Monday 28 June 2010

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

Friday 25 June 2010

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

European Tax Haven

Liechtenstein says ‘no’ to banking anonymity

Liechtenstein has bitten the bullet and will finally close the door on banking anonymity.

The Liechtenstein Bankers Association announced that a formal agreement to comply with, and enforce, the abolition of banking anonymity will take effect from the beginning of this month.

From then, all intermediaries (who, it is estimated, are responsible for one-third of Liechtenstein’s bank accounts) will be required to reveal the names of the depositors they represent. The banks will then perform their own identity checks on their customers. The new regulations do not apply solely to new account holders: current customers’ identities will also be investigated.

European Tax Haven & Liechtenstein Bankers Association

The Liechtenstein Bankers Association said that its members hope to complete their checks by the end of next year. However, no further account details will be disclosed.
The Bankers Association fears that some clients may refuse to reveal their identity and choose to withdraw their funds. The move will be welcomed by institutions such as the OECD and the FATF.

The Alpine principality has found itself to be the focus of intense international scrutiny over allegations that its banks were used to launder money by organised crime and drug barons. Things came to a head in June this year, when the FATF blacklisted Liechtenstein as one of 15 nations accused of failing to cooperate in the fight against money laundering.

European Tax Haven - Bankers Association

“With the new policy, the Bankers Association is acting decisively to counter the criticism against Liechtenstein with concrete measures,” said the association.
Justice Minister Heinz Frommelt said: “It is 100 per cent in our own interest to make sure there is no illegally earned money in Liechtenstein.”
Offshore Pro Group

Saturday 19 June 2010

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

Panama Corporation Tax Information & Facts

Panama Corporation Tax Information & Facts

Panama is the best offshore tax haven for doing offshore business, because in Panama we have a territorial tax system, meaning that offshore income (income derived from activities outside of Panama) is not taxed by the Panamanian government.

Non-resident Offshore Panama Corporations offer some of the following tax advantages:

No Income Tax: Panama corporations do not pay taxes on offshore income derived from sources outside of Panama.
No Capital Gains Tax: Panama corporations do not pay capital gains taxes on gains resulting from the purchase & sale of securities transacted outside of Panama (for example, the purchase and sale of publicly traded securities on non-Panamanian stock markets).
No Interest Income Tax: Panama corporations do not pay taxes on any bank interest income earned either inside or outside of Panama (for example, there is no tax on interest earned from savings accounts or certificates of deposit in Panama).
No sales tax: Panama corporations do not pay taxes on product or service sales that are conducted outside of Panama.
No Tax on Issuance of Corporate Shares: Panama corporations do not pay taxes on issuance of shares, whether bearer or nominative.
No dividend tax to shareholders: Shareholders of Panama corporations do not pay taxes on dividends, for income generated from sources outside of Panama.
Flat Annual Panama Corporate Franchise Tax

The only tax paid by non-resident offshore Panama Corporations (or Panama Foundations) is the flat annual corporate franchise tax of US$300 (referred to as the “tasa unica”).

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



If the flat annual corporate franchise tax ("tasa unica") is not paid on or before the due dates mentioned above, the entity will be charged a late penalty of US$50 per year that the tax is not paid.















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


Second Late Payment Penalty:

If the flat annual corporate franchise tax ("tasa unica") is not paid after two "deadline" periods, the entity will be charged a second late penalty of US$300 per year for every additional "deadline" period missed thereafter.

The corporate franchise taxes and late penalties mentioned above applies to all "entities" (Panama corporations, Panama foundations, or Panama trusts) registered at the public registry of Panama.

Disclaimer: *The Panama corporation tax information contained on this page is for informational purposes only and should not be relied upon for any offshore tax consulting or otherwise any offshore tax advisory services. A professional offshore tax advisor should be hired for any and all offshore tax advisory or offshore tax consultations on offshore taxes or related issues involving offshore tax planning. The law firm Panama Offshore Legal Services shall not be held liable for any information contained within this website that may be out dated, incorrect, or otherwise misused by the reader in any way for tax abuse. The reader takes full responsibility for all decisions relating to structuring his or her business affairs.
Offshore Pro Group

Friday 18 June 2010

BERMUDA TAX HAVEN

Bermuda Tax Haven

The essential point is that Bermuda’s tax regime remains one of the world’s most attractive. There are no withholding, capital gains, transfer, wealth, gift or income taxes for non-resident entities.

Bermuda Tax Haven & The PLP

Ever since the 1950s, when the basic framework for Bermuda’s current regulation was first introduced, the island’s reputation has grown steadily. This almost-unparalleled reputation has grown on the back of stringent monitoring of who gets to do business here.
Bermuda Tax Haven - Bermuda International Business Association

A spokesperson for the Bermuda International Business Association says: “Our regulation is light but very, very effective. We really do screen the people who we do business with. We really know our customers extremely well, so we don’t necessarily need to be very heavy-handed in terms of regulation.”
Bermuda’s reputation was exemplified this summer when scores of havens were left nursing their wounds following the OECD’s attack on harmful tax practices. Bermuda escaped the purge almost completely unscathed.

The island’s ability to escape the shame of an OECD blacklisting was due in no small part to the fact it agreed to a deal with the international body. Bermuda said it would implement changes to its markets. But the blacklist avoidance is also because Bermuda was in a position to bargain whereas some of its less salubrious offshore rivals were not.

Changes agreed with the OECD included altering the rules so foreign companies can own firms that trade in Bermuda. Also, Bermuda agreed to co-operate fully when national governments want information on tax evaders. As a centre that has always tried to avoid dirty money, the OECD’s criticisms of numerous other tax havens merely cast a holy glow upon Bermuda.

Bermuda Tax Haven & Offshore Jurisdictions

As one expert in the Bermudan economy says: “Bermuda is one of the most successful offshore jurisdictions. It is also one of the cleanest. It is clean business and they are making more money than other countries that have more scandal.”

On the whole, Bermuda retains its strong reputation and the government has done little to upset the apple cart. Despite the potential clouds it is still a legitimate well-regulated and sophisticated home for investment capital.
Offshore Pro Group

Why Incorporate an Offshore Tax Haven Company?

An Offshore, International Company is commonly set up in a tax haven like the British Virgin Islands, Bahamas, Caymans Islands etc, where there are no corporate or personal income taxes, capital gains taxes, reporting requirements, or restrictions on company employment policies.

As the world becomes global, fewer businesses are local and many corporations are increasing going internationalization. Corporate structuring and planning have achieved higher levels of complexity than ever before while the need for anonymity remains strong.Corporation must keep pace and be constantly on the look out for new ways to profit. One way is to have a clear understanding of the characteristics offshore foreign corporations and how they may be put to advantageous use.

