What will Ricardo Martinelli’s election as the new President of Panama mean for the offshore banking sector and Panama’s tax haven status? Will Panama IBCs and Corporations still be attractive tax planning vehicles? Will Private Interest Foundations remain inpenetrable?

The election of a self-made multi-millionaire as Panama’s new President this last weekend is good news for anyone thinking of doing business in Panama’s booming offshore sector. “Super 99″ Supermarket tycoon Ricardo Martinelli beat socialist Balbina Herrera who was intent on raising taxes and threatened changes to Panama’s traditional laissez-faire approach to government.

Martinelli is a business friendly conservative who understands the need for fiscal discipline, says Reuters. What we particularly like about him is his money is not from family or government. He is a self-made millionaire who has been there, done that, seen hard times and survived – the real archetypal tycoon.

He was almost bankrupted by looting at his supermarkets after the US invasion of Panama in 1989 but since then he has built up business interests also in real estate, hydro electric energy (very smart guy), and sugar. The Panamanian electorate has bucked the recent trend in Latin America towards left-wing governments, showing once again that Panama is a business friendly country.

Needless to say, Martinelli is keen to court the Obama administration, given the importance of US trade with Panama. In common with what’s going on in the rest of the world, Panama is likely to loosen up bank secrecy somewhat over the coming years. Despite their committments to the G20 and OECD, we know the Panamanians will deliberately move slowly on this. But it is coming.

On the other hand, a closer relationship with the US, which Martinelli is seeking in the scope of a Free Trade Agreement, also stands to benefit the offshore sector through increasing opportunities for legitimate international tax planning. (See yesterday’s article about the enormous tax benefits US tax law actually allows for offshore business, especially in the pharma and tech sectors, and for high net worth individuals)

Indeed, the anti tax haven crusade is already getting worried about this prospect and cranking up the publicity… something that can only be a good sign for supporters of the right for individuals to do what they like with their own money!

The Tax Justice Network, in a recent article called Grimy Panama, describes Panama as an “especially unpleasant secrecy jurisdiction,” pointing out that unlike most tax havens and even their bete-noire Switzerland, Panama does not have any tax or information exchange treaties. Furthermore, they point out, “The OECD notes that Panama made a commitment in 2002 to conform to international tax norms but since has completed not a single agreement to implement its promise.”

Another report claims that this Free Trade Agreement between the USA and Panama, which comes much closer with the election of Martinelli, would “undermine U.S. efforts to stop ofshore tax-haven abuse.” Apparently, these people have some problem with Panama trying to create a “comparitive advantage” for itself through regulation of financial services… while in the almost the same breath they suggest that the USA should seek to gain what could only be described as a comparitive advantage for itself, by putting up legal and fiscal barriers to American companies wishing to do business overseas. Finally, needless to say, they throw in accusations of money laundering on behalf of American International Group, Mexican and Colombian narcotraffickers.

Bottom line? The socialists are worried because events in Panama and the possibility of a Free Trade Agreement would give Panamanian companies better access to US markets on more preferential terms. That could open up exciting new possibilities for paying less tax legally.

We are pleased to welcome Ricardo Martinelli as the new Panamanian President, and take this opportunity to remind readers that we are now offering a free e-book “Eight Important Things You Should Know Before Doing Offshore Business in Panama.” Because the business culture in Panama is different, the way of doing things may not be what you are used to, and there are certain ways of getting things done (or conversely doing things the wrong way) that might surprise you.  Download your e-book by Peter Macfarlane now, here: Panama Corporations and Banking – Hidden Truths Revealed.

by Peter Macfarlane, Offshore Banking Consultant for the Q Wealth Report

One recurring question we hear almost every day in the wealth management business is “How Can I Open a Swiss Bank account?” Whilst a minority of those asking the question might really be candidates for Swiss private banking, the majority seem to have watched too many Bond movies! This article is a brief introduction to Swiss banking to help you decide which of these categories you fit into.

