pay an annual fee of US$350 in which the fund is registered prior to June 30. It will be USD175 if the fund is registered after that date.

Even though a private or professional fund is not required to file audited accounts, the BVI FSC is empowered to require access to the information and records of the fund in order to ascertain compliance to the BVI MFA (Mutual Funds Act,1996).