Offshore Companies are only applicable if you are doing business overseas and not in the country where youre offshore was incorporated. All income derived in and from the incorporated country is normally taxable. eg. An offshore incorporation in Bahamas, doing business in Bahamas will require to pay taxes in Bahamas, where else, if the business was done in USA or Hong Kong, all profit are not taxable.

Singapore and Hong Kong although not typically regarded as tax haven, has a favourable tax regime which effectively means that correctly structured, managed and administered these companies can be utilised for offshore business and international business without paying tax in Singapore or Hong Kong provided that any profits arising are not made in the respective country (non resident company) and the earned money can be remmitted back. This type of tax regulation is known as territorial taxation. With the strict rule in place for prevention of money laundering and terrorist financing, opening bank account for other tax haven jurisdictions can be difficult. On the contrary, to open a corporate bank account for companies in Singapore or Hong Kong is easier as these companies are more transparent due to the strict compliance control by the government.
What is Tax Haven?

A tax haven is normally known as a jurisdiction, which actively makes itself available for the avoidance of taxes, which would otherwise be paid in a higher tax jurisdiction. A more correct term to use would be tax mitigation or planning, because there are ways of mitigating taxes without breaking the law, whereas tax avoidance is generally classified as a crime.
Is it legal for me to have offshore companies, and bank accounts?

Yes, because most nations encourage international trade and enterprise, there are usually no restrictions on residents doing business or having bank accounts in other countries. Reporting requirements on such accounts however, differ from country to country. Sophisticated and reputable high-net-worth individuals and corporations routinely use offshore investment vehicles worldwide.

Main keys benefits for having your an offshore company.
The main reasons to incorporate offshore are:

Asset Protection Protect assets in combination with a Trust, an offshore company can avoid high levels of income, capital and death taxes that would otherwise be payable if the assets were held directly. It can also protect assets from creditors and other interested parties. From competitors, adverse claimants and other parties from whom you wish to keep your business interests private and to secure against future claims such as bankruptcy, judgment creditors and other litigants, etc.;

Confidentiality Keep business affairs confidential, Offshore Companies offer complete privacy. If the company shares are held by a Trust, the ownership is legally vested in the trustee, thus gaining the potential for even greater tax planning advantages.

Estate Planning Family and Protective Trusts (possibly as an alternative to a Will) for accumulation of investment income and long-term benefits for beneficiaries on a favorable tax basis (without income, inheritance or capital gains taxes);

Simplify the transfer of assets and properties held in several countries: The sale or probate of properties in different countries can become complex and expensive. If an offshore company collectively holds these, ownership can be transferred by company shares rather than transferring the actual properties owned by the company.

International Tax Planning Conduct business without corporate taxes: Tax havens, such as British Virgin Islands, allow the formation of International Companies that have no tax or reporting responsibilities. This means you save money not only from the absence of corporate taxes, but also from reduced compliance and other regulatory costs. Reduce payroll and travel expense administration: Allow employment or consultancy fees to accumulate in a low tax area: Offshore corporations can contract the services of professionals to employers resident in high tax locations or politically unstable areas. This allows the fees to accumulate in a low tax jurisdiction.

Conduct business as an international entity: International Companies have the same rights as an individual person and can make investments, buy and sell real estate, trade portfolios of stocks and bonds, and conduct any legal business activities so long as these are not done in the country of registration. Offshore Companies set up in offshore need not pay social security, withholding tax, or associated expenses of employees working in other foreign countries.

Major savings for companies that have staff working on overseas projects. Minimize tax exposure when dealing with international transactions: An offshore corporation can buy or lease products from one country and then sell or lease them to a company in another country so the profits of the transaction are accumulated in the offshore company where there is no taxation on profits. Maximize profits from intellectual property rights, franchising and licensing: An offshore company can franchise or license intellectual property rights in other foreign countries allowing the profits to accumulate in a tax-free environment.

Protect investments in other foreign countries: International Companies can loan funds to corporations in other foreign countries. Investors may set up, but not directly own, an offshore company that loans funds to a development company set up in another country and charge interest rates that will lower tax obligations and protect the long term ability to repatriate investment funds. This can be especially important when working in countries with strict exchange controls and high tax profiles.

Own or lease ships or pleasure craft: Shipping companies may own or lease ships or pleasure craft and pay no taxes on income derived from the vessels. Registration fees are low and vessels are welcomed in ports worldwide.
Offshore Pro Group

Tuesday 15 June 2010

Mauritius as Low Tax Haven

At present, there are two main fiscally advantageous companies in Mauritius: "Ordinary offshore Companies" (Governed by the General Companies Act, 1984 as amended by the Mauritius Offshore Business Activities Act, 1992) and "International Companies" (Governed by the International Companies Act, 1994). In synopsis, the former can avail of the Mauritian double taxation treaty network whilst the latter are directly analogous to West Indian 'Tax Free' IBC Companies and do not enjoy tax treaty benefits. To enjoy the substantial benefits afforded by the Mauritian/Indian Double Taxation Treaty, which interestingly was signed in 1983 and hence before much of the Mauritian tax planning legislation, it is necessary to prove that the recipient is resident. Under Article 4 of the Treaty a company, including an ordinary offshore company, will be deemed so resident if:

(i) The undertaking is liable to indigenous tax, and

(ii) there is genuine proof of local management and control.

Mauritius has a significant number of local lawyers and accountants who can provide resident directors, maintain local bank accounts, record official "minutes", hold board meetings and submit the annul audited accounts. In respect to the liability to local tax there would of course be no benefits if fiscal liability was merely extrapolated from India to Mauritius. The full normal corporate tax rate for the latter being a very non Tax Haven" 35%. However, under S.59D of the Income Tax Act the proscribed rate of tax for an Ordinary Offshore Company is 0% unless otherwise elected up to a maximum rate of 35%. This provision existing for tax planning and anti-avoidance reasons. In other words, it is quite possible for a Mauritian Ordinary Offshore Company to have no indigenous tax consequences. The question therefore becomes at what level will India impose withholding taxes on investments. Under the Treaty, once a Mauritian company holds an investment stake of 10% or more in an Indian company - known as a participation exemption - India will only impose a withholding tax rate of 5% on dividend distributions. In addition, tax on realised capital gains from the disposition of shares are fully exempted from Indian taxes. Of course, it would be wrong to give the impression that Mauritius is the ubiquitous solution for investments into India. Cyprus may provide a more successful catalyst especially where a Cypriot company wishes to grant a loan to an Indian subsidiary. The withholding tax on interest payments merely being 10% as opposed to the 20% rate levied in the case of Mauritius. Cyprus can also provide protection against the imposition of capital gains taxes.