First of all let me point out that if you are looking for a secret bank account, there are places that are much more discreet, much more under the radar than Switzerland. You’ll find, for example, nine alternatives to Swiss banks which also have that “private banking feel” listed in the Practical Offshore Banking Guide 2009, which is available free to Q Wealth members. This instantly-downloadable pdf guide also explains the truth behind some of the services associated with Swiss banking like anonymous numbered bank accounts (yes, it is still possible to open numbered bank accounts legally as of 2009! – details in the guide)

But what if you have your heart set on a real Swiss account? Opening a bank account in Switzerland is in theory not too difficult – but like all banks anywhere in the world, Swiss banks do reserve the right to refuse customers. Needless to say the recent hoo-hah from the G20 and the OECD has not made it any easier to open Swiss bank accounts. All banks are scared of being accused of money laundering and this has made it much harder, especially for non Swiss residents, to open bank accounts.

Then, you need to choose a Swiss bank according your requirements. If you want traditional private banking service and a free lunch each time you visit your banker, expect to invest at least a million as your opening deposit. Some of these real Swiss private banks are so discreet they don’t even have signs outside their offices, let alone websites.

You can, however, open accounts at more run-of-the-mill Swiss banks with a very low opening deposit or minimum figure to open accounts. Swiss banks like Migros or Swissquote Bank (which is really more of a discount brokerage, E-Trade style) have no minimum opening deposits whatsoever and you can start the process all by yourself – no need to pay an intermediary. The disadvantage is that, well, there is no particular advantage if you see what I mean… this is not traditional Swiss banking at all! There is nothing private about these banks. Swissquote, for example, will require you to waive bank secrecy before you can even open account!

If you have a Swiss work permit and wish to open a local Swiss bank account, that changes things significantly. In order to pay your salary in, your employer will probably require that you have a bank account. But Swiss working papers make all the difference.  Some of the documents you will need, according to expat website AngloInfo, are:

• Passport or identity card
• Recent utility bill (electricity is best)
• Residence permit
• A copy of your work contract
• Cross border workers from France or Germany, a copy of your permis frontalier (cross border work permit)

It is not necessary to make an appointment to open a current account, says Anglo Info. Opening an account can be done in a day and means of payments (like cash cards) will usually arrive within a week to ten days of the account being opened.

In general banks all over Switzerland are open from Monday to Friday from 08:30 to 16:30, and are closed at weekends and on public holidays.

You may, however, not need a Swiss bank account at all. Household bills and invoices are more commonly paid through the post office, with a so-called Bulletin de Versement (bill slip). Bill slips are attached to each bill that you receive by the post.

Below are some links to major Swiss retail banks. Remember these are not the same as Private Banks. If you are a non-resident looking to open a Swiss bank account, you need to be looking at Private Banks since they are the ones that accept non-resident business. To sign up for our free newsletter on Asset Protection and Private Offshore Banking, visit our Q Bytes page.

Major Swiss Banks

• Banque Coop
• Banque Migros
• Banque Raiffeisen
• Crédit Suisse
• UBS SA

by Peter Macfarlane, Offshore Banking Expert for The Q Wealth Report

To judge from my inbox, the grandstanding by G20 leaders and the OECD is having its desired effect. In fact, it has two aims:

1. Publicity that portrays Brown, Obama and Sarkozy in a positive light while distracting voters from all the problems at home, caused by bankers in their home countries.
2. Scaring people off investing money in tax haven banks (ie, those banks in countries where banking secrecy is written into the law).

Of course, we cannot afford to dismiss the new OECD blacklists out of hand. But neither should we panic. And above all we should not be rushed into decisions that could cause problems down the line. Strategy for building wealth offshore should be well thought out for the long term. If you are one of the many who are concerned that your tax and offshore banking arrangements may not stand up to new scrutiny, then you should be taking some action now to put things right – but not panicking. We are happy to refer our readers informally to appropriate professionals.

