Going Offshore – Tax Planning for Individuals and Corporations

How did Romney accumulate $250 Million in the Caymans?

Jack Bass
Jack Bass

This article is written by Jack A. Bass B.A., LL.B, one of North America’s foremost consultants, economists and stock market writers. He forecast the dramatic rise in the price of gold and the fall in natural gas prices. For more, visit his website or contact him directly by email.

Offshore tax planning is often misunderstood because it evokes images of tax evasion. True, more than a few unethical or criminal citizens set up accounts offshore with the intent of under-reporting, or misreporting earnings and income. Today there is better international cooperation and enforcement of tax law.

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If you intend on engaging in offshore tax planning, you will need to be aware of the laws regulating what legal tax planning is and keep to the right side of the law. Establishing offshore accounts, corporations, trusts , banking and investments is both legal and profitable.

Why Would You Pay More?

Tax minimization is a legal strategy – so why volunteer to pay more taxes than required? You may already be acting to reduce the burden of taxes your household or your business will owe to federal, state and local governments each year. The same is available on the global scale.

Tax evasion is illegal. Evasion takes minimization a step further. It can involve omitting income from tax schedules in order to reduce your annual tax burden. This practice was once popular with offshore tax planning because some offshore havens did not consider evasion a crime. As a result, they would not provide information on income earned or stored in accounts outside of the United States. With an increase in global tax law and enforcement, there are fewer havens that will allow you to legally evade taxes.

Why Go Offshore?

The motivations for individuals and corporations to utilize offshore planning and offshore companies include the desire to: reduce tax, protect assets, manage risk, maintain privacy, avoid bureaucracy and reduce costs.

More specifically, the reasons for going offshore and utilizing offshore companies for tax planning and offshore business include: free remittance of profits and capital, access to tax treaties, security of property rights, banking privacy, reduced taxation and the search for political stability.

Offshore Banking

Potential clients must understand that opening an offshore bank account is not a simple matter and can be time consuming. Some offshore and international banks may take longer than one month to open an offshore bank account from receipt of a completed bank account opening package. The list of requirements includes a copy of your passport, driver’s license and often a letter of introduction.

Consequently, potential clients are encouraged to ensure that they provide us with a complete picture of themselves and their intended business activity. Banks do their own due diligence before opening an account and will search data bases to assure themselves they are not dealing with known criminals or persons trying to escape a list of lawsuits.

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Asset Protection

Professional such as physicians often seek offshore accounts to guard a lifetime of assets from lawsuits – including upset clients and ex-wives.

The unexpected protective consequence of the LP structure is actually what gave birth to Asset Protection. What the banks found out was that the Limited Partners were unable to force distributions to pay their other obligations. The big news was that neither were the banks, even when they had valid judgments! If your assets are in Belize the court orders cannot be enforced against assets held in trust in that jurisdiction.

They were only allowed the remedy of a “charging order.” The net effect was that the banks were happy to settle for much less than owed, rather than wait it out for an indefinite period with General Partners that were friendly to their investor debtors, not to the banks. A good settlement leaves your assets in your hands.

Thus was created a a new field of law: Asset Protection. Since the Limited Partnership (LP) worked so well during the real estate crash, it became the base of the new planning. However, instead of many different investors as Limited Partners, the new Asset Protection planning only used the immediate family members. Thus the LP became known as the Family Limited Partnership (FLP).

Where in the World Does Carmen Send Her Assets?

Today, there are over two-dozen foreign jurisdictions that have enacted specific asset protection legislation, including: The Bahamas, Belize, Cook Islands, Bermuda, Nevis, Cayman Islands, Cyprus, Gibraltar and the Turks & Caicos Islands, to name just a few.

If you are serious about preserving your wealth, I cannot encourage you enough to take the time to educate yourself about the options available to you and how you can truly protect what you have worked so hard to create.

There are dozens of jurisdictions, such as Luxembourg, Hong Kong, Singapore and the British Virgin Islands that offer a great business environment with fully legal tax benefits. We have to match your goals to the right jurisdictions.

In most jurisdictions you can set up your offshore company in as little as a few weeks. We most often start the process with registering a company name and sending in the right documentation and supporting documents for the incorporation and a bank account(s) or merchant account for you and your business. All of this can be conducted by internet on in rare cases we will attend in person

Now it is crunch time. It is time to get the bookkeeping caught up, look at all your revenue streams versus all of your deductions and estimate what your tax picture will look like.

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