Mauritius permits the incorporation of companies under the International Companies Act of 1994 and exempts them from all taxes except for a $100 annual fee. Bearer and no par value shares are permitted. No information need be given to the authorities prior to incorporation or prior to exempt tax status being granted. There is no information open to the public about exempt companies and there is no restriction on where meetings may be held. A registered office and a representative is required and certain documents must be kept at the agent's office. Exempt companies can not however take advantage of double taxation treaties, the most important of which is with India.

As can be seen from the above, Mauritius offers substantial advantages for investors who are active in India. In addition, exempt companies, which may not avail themselves of the double tax treaty, are nevertheless private and inexpensive and may be appropriate in may other situations.

Mauritius (Low Tax Haven in the Indian Ocean)

Mauritius, in the Indian Ocean 500 miles east of Madagascar, is a little island democracy about 2/3rds the size of Rhode Island. Mauritius has a topography and subtropical climate much like the Hawaiian Islands. Oval shaped, only 38 miles long and 28 miles wide, Mauritius is almost completely surrounded by a coral reef. Average temperatures of 740 on the coast and 67o on the misty central plateau make Mauritius a land of enchantment.

The first Westerners to visit Mauritius were the Portuguese in the 16th century, and they found the island totally uninhabited. Since then much of the original plant and animal life has been displaced, including the flightless dodo bird. After the Portuguese came the Dutch, who gave up establishing a settlement there in 1710. The French took possession next, introducing sugar, spices, coffee, tea and other crops to the island.

During the Anglo-French wars of the 1700s the French made the mistake of attacking British shipping from their I’le de France (Mauritius’ French name). In 1810 the British captured the island and renamed it Mauritius. Today, Mauritius is an independent nation and member of the British Commonwealth of Nations. A governor general is appointed by Great Britain representing the Crown.

Political Stability


Mauritius is politically stable, although the government is run by former leftists who balked at carrying out radical socialistic policies in 1983 to redistribute the sugar cane fields owned mainly by French-Mauritian families. As Minister of Finance V. Seethanah Lutchmeenariaidoo said… “Either we had to nationalize the land and distribute it to co-operatives in a Mexican style agrarian revolution, or we had to use consensus and dialog. We chose the second route.”

Ministry official Emmanuel Arouff insists that the “spirit of democracy and free enterprise are deeply ingrained in Mauritius. We are only too happy that our socialist experiment lasted only 9 months. We value our little bit of prosperity and independence.”

Mauritius maintains ties with the government of South Africa yet openly opposing apartheid. The Mauritian government believes there should be a negotiated settlement. Tourists that visit Mauritius are struck by the island’s lack of racial friction and a 94% literacy rate.

Currently, trade (mainly food and machinery) with South Africa account for 10% of Mauritius imports. With its one economy crop Mauritius must import foodstuff heavily.

Territorial System of Taxation


Mauritius is not a no-tax haven like the Bahamas. Its tax system can best be described as territorial, somewhat like Singapore’s but with lower rates. All companies in Mauritius, whether resident or nonresident, are taxed only on their net profits earned in Mauritius. There are no capital gains taxes, and stocks and bonds in publicly traded companies and private companies can be sold tax-free. There is a land development tax, called Capital Gains Morcellement tax, which is levied on real estate developers who parcel out land for development (resale) purposes. Mauritius tax system is designed to make it a regional warehouse and re-export center to Africa.

Corporate Tax Rates


There are two brackets for the corporate taxpayer. Special Certificate Companies pay a flat rate of 15% and Non-Certificate Companies pay at a 35% rate. Generous allowances can often reduce the effective tax rate to a much lower level. For example, investment tax credits for industrial, manufacturing, shipping or tourist activities permit a deduction from income tax equal to 30% of the cash actually paid up as share capital. The credit is spread out over three years, but limited to R$30,000 for individuals and R$100,000 for companies.

Individual Tax Rates


Resident individuals are taxed on their gross personal income on a sliding scale from 5% to 35%. Personal income consists of earned income (salary, wages, bonus, commissions, fees, pensions and benefits in kind) and unearned income (dividends, trade profits, rents, interest partnership profits). Capital gains are not taxed. Dividends paid on shares of Special Certificate Companies are exempt from tax during the first 10 years starting from the company’s production date. Dividends that accrue to foreign investors who get approved status may be repatriated without tax being levied.
Offshore Pro Group

Mauritius Not A Tax Haven, Says Vice Premier

The Vice Prime Minister of Mauritius, Ramakrishna Sithanen, on a visit to India, is concerned that India should not set Mauritius aside for special treatment in its efforts to address tax treaty misuse.

On the agenda for his meeting with India's Finance Minister, Pranab Mukherjee, would have been the tax treaty with Mauritius, which currently provides for exemption of capital gains tax on sales of shares.

According to a written parliamentary answer last year, amendments to this particular treaty were planned by India to "prevent its misuse for avoiding taxes and enhance exchange of information, including banking information."

Other treaties entered into prior to 2004 are also weak in their anti-abuse provisions, the Indian government believes; these include agreements with the Netherlands, Australia, Cyprus, and the US. The parliamentary written answer recorded that 60% of Indian foreign investments in the last year involved countries listed as "tax havens," the main ones cited being Mauritius, Cyprus, and Singapore.

“Mauritius is definitely not a tax haven,” said Sithanen in an address to businessmen. “Financial services form just 12.5% of our gross domestic product.” Although Sithanen, who is also the Finance and Economic Development Minister, promised to cooperate with India in combatting tax evasion, he also said his country would not welcome "fishing expeditions."

More than 40% of the USD80bn foreign direct investment into India in the last 10 years has been routed through Mauritius, because, it is assumed, of tax benefits related to the double taxation treaty.

Sithanen told CNBC-TV18 in an interview that he "would like footprints of Indian investors to become bigger." Sithanen also told Reuters that Mauritius' Financial Services Commission, which is responsible for licensing global businesses, would revoke the licenses of entities which were found to be deliberately attempting to evade Indian tax.

