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Thinking of going offshore for asset protection, confidentiality or
profit?
These frequently-asked offshore banking and investment questions may help
you decide and realise that there are substantial benefits in using
offshore financial structures to protect your assets, provide
confidentiality or provide you with fabulous, tax-minimised investment
opportunities.
Q. What does offshore investing mean?
A. Offshore, at least with respect to the financial world, generally
means a jurisdiction other than where the investor lives. The foreign
countries most favoured for investment purposes have laws which give
distinct advantages to the investor or businessperson.
These laws may take the form of local no-tax or low-tax liability on all
investment income regardless of the residence of the investor (Bahamas,
Cayman Islands, Turks & Caicos Islands), local tax exemptions for non-residents
of that jurisdiction (Channel Islands, Gibraltar, Belize, Luxembourg,
Vanuatu) tax holidays for certain types of local investment (Portugal,
Netherlands Antilles, Ireland, Jamaica), favourable tax treatment through
treaties and agreements with the investor's home country.
Q. Do I have to travel overseas to invest offshore?
A. No. Offshore investing does not mean that you have to live overseas,
sell your local investments, or even visit your foreign bank accounts,
corporations or other offshore facilities. Offshore investing can be done
from your own home using email facilities on your home or business
computer, also by using public telephones (use phone cards for
convenience and privacy) or faxes at the local post office. Why not use
the home phone or fax, I hear you ask? If you use your home phone or fax,
you have just given anybody who wants to know an idea of what you're up
to, and a permanent record and paper trail to your bank, adviser etc. For
those less urgent requests, the mail is fine, and untraceable.
Q. What are the main reasons for having my wealth placed offshore?
A. They are:
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Asset Protection - To secure against future claims such as bankruptcy,
judgment creditors and other litigants, etc.
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Estate Planning - Family and Protective Trusts (possibly as an
alternative to a will and testament) for accumulation of investment
income and long-term benefits for beneficiaries on a favourable tax basis.
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Confidentiality - From competitors, adverse claimants and other
parties from whom you wish to keep your business or personal interests
private.
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International Tax Planning - Advantageous use of foreign jurisdictions
and their tax rules for reduction of tax liability.
Q. Is it legal for me to have offshore investments, companies, and bank
accounts?
A. Absolutely. Because every western nation encourages 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.
Local reporting requirements can be intrusive and, to a large extent,
these heavy-handed rules depend solely on the honesty of the investor in
question. Such is the secrecy provided by these offshore centres.
Offshore investment vehicles are routinely and legally used by
sophisticated and reputable high-net-worth individuals and corporations
worldwide.
Q. What are the banks like offshore?
A. They are every bit as good as local banks. Banks such as Barclays,
Lloyds and Citibank operate in most offshore financial havens.
Q. Is it convenient to use offshore banks?
A. Yes. These days, with email, faxing and telephone facilities and the
use of ATM's, your money is just as accessible as it is at home. Only
withdrawals of large amounts of cash will take a little longer.
Q. What about income tax on income I've earned offshore?
A. Australia, New Zealand, USA and most other high-tax countries require
residents to declare their income on a worldwide basis. No matter where
you earn it, tax is payable when income accrues to you, or in certain
circumstances, when it accrues to an entity which you control. That is
why most countries impose no restriction on where one's business
interests, investments or bank accounts can be located.
Q. If I have to pay taxes, what is the advantage of investing offshore?
A. There are many other legitimate reasons to invest offshore which do
not relate to taxes. But there are some little-known tax loopholes that
can be exploited legally. However, there are other important reasons to
consider going offshore as well, including asset protection, estate
planning, confidentiality, better investment yields and taking advantage
of active business interests overseas.
Q. I want to keep my affairs confidential for reasons other than tax
minimisation. Is confidentiality and privacy guaranteed?
A. With the right choices, your privacy can be absolutely guaranteed.
Except in the event of proven criminal activity (excluding so-called
"fiscal offences" such as tax evasion or other money collection
disputes). The USA and Australia are among some of the only countries
that have criminalised tax avoidance or evasion.
Tax haven jurisdictions never respond to information requests made on the
basis of tax evasion but, keep in mind, it is your responsibility to obey
tax laws. Most offshore governments uphold strict confidentiality laws
for banks, corporate registries, and trust companies. These laws protect
offshore investors from third parties, including both private and
governmental authorities.
Q. What's the minimum amount I have to place offshore to make it worth my
while?
A. There is no minimum amount required. However, most people will weigh
the one time set-up costs (usually US$1,500 to US$10,000 and annual fees
charged by the jurisdictions for things like registration fees, etc.) and
determine if it's worthwhile to invest offshore.
In my opinion, you should be looking at an investment of at least US$10,000
or have an offshore income stream that can easily be diverted into an
offshore structure.
Q. Do I need a company or trust set up?
A. No, not immediately anyway. Most people establish offshore trusts and
companies prior to opening bank accounts so they can use the company name
to provide extra secrecy.
Quite often the beneficial owner or shareholder of a trust or company can
be kept confidential or even unknown in the case of bearer shares or non-existent
trust beneficiaries.
Obviously, the cost of these structures range from around US$1,000 up
depending on the jurisdiction you choose and the complexity of the
structure you propose. |
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