Tax evasion through offshore personal bank accounts really is a thing of the past. It’s been passe for years. It’s not a particularly attractive business for any tax haven bank because it has the potential to cause lots of problems for relatively little reward. There are so many ways you can legally protect your privacy without having to rely on bank secrecy. For those who are interested, I’ve written a more in-depth article on the subject of the G20, the OECD and Banking Secrecy here.

We never have and never will promote tax evasion in The Q Wealth Report. We believe in full compliance with all applicable laws. That is what we write about consistently, and we have done so for well over a decade. Our view is that offshore banking is just one essential part of an overall long term strategy. Most of the clients I deal with these days are not motivated so much by tax (although that is obviously one of their concerns.) Most people are going offshore these days motivated more by security, asset protection, and the much better opportunities that exist offshore to profit from the recession. You can work, invest, retire or live in the world’s best tax havens.

My clients detest instrusive, Big Brother style governments. They subscribe to the view that attempts to redistribute wealth will simply end up redistributing taxpayers, who are increasingly voting with their feet. Our belief is that it’s much better to be living legally tax-free in a low-cost, healthy, tropical paradise… earning your living or managing your investments over the internet from a secure country where banking service and secrecy still go hand in hand. Meanwhile you can watch on TV as things get worse and worse in G20 countries, rather than watching from your window!

I’ve always written that if you need to rely on banking secrecy to protect yourself, you might as well give up. By that I mean that if you want to protect your assets, you should hide them where they cannot be found. You should take care to avoid any and all paper trails leading to them. If nobody knows where to find your stash of cash, nobody will ask your offshore bank about you. That is true secrecy. If the taxman knows where your money is, it’s already too late.

I imagine some people will be reading this article as first time visitors to The Q Wealth blog, who are keen right now to know what banks and countries are safe to invest in. Well my basic advice is to wrap everything in secure offshore corporate structures (for example, Belize or Panamanian corporations). Do this through reputable professionals who respect security – not through internet merchants competing to provide the lowest price, who just want to sell you a stack of papers and then move on to the next case (until it is time to charge your annual renewal fee).

If you feel that your financial arrangements are not watertight, then now is a good time to start taking a look at them. Offshore banking is one important aspect of any overall financial privacy and asset protection structure – it is covered in our free e-book The Practical Offshore Banking Guide 2009. Then, you should be looking at other wealth preservation and alternative investment strategies – for example, we have another free e-book covering Precious Metals Investments. Gold Bullion is one of the most secure, inflation-proof investments, and in the e-book we tell you how you can legally buy and store it offshore. Oh, and did I mention that there is absolutely no requirement to report gold bullion on your tax returns?

Then there are many other things you can do to protect your assets and help them grow. Consider second residency or even a second passport. By now we are getting more in to intangibles. Second passports can increase your security and flexibility. Then again, they could solve any OECD/G20 banking secrecy problems at a stroke! By changing your citizenship to a neutral country that does not tax its expatriates, you can give your asset portfolio and offshore bank account a new lease of privacy.

Of course, in this article we can only scratch the surface. The good news is that in our quarterly Q Wealth Report newsletter you will benefit from our first hand reporting and updating of news affecting your offshore investments. We don’t just get our information from the internet. I myself spent last week flying around Europe for a series of meetings with high level bankers and tax haven government officials, because I know the things they say off the record often mean more than the committments they make on the record.

As a subscriber to Q Wealth Report, not only do you obtain instant access to those two e-books plus a series of other special reports and white papers, but you will have access on an ongoing basis to this unique first-hand insight that I don’t believe you will find anywhere else. You will also have privileged access to our network of Q Wealth Experts. These are people located around the world who know and understand, live and breathe, freedom, wealth and privacy.

With the right team on your side, the latest OECD efforts really are “much ado about nothing.”