"We have never received any complaint about money laundering. However, there has been a request in the course of the investigation that is being carried out and we have submitted all the information that we have," Sithanen said.
Offshore Pro Group

Sunday 13 June 2010

Advantages of Offshore Companies in Tax haven

Advantages of Offshore Companies in Tax haven:

No restrictions on nationality
No requirements to disclose ownership
No restrictions on foreign owned corporations
No restrictions concerning ownership of shares
Shares could be suscribed to the Bearer or By Name
No residence requirements for Directors/Officers
No paid-in capital requirements
No Income Tax is paid or reported if the corporation operate outside the jurisdiction
No exchange controls
No restrictions on Mergers, Acquisitions or Joint Ventures
No requirements to file annual Financial Statements
No requirement to hold annual General Meetings of Shareholders or Directors
Secrecy and Anonymity
Total tax exemption on all and any business activity or transaction carried on outside the jurisdiction
Total business privacy
Registration takes between 10-20 days depending on the jurisdiction and shelf companies are readily available
Reasonable Annual Registration and Resident Agent Fees
The accounting books for the corporation could be kept in any part of the world and in any language
Amendments can be made to the incorporation documents upon the needs of the corporation
Established base of bilingual accountants and lawyers specialized in banking, corporate and trust services
Flexible corporate laws permitting foreign corporations to rotate their domicile or seat between Panama, BVI, Bahamas and other locations.
While not providing any specific legal or tax counsel, nevertheless for some individuals or companies, offshore companies may offer specific tax advantages over other jurisdictions. Any potential client seeking legal or tax advise should consult with their individual legal or tax advisor
Offshore Pro Group

The Republic of Ireland -A new tax haven?

A recent report has found that Ireland is the most profitable country in the world for U.S. corporations.
The report, which was recently published in the U.S. tax journal Tax Notes, found that profits made by U.S. companies in Ireland doubled from 1999 to 2002, while profits in the rest of Europe plunged. While Luxembourg showed greater profitability rates for U.S. corporations, Ireland has a much larger "real economy" and produced the greatest profitability.

The report found a huge shift in the movement of capital towards tax havens.
" In low-tax Ireland, for instance, profits of subsidiaries of U.S. multinationals have doubled in four years, from $13.4 billion to $26.8 billion. Profits from operations of U.S. multinationals in no-tax Bermuda have tripled, from $8.5 billion to $25.2 billion. Not surprisingly, those two tax havens rank as the number one and number two locations in terms of profitability for U.S. corporations operating abroad - surpassing long-time leading investment partners like the United Kingdom," the report stated.

The report, written by Martin Sullivan, a former U.S. Treasury Department international taxation specialist, found that U.S. multinationals made $2.01 profit in Ireland in 2001 for every $1 they made in 1999.

In Britain, U.S. multinational profits dropped sharply to 67 U.S. cents in 2002 for every $1 profit made in 1999. In Germany, profits fell even more, slipping to 46 cents in 2002 for every $1 made in 1999.

While U.S. corporations in Ireland were involved in real productivity and the country was only a "semi tax haven", locations such as Bermuda were found to have returns that bore little relation to productivity on the island.

Sullivan described the movement of profits to tax havens as "a seismic shift" in international taxation. He told The Irish Times it was clear that U.S. corporations were locking large amounts of profits in Ireland but it was difficult to assess how much of this money was a result of genuine economic activity in the country, and how much was placed there to avoid U.S. tax rates. "I haven't attached dollar figures to it because no one knows the normal rate of return. It's an elusive number," he said.

The report has already caused a considerable stir in Washington. A columnist for the Washington Times, Bruce Bartlett, said that U.S. tax laws needed to be rewritten to stop American companies from receiving tax credit for profits earned and held abroad.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.
Offshore Pro Group

Saturday 12 June 2010

Why Panama?

Why Panama?
Selecting an offshore jurisdiction is an integral part of establishing an offshore structure or financial account. The jurisdiction that you choose should have at the very minimum, the following 10 characteristics:

1. A Full Fledged Tax Haven – Panama has no capital gains tax on offshore investments, no interest income tax on offshore bank account interest, no offshore income tax, no inheritance tax, etc.

2. Favorable Incorporation Laws - the corporate laws of the country should enable you to hold "Bearer Shares", have directors from any country, inexpensive, and be able to incorporate Private Interest Foundations like Panama does.

3. Stable Currency With No Currency Restriction Regulations - the currency of the country must be stable, and there should be no restrictions on the movement of funds in or out of the country, and your offshore bank should be able to hold your money in any major currency.

4. Strict Privacy Laws - there should be strict privacy laws that protect your banking information and corporate book information from anyone, including foreign governments.

5. Stable Government - the government of the country should be a stable democracy and should use the opposite legal system of your domestic country (if your country uses common law, you should seek a country that uses civil law). The country should also be safe to visit.

6. Stable Economy - the economy of the country should be stable, with consistent growth and low inflation.

7. Excellent Banking System - the banking system of the country should be advanced in areas of international banking regulations, infrastructure, government auditing, and technology.

8. Excellent Communications System & No Natural Disasters - the communications systems of the country should be technologically advanced in comparison with first world countries, and the country should be located in a region that is free of environmental / natural disasters (hurricanes, tornadoes, earthquakes, tidal waves, etc.), so communications are never severed or problematic.

9. Language Compatibility - the language of the country should be suitable for your understanding.

10. Time Zone Compatibility & Close Location - the time zone of the country should be such that you can contact your offshore provider or financial institution during your normal domestic business hours & fly to the country quickly (same day) if necessary to handle urgent business or financial needs.
After careful research, you will find Panama to be the ideal jurisdiction for your offshore needs, since Panama meets ALL of the above criteria! The Panama corporation law was promulgated over 70 years ago and has since been copied by many of the other tax haven nations. Panama is one of the most popular places in the world to incorporate, with currently over 500,000 registered entities. Panama also offers the Panama Private Interest Foundation, which is one of the most useful asset protection and estate planning vehicles available today.
Panama offers the following benefits and advantages:
1. Panama is a 100% Tax Haven: Non-resident Panamanian International Business Corporations (IBC's) and Private Interest Foundations do not pay tax on any of their income (as indicated below), nor do they have any reporting requirements to the Panamanian government.
· No income tax.
· No capital gains tax.
· No interest income tax.
· No sales tax.
· No tax on issuance of corporate shares.
· No tax to shareholders.
· No stock sale or transfer tax.
· No capital stock tax.
· No property tax.
· No estate tax.
· No gift tax.
· No stamp tax.
· No succession tax.
· No inventory tax.
2. Panama offers the most favorable and most flexible incorporation laws available in the world. Private Interest Foundations are also available, and are one of the most widely used estate planning structures in the world today.
· Panama is the registered domicile for over 500,000 corporations & foundations, making it the second most popular jurisdiction to incorporate in the world, next to Hong Kong.
· Panama does not impose any reporting requirements for non-resident Panamanian corporations.
· Panama does not allow "piercing the corporate veil".
· Panama corporations share certificates can be issued in Nominative or Bearer form (anonymous form of ownership), with or without par value.
· Panama corporations do not require Paid-In Capital, nor is there a time limit in which authorized capital must be fully paid.
· Panama corporations directors, officers and shareholders may be of any nationality and resident of any country.
· Neither the directors nor the officers of Panama corporations need to be shareholders.
· Meetings of directors, officers, and shareholders may be held in any country and accounting books may be kept in any country.
· It is not necessary for the interested parties to be present in Panama for the purpose of establishing a corporation.
· Corporations conducting business outside of Panama do not require a commercial license for offshore business activities.
3. Panama's circulating currency is the US Dollar, and Panama has no currency exchange controls or currency restrictions so funds can flow in and out of the country freely.
· Panama uses the U.S. dollar as its legal tender (currency), instilling tremendous fiscal and monetary discipline while keeping inflation very low - under two percent for the last 40 years.
· A dollar economy insulates Panama from global economic shocks. During the Asian monetary crisis of 1998, Panama became one of the healthiest economies in Latin America.
· No currency exchange controls. Panama has no restrictions on monetary remittances abroad, including dividends, interests, branch profits and royalties.
· No restrictions on funds flowing in or out of the country in any currency.
4. Panama continues to maintain what we consider to be the most solid banking and corporate book secrecy laws in the world, which are engraved in its' constitution. With Britain's proposed regulation for removal of bank and corporate book secrecy in the UK offshore territories, it is clear that Panama remains the most secure offshore financial center, where privacy and confidentiality is not only respected, but vigorously protected by constitutional law.
· Panama offers the best bank secrecy laws in the world.
· Panama offers the best corporate book secrecy laws in the world.
· There is no such thing as "piercing the corporate veil" in Panama.
· Revealing banking information to third parties is a crime, punishable by prison.
· Panama has no mutual legal assistance treaties (MLAT's) for sharing of banking information with any other nation. (Under the new internationally accepted anti-money laundering laws, they make exceptions in criminal cases of money laundering, drug related crimes, terrorism, etc.)
· Panama Corporations offer "Bearer Shares", allowing shareholders to maintain 100% anonymity and privacy.
· Panama Private Interest Foundations allow for Private Protectorate Documents and Private Letters of Wishes, enabling controllers (Protectors) and beneficiaries of Private Interest Foundations to remain 100% anonymous and private.
5. Panama has what is considered by government analysts to be the most stable government in all of Central or South America.
· Democratic government since 1990. The Government of Panama is headed by the executive branch, which is composed of a president and two vice presidents, democratically elected for a five-year term by direct vote.
· Mireya Moscoso, was the Panama's first female president and led the country at a moment of great historical importance as the Panama Canal began a new era under Panamanian administration. Our current president is Martin Torrijos, as of this writing (March 2009), whose term will end this year. Martin Torrijos has been very popular and approved the expansion of the Panama Canal.

· The Panamanian military was abolished by constitutional amendment in 1994, and the government still has a unique security arrangement with the U.S. due to the Neutrality Treaty of the Panama Canal. As a result, the risks of going back to the earlier military regime are virtually non-existent (Source: Euromoney Report/Lehman Brothers, Feb. 26, 1999).
· Stable government with excellent government infrastructure.
· Pro-business government attitude and policy.
· Civil law system.
· Moody's has issued Panama a sovereign debt ceiling of Ba1 and Standard & Poors as well as Fitch Ratings has assigned a default-risk rating of BB+/Stable/B as of March 2009. In September 2008, Moody's Assigned a Prospective (P) A2 Rating to the Senior Unsecured Debt Obligations of the Panama Canal Authority in Conjunction with the Expansion Project. The (P) A2 rating pierces the current Country Ceiling of A3 by one rating notch.
· Panama is a peaceful country with no military. Unlike many neighboring countries, personal security concerns are limited. Panama has the lowest crime rate in all of Central and South America.
6. Panama's economy is one of the most stable, prosperous, and most advanced in all of Central and South America.
· Panama is home to the second largest international distribution and trade center (free trade zone) in the world next to Hong Kong. Panama's Colon Free Zone has over 1500 international import/export businesses operating within it, receives more than 250,000 visitors yearly, and generates exports and re-exports valued at more than US$11 billion annually.
Why Panama - Colon Free Trade Zone, Panama
Most other tax haven nations such as Bahamas, St. Vincent, Cayman Islands, St. Kitts, Nevis, Vanuatu, Bermuda, Costa Rica, Belize, Isle of Man, etc. are simply tax havens that survive primarily on offshore banking and tourism.

Panama is a genuine international trade and banking center that is well known and respected throughout the world.
· The banking and commercial trade industry is alive in Panama with the US Dollar as its’ circulating currency. There are over 100 international banks in Panama.
· Low inflation - Panama's inflation rate has been less than 2% for the last 40 years, although it has been slightly higher this year (2008).
· Panama's GDP (2008) is over US$19 Billion. In recent years, the service sector has accounted for over 80% of the country's GNP. The Panama Canal is also a large contributor to Panama's overall economic success.
· Panama is at the top of the list of the world's freest economies, according to Canada's Fraser Institute (Economic Freedom of the World: 1998/9 Interim Report, Nov. 1998). Ranked eighth with Australia, Ireland, the Netherlands and Luxembourg, Panama represents an environment conducive for the creation of companies, jobs and prosperity.
· Panama is a member of the World Trade Organization (WTO) and is a beneficiary of the Caribbean Basin Initiative (CBI). Panama has initiated formal negotiations pertaining to free trade agreements with numerous countries and regional groups.
· Panama has been ranked first in Central/South America for low cost of living, operational cost and index of labor by the Tripartite Committee, which consists of the Economic Commission for Latin America and the Caribbean (ECLAC), the Organization of American States (OAS) and the Inter-American Development Bank (IDB).
· Political Risk Services (PRS) placed Panama in the top three countries of the hemisphere with the best risk-investment qualifications.
· The Wall Street Journal/Heritage Foundation's annual Index of Economic Freedom found Panama second in the region.
· Panama's open economy offers the lowest tariffs in the region, which has helped increase foreign investment in both the public and private sectors. There are more than 40 laws and decrees that offer investors special import, tax, and operational incentives. Sectors enjoying these incentives include tourism, export processing zones, mining, reforestation, insurance and re-insurance, agro-industry, petroleum free zones, infrastructure and construction.
· The Investments Stability Law (Law No. 54 of July 22, 1998) guarantees all foreign and national investors equal rights, continuing Panama's long-standing policy of providing a foreign-investment environment that requires no special authorizations, permits or prior registration.
· Major companies in Panama include international names such as Federal Express, DHL, UPS, Price-Mart, Movistar, Kansas City Southern Railways, Continental Airlines, Copa Airlines, American Airlines, ICA (construction), Cable & Wireless, Digicel, Claro Communications, Evergreen, Hutchinson Whampoa, and many others.
7. Panama City is home to the second largest international banking center in the world next to Switzerland. Panama has the most modern and successful international banking center in Latin America, with more than 100 banks from 35 different countries.
Why Panama - Panama City
Panama is the largest international banking center in the world next to Switzerland.
Approximately 100 international banks are located in Panama.

· Panama offers a modern and technologically advanced banking system.
· Panama is one of the most stable banking jurisdictions in the world.
· Thanks to an excellent, diversified economy, and very strict banking regulations, very few banks have failed in Panamanian banking history. The USA, UK, and even Switzerland have had several bank failures within the last 10 years, not to mention many other tax haven's bank failure rates. Even during the recent (2008 - 2009) global banking crisis, not one Panamanian bank has been reported to have any liquidity problems.
· The Panamanian government has enacted strict bank auditing guidelines, to monitor banking practices, credit guidelines, and overall bank administration. Each bank must submit monthly auditing reports to Panama's Banking Superintendence and National Banking Commission, together with the government owned Banco Nacional de Panama (National Bank of Panama).
· The Panamanian banking system is set up to ensure depositors the security of their deposits. The National Banking Commission (NBC) and the Banco Nacional de Panama (BNP) execute the functions of a central clearing bank. The NBC oversees the banking system, sets the reserve requirements and regulates interest rates. The BNP functions as the Panamanian governments principal depository, manages the country's international reserves and is the clearing-house for the banking system.
· Panama's new comprehensive banking law (Decree No. 9) meets the standards of leading financial centers around the world for transparency and regulation, and conforms to the statutes of the Basle Commission.
· Some of the banks present in Panama's banking center are: Citibank, HSBC / Banistmo, Bank of Tokyo, Bank of Boston, Banco Nacional de Paris, International Commercial Bank of China, Banco du Brasil, Societe Generale, Banque Sudameris, BBVA, Metrobank, Banco General, Global Bank, Multi Bank, Banco Aliado, BancoLat, BIPAN, Bank of Nova Scotia, Banvivienda, Credicorp Bank, and much more.
· The Panama Stock Exchange is the fastest growing in the region with an average total trading volume of US$900 million.
· Some of the brokerage firms present in Panama are (some through affiliates): Merrill Lynch, Pershing / DLJ, Paine Webber, Solomon Smith Barney, Credit Suise, EFG Securities, Thales Securities, PanAmerica Capital Group, Financial Pacific, and several others.
8. Panama's communications systems and infrastructure are the equivalent of any first world country such as the USA, Canada, or the United Kingdom. Telephone, fax, internet, and cellular communications are all offered in Panama by the worlds’ largest communications companies.
· Panama has the highest level of communications infrastructure for telephone, fax, internet, and cellular communications in all of Central & South America, including the Caribbean.
· Panama's privatization efforts in the telecommunications sector were initiated in 1995, with the restructuring of the state-owned monopoly operator, INTEL, the subsequent concession to Bell South in 1995 to operate one of the two (2) cellular mobile telephone licenses and the sale of 49% of the shares of INTEL to Cable & Wireless (a UK company) in 1997.
· Cable & Wireless enjoyed complete management responsibility, exclusivity in certain telephone services (including international long distance services) for a period of five years (which expired in 2003) and has a license to operate in the mobile cellular communications sector. Movistar has the second largest share in the mobile cellular communications sector. Digicel and several other companies also operate in the cellular communications sector in Panama.
· Panama has the best access to multiple high-bandwidth continental fiber optic networks in telecommunications infrastructure. The extremely low risk of natural disasters (hurricanes etc.), gives the Panama telecom sector security and reliability of service as well as a competitive advantage over other offshore jurisdictions.
· Panama is extremely easy to access from almost anywhere. Due to its central location in the middle of the Americas, Panamas’ COPA Airlines (partly owned by Continental Airlines) has converted Panama into a major hub for international travelers. Panamas’ proximity to large cities with direct flights from North America, Central America, South America and Europe makes it relatively cost effective to bring in specialist know-how for installation and maintenance. Direct flights are available to Panama from most major cities around the globe.
· Panama's long history as an international banking and services jurisdiction, has resulted in the availability of technical know-how in internet technology and information technology as well as sufficient human resources to install and maintain e commerce operations. The MAYA-1 and ARCOS-1 ring systems link the continental Americas and the Caribbean Basin, which was completed in December of 2000.
· All the preceding advantages, incentives and infrastructure place Panama as an ideal location for: Internet Service Providers, E-Commerce Providers, Applications Outsourcing ASP, Broadband Content Providers, New Media Content Providers, and Exchange Traffic.
9. Panama's official language is Spanish, however, English is the second most widely spoken language. 8 out of 10 Panamanians living within the banking sector of Panama City are bi-lingual in English and Spanish.
· English is a widely spoken language in Panama.
· 9 out of 10 educated Panamanians have traveled to the USA.
· Panama has a very high literacy rate in comparison with other Central and South American countries.
10. The Republic of Panama is located at the narrowest point of the Central American Isthmus, which connects the continents of North and South America. It is just 2.5 hours by air from Miami, FL, USA and located in the same time zone as the U.S. East Coast (five hours behind Greenwich Mean Time).
· Panama is located between Costa Rica & Colombia.
· Panama is on Eastern Standard Time (same as New York, USA).
· Panama is just 2.5 hours away by air from Miami, Florida, USA.
Panama is the ideal jurisdiction for international investors and businessmen to operate their offshore corporations, banking, investing, finances, and all other areas of international trade!
Take the next step to financial freedom, and incorporate in Panama Today!
Offshore Pro Group

Offshore Myths and Facts

As introduction, we are going to describe how it works the offshore industry, step by step, why is very important in the world and how you can take a look around it from this site. We want you to know first, in Offshore industry there are too many factors involved in the choice of the offshore solution most trustworthy for the customer . Before that , one of the best parts of this industry is the myths generated, let's go ahead and look some of them.

Panama Offshore fact: Is it true that offshore industry controls more than the half of the bank industry in the world?

Yes, it is. According some experts, between Switzerland, Cayman Island, BVI, and other Offshore Financial Centers including Panama combine together control more than the half of the money of the world and it is for Offshore purposes. See more inside our Directory.

Panama Offshore Tax fact: Is it true that many 500 fortune use offshore tax haven to cover expenses to avoid taxes?

No, not at all. The offshore outsourcing is one of the best way to save money, for instance big companies such as DELL Inc, SPRINT, NEXTEL, AT&T, DIRECT TV, etc, are using offshore outsourcing services and this is not a way to avoid pay taxes, it is a way to minimize expenses. A recent study by the McKinsey Global Institute proved that every dollar spent on a business process outsourced, the U.S. economy get at least $1.12. The biggest part goes to the employer (58 cents).


Panama Offshore regulation fact: Is it true that offshore regulations protect the terrorism?

No, it is not. In every reliable offshore jurisdiction is a major crime protect terrorism, however you can tell me, yes I know, but How do we know this truly happen?, Every customer need to complete due diligence in order to access offshore services, there is some cases that somebody else complete the due diligence, but that is out of the question. It is not a secret that September, 11th's implicated received the money in United States. The regulations exist.

Panama Offshore relationship with the US fact: Is it true if the US Government find out that a US citizen owns an offshore structure he most likely will go to jail?

No, it is not true. If US government find out that your are deliberately avoiding taxes that means you are not declaring anything to the Internal Revenue Services or if your are in money laundering you will be in jail. But if you are diversificating your invest that is not a crime. What will happen if you buy a private interest foundation in Panama with a nominee services with your kids as beneficiaries and your as administrator, it is crime, no it's not. The US history is clear generally when IRS put somebody in jail is a recognize drug dealer or a notorious crime organized member.

Offshore fact: Is it true that you can't send money to an offshore jurisdiction because your government will investigate you?

Somewhat, it depends. If you send more than 9,999.00 you need to fill out an IRS form and probably you will be investigated a little bit, you need to prove the origin of the money, as well you need to declare the purpose of this transaction. The best way to transfer that amount of money is making business or investment, Real Estate investment by loans, or simply send it because you will receive more interest in an offshore bank then your domestic banks.

Panama Offshore fact: Is it true that I need to give somebody else my money to protect it in an offshore jurisdiction?

No, it's not. if you give away your money to a trustee without any legal document you will be an idiot, nobody do that. I see some offshore critics sites, they said if you transfer some money to an offshore account, its a matter of time the offshore provider will take your money, because you have to denied this money is yours because it will be a tax crime. This is absolutely false, I am going to give you an example, if you purchase an offshore corporation with an offshore bank account, you will get the control of the company and the control of the bank account, you can sign the book check as an administrator a reliable offshore jurisdiction never will tell the US or any Government, you must to pay anyway the income taxes as a person and you are going to be able to be a part of the payroll. If for any reason you don't want to sign the check book you will get a letter that the money is yours.
Offshore Pro Group

Thursday 10 June 2010

The Right Way to Use Offshore Business Entities

The Right Way to Use Offshore Business Entities

Could you benefit from an offshore business entity? Here are a few of the most common ways they're used:

To hold an investment portfolio.
For asset protection purposes.
To achieve greater privacy.
To operate an offshore business.
To own foreign real estate.
Foreign corporations, generally organized as international business companies (IBCs) are the most commonly used offshore business entity. Most countries with IBC legislation are in low or no-tax jurisdictions (e.g., the British Virgin Islands) and income from the IBC, particularly if earned outside the country of formation, isn't taxed there.

However, for U.S. persons investing overseas, foreign corporations usually aren't a good choice. This is due to the unfavorable tax treatment imposed on the foreign corporation 's U.S. shareholders. In virtually all cases in which U.S. shareholders use a foreign corporation to hold assets that generate passive income, they become entangled in a complex web of rules designed to prevent U.S.-based multinational corporations from diverting profits into foreign subsidiaries where tax can be deferred indefinitely.

These controlled foreign corporation (CFC) rules are among the most complex in the U.S. Tax Code. Here's a highly simplified summary:

If U.S. shareholders own more than 50% of the shares in a foreign corporation (e.g., an IBC), by vote or value, the foreign corporation is classified as a CFC. U.S. shareholders are defined as U.S. natural persons, partnerships, corporations, trusts, and estates that own, respectively, 10% or greater interests in the foreign corporation.

If you're a U.S. shareholder in a CFC, and it generates what the IRS calls "subpart F" income, you can't defer tax on that income. Subpart F income includes passive investment income, income from personal service contracts, income from transactions with related U.S. persons or entities, and income from certain industries such as insurance, banking, mining and others. Naturally, exceptions apply to many of these general rules.

If that's not enough, if your foreign corporation is classified as a CFC:

The 15% income tax rate on capital gains and dividends isn't available.
Losses on investments can't be allocated against gains until the IBC is liquidated.
Any investments in the United States may result in double taxation.
The basis of the stock does not step-up to its fair market value at the death of a shareholder for estate tax purposes. (For 2010 there is a step-up because of no estate tax).
Complex IRS reporting requirements also apply.
With a foreign corporation, you also won't receive much more asset protection with a corporation chartered in a U.S. state. While IBCs are less visible than domestic corporations, if you suffer a judgment, a creditor can simply obtain a court order to seize your shares. If you own more than 50% of the shares, the creditor can even liquidate the IBC.

Because of the tax traps in CFCs, offshore limited liability companies (OLLCs) are often a better choice for U.S. persons investing or doing business offshore. While you lose the opportunity for tax deferral on income and realized gains, by making the proper election with the IRS, you eliminate the potential tax problems of a CFC. However, you'll still need to pay tax on the OLLC's income or realized gain, and file an annual information return with the IRS.

OLLCs provide more asset protection than domestic LLCs. Attorney Christopher Riser explains why:

"A creditor of a member of a U.S. LLC with a U.S. manager may be able to obtain a court order forcing the manager to make distributions which, combined with a charging order, will satisfy the member's judgment debt. The creditor of a member of an offshore LLC with a non-U.S. manager in most cases will not be able to obtain jurisdiction over the non-U.S. manager. Even if an order were issued by a U.S. court, the non-U.S. manager could not be forced to comply unless and until a successful action was brought in the non-U.S. manager's jurisdiction."

OLLCs can also be used as estate planning tools in the same manner as domestic LLCs or domestic limited partnerships. If the OLLC is properly structured, minority membership interests should be discounted for estate and gift tax purposes for lack of marketability and lack of control. Proposals before Congress would eliminate these discounts for gifts of minority interests to family members.

Particularly if you're considering an offshore business entity to hold a portfolio of passive investments, an OLLC is one of the best ways to do it. Chapter 5 of my book THE LIFEBOAT STRATEGY contains an extensive discussion of offshore business entities, including OLLCs.
Offshore Pro Group

Offshore Company Administration

There are two options when it comes to offshore company administration in a tax haven. The first option is to have an offshore incorporation that is directed by the owner. This simply means that as the beneficial owner of the international business company “IBC”, you can be appointed as the company director. This appointment is not directly registered on the public file in the Registrar of Companies in most tax havens, but it, along with the relevant resolutions; have to be kept in the registered office of the company by the Registered Agent. Of course the details of the company director will also be found in the main documents of the company.


The second option is to have a company that is directed by an appointed director, called a nominee. In this case a professional third-party director takes on the directorship of the company. This position is often called that of “Nominee Director. The incorporation agent usually provides the nominee service or you can choose to outsource it to another reputable company management service provider. In actual fact, the owner of the company has the right to ask anyone they want to be appointed as the company director.


In certain tax havens, where the law permits it, the nominee director may be a corporation.


A third-party company manager’s main purpose is to protect the actual owner of the offshore company from any outright relation to the company. Realistically, the appointed third-party director does not have an active involvement in the regular affairs of the company. Instead, he simply fills the official position. In fact, this is why he or she is called by the term “nominee” director. Really the owner of the company personally transacts the daily business of the company. To be able to serve an active function, he or she is usually appointed a “representative” of his or her own company through the enactment of a special resolution or a power of attorney. This means the client personally signs all the company’s correspondence, contractual documents, and raises invoices, operating company bank accounts with his own signature, acting as if he were a director.


Having the owner of the offshore incorporation appear as a shareholder will reduce the level of confidentiality. So in order to further conceal the owner’s direct link to the company, he might enlist the services of a nominee shareholder. This is quite a passive position, which is different from the directorship, the incorporation agent typically provides a nominee shareholder service.
Offshore Pro Group

Wednesday 9 June 2010

Bank Secrecy For Your Offshore Account

One of the most important reasons that you have for opening an offshore account to place your offshore company’s funds or to make offshore investments is the privacy and confidentiality that comes with such accounts. Most tax havens have strong laws that protect against unwanted and unauthorized disclosure of financial matters. What bank secrecy means is that by law no bank employee may reveal information regarding a client’s account without a court order. This prohibition is backed up by criminal sanctions that impose large fines and imprisonment for those breaking financial privacy laws. Offshore banks and the countries offering offshore incorporations must enforce their privacy laws strongly; if not there business will disappear fast. In most tax havens a court order can only be obtained if the law you may have broken for example in your home country is also a crime in the tax haven where you bank. And there are tax havens where tax evasion is not a crime.


Even if the offshore bank with which you do transact business adheres to strict secrecy laws, this does not mean that no one will know you are banking offshore. It usually is not the bank’s fault if someone discovers your offshore account. You may have left a paper trail to your account by depositing checks or wiring money. Or more commonly by letting people know you went offshore. To keep it secret, keep it quiet. Have a low profile and being discreet will insure that your business will stay confidential and away from the prying eyes of governments, creditors, spouses and litigants.
Offshore Pro Group

Lord Ashcroft non-domicile tax status under attack

The recent revelations of Lord Michael Ashcroft’s tax status, specifically his standing as a ‘non-dom’, has again thrust a politician into the spotlight, and created a wave of furore and questions in the process.

But who is Lord Michael Ashcroft? What, if anything, has he done wrong? What is a non-dom anyway?

Michael Ashcroft, according to his personal website, is a “businessman, philanthropist and politician” who was born in 1946 in the United Kingdom. He was educated in England and upon finishing his education he embarked on a journey to create himself a fabulous fortune. At 26 he formed his own company Michael A Ashcroft Associates, and acquired an ailing cleaning outfit for the meagre sum of one pound. Fast-forward three years later and the cleaning company finds a new owner, but this time Ashcroft pockets the tidy sum of £1.3 million. As he gained a strong foothold in the business world Ashcroft left the UK and made Belize, a place where he spent time as a child, his new base of operations.

His business interests in Belize soon amassed him a huge amount of money and in 1997 he sold his cleaning and security empire, ADT, and is thought to have gained £500m in the process. Then in 1998 he began his love affair with the Conservative party when then-leader, William Hague, appointed him as the Tory treasurer. He started ploughing money into the Tories and it is then that the question was raised, where was he domiciled England or Belize? How much tax was he really paying?

Then, in 2000, he was inducted into the House of Lords as a fully working peer. William Hague set out to clear up any confusion by stating that Ashcroft would now return to the UK, become a UK resident and subsequently pay many millions of pounds a year in taxes. However, this issue never really went away, and even though Ashcroft was essentially fuelling the Conservatives with huge donations, in 2004 the House of Lords expense register revealed that his main residence was indeed Belize. With questions coming thick and fast, Ashcroft, his people, and the Conservative Party all neglected to shed any light on the matter.

Soon, the Labour Party began to take notice. They claimed that Ashcroft, number 37 on the Sunday Times Rich List and worth an estimated £1.1 billion, was giving the Tories an unfair advantage. He was using his vast wealth as well as his business acumen to help the Tories win seats in marginal constituencies. The Labour party said that he is essentially buying votes for the Conservative party and that it was difficult to compete against such practices. More controversy followed Ashcroft, he also made large donations through the company Bearwood Corporate Services however an investigation is now under way so to whether these donations may have in fact breached electoral law. Baron Oakeshott, Liberal Democrat member, came out at this time and said “Democracy is in danger if Lord Ashcroft has been pouring millions into Conservative campaigns through an offshore pipeline from a Caribbean tax haven”.

Finally, on 1st March 2010 Ashcroft admitted that he is a non-dom- which means he is not domiciled in the UK and thus does not pay UK income tax on any of his international earnings, a highly lucrative status.

Non-doms are able to protect their wealth from UK income tax even if, like Ashcroft, they live in the UK. The main way of being a non-dom is by having non-dom parents. Through this one can claim that, even if one spends a bulk of time in the UK, the UK is not their permanent place of residence.

The high flyers, the jet setters and the super rich that traditionally establish themselves as non-doms do so through the aforementioned parental option, or show that they have strong business and personal connections to other countries, or establish that they plan to leave the UK at some point in the future. It is estimated that there are over 120,000 non-doms currently living in the UK. Non-doms spend a vast amount of money and contribute highly to the British economy, in 2007 they spent a whopping £17 billion.

Non-doms still have to pay tax on any income earned in the UK, but since they traditionally make their highest earnings on foreign shores, this is generally a tiny sum compared to the money they make worldwide.
Offshore Pro Group