The term Tax Haven over the past several decades has come to mean sheltering your income from the taxes of the country in which you live. But, there is a caveat where the cash is not actually in your hands, but in the hands of another entity or jursdiction.
This was once the domain and playground of the super wealthy. But as years went by, more players got invovlved and many other small countries also started playing the game. The tax hungry countries from the overtaxed citizens also decided to get into the game. What was forseen was a total erosion of the tax base. And that’s the result of the very harsh and threatening G20 with the OECD spear heading the assault on all these tax havens. Recently, even the giant financial centres have become targets and have been forced to knuckle under the big bully might of the G20.
The biggest bust of all to force the Swiss to back off on their sovereign banking secrecy came when busted UBS in the US. Now, with the new tax treaty, U.S. tax authorities will be able to request information on Americans suspected of concealing Swiss bank accounts, the Swiss Finance Ministry said.
The treaty forbids so-called ‘fishing expeditions,’ meaning U.S. authorities have to provide specific details on the person they are seeking further information about and can’t simply ask for wholesale lists of Americans with Swiss accounts, the ministry said.
Since March, Switzerland has signed 11 tax information exchange agreements, one short of the number required by OECD for it to be removed from a ‘gray list’ of uncooperative tax havens.
Here are what have been happening related to the Swiss UBS fallout.
* Switzerland has also signed agreements with Denmark, Luxembourg, France, Norway, Austria, Britain, Mexico, Finland, Faeroe Islands and Spain and the government has authorized the signing of a 12th with Qatar…according to the OECD guidelines…read more.
* Robert McKenzie says one of his clients told him he forgot he had $32 million stashed in a foreign bank account. While it may seem preposterous to lose track of that much money, the client is now coming forward to declare the cash to the Internal Revenue Service…read more.
* Chen (the former Taiwanese President)was sentenced to life in prison by the Taipei District Court earlier this month after being found guilty of embezzling $3.15 million during his 2000-08 presidency from a special presidential fund, receiving bribes worth at least $9 million, and laundering some of the money through Swiss bank accounts…read more.
* Toronto — Thirty-six Canadian clients of Swiss bank UBS have come forward to disclose unpaid taxes, and investigations so far have found $7-million in unreported income, the Canada Revenue Agency said Thursday. The voluntary disclosures follow a high-profile investigation of UBS in the United States, where the bank admitted to using Switzerland’s bank secrecy laws to help wealthy Americans evade taxes…read more.
Really the End of Tax Havens?
Is this the total meltdown of tax havens and offshore banking? The tax haven as being practiced for decades is dead…that’s true. But I for one am of the opinion that it has just morphed to become a very different animal. There will be geniuses of finance who will always find ways around such issues. So, perhaps instead of tax havens, perhaps they will be called offshore banking and private banking wealth management instead.
What is the alure that Offshore Banking has to attract the once nay sayers to participate?
In Toronto during a business promotion fair, Royal Bank representatives, Hong Kong Bank, and a couple of others were offering Offshore Banking services very openly. Right, the Hong Kong Bank or HSBC has been doing this for a generation; but The Royal Bank? This is a common occurance today.
I’m talking about the big retail/commercial banks in the G20 and in any other country with large banks. This has of course gone on for a number of years and even in todays’ banking climate of sledge hammer force on smaller countries to tax foreign banking/business accounts and also to remove banking secrecy.
Banks, in the G20 have largely been mandated (being forced really) to act as the money laundering police. And because of this, many sad errors (might be called acts of money terror) have been forced upon many innocent and helpless people…
True story of a guy trying to buy a small home…After some years of regular checks and cash, a loan was put into the account to be used as a downpayment. The account was immediately frozen simply because it came from a country half a world away – an offshore bank source - parents. The interrogation by bank officers (not police officers) acting like some secret police began. In the meantime, the deal on the house was sold to another buyer. Too late the funds were eventually released after the orders of the ombudsman. “So, sue us” was the arrogant reply when compensation was asked.
The drive to milk the “Offshore Banking” market has gone on unabated. Yet, I recall, just a handful of years ago the big banks in Canada were bashing offshore banking but at the same time setting up branches overseas. Of course, they were trying to “bring to light” other banks which allow illegal activities.
The word is Money. It’s liquid and moves freely across the borders in billions at a time – of course, these days with the advent of retail forex exchanges and trading that theoretical transfer value if now $Trillions daily. Furthermore, travellers and worldwide businesses have an unsatiable appetite for cash everywhere they went. So, why not get in on the action? And just the other day, such a cash transfer didn’t meet with any eyebrow raising, but a very friendly teller, “Will we be expecting more in future? You know that we have an offshore banking unit that can help you, sir”
Has Offshore Banking suddenly become such a good thing now?
There are very few Offshore Banking and Business Centres set up into law that have that huge potential of being close to a financial and business juggernaut. Macao recently comes to mind.
Here’s a simple part of a statement below, with huge implications:
“On October 13 1999, just 61 days before the hand-over of Macau from Portugal to China, the then Governor, Vasco Rocha Vieira, signed and approved the Offshore Law of Macau, (Decree-Law No. 58/99M) and was effective from November 1, 1999. The offshore law of Macau provides the regulation of various offshore vehicles, namely, offshore institution ( ????) authorization granted to corporations conducting business activities, insurance companies, banks and offshore trust.” To read more click here.
Yes, Macao has become a potential offshore banking and business centre of power. 9 years on, Macao has lived up to its promise. The Chinese Government has welcomed the scheme with open arms. Just look at the hugely wealthy island today. There are more Casinos being built as I write this.
The caution for offshore companies setting up shop here is that once you set up your place of business, you are only to conduct offshore business. You cannot be an absentee corporation like many other offshore banking island countries. So, it does get a little more costly – and you do have to employ locals only. The official language is Chinese and Portugese, but you may enter your documents in English as a trasactional language of choice and apply and pay for the translation – simple.
Oh, they do have a Macao Grand Prix – a car and motorcycle race held annualy too.
The State of Brunei, Abode of Peace is the country’s official name. Located on the North Western coast of Borneo, it was once a British protectorate, from 1888 to 1984, today’s Brunei is a mixture of polo fields and golden mosques; the new and the old with huge revenues and surpluses almost exclusively from petroleum and natural gas, enjoying one of the highest per capita incomes in Asia. And residents are income tax free too.
Brunei introduced their August 2000 offshore tax haven legislation covering international banking, insurance, offshore companies, trusts, limited partnerships and registered agents.
The Brunei International Finance Centre (BIFC) was created and headed by Mr. Robert Miller, whose reputation is indisputable after setting up the hugely successful insurance and banking sectors in Bermuda and Labuan Island, Malaysia, “Our aim is to become a more relaxed Singapore, with a touch of Bahrain.”
This new attitude and focus is very refreshing and most certainly very welcome to the international business community.
The following are a list of what The Brunei International Finance Centre offers as products and services (according to their literature – partly reproduced in brief):
1) International Business Companies (IBC).
- Brunei-registered tax-free International Business Companies may engage in any activity not prohibited under the laws of the country.
- Directors and shareholders may be individuals of any nationality or corporations.
- A resident secretary is mandatory.
- Bearer shares are not permitted,
- Registered shares may be held by nominees.
2) Brunei companies may be established as Dedicated Cell Companies (DCC).
- This corporate form is commonly known as Protected Cell Company in other jurisdictions.
- A cell company so created is a legal entity within which a number of separate cells exist for the purpose of segregating and protecting assets.
- Creditors are restricted in their rights only to the cell to which they have a claim and not the whole company.
3) International Limited Partnerships (ILP).
- A business entity consisting of one or more general partners and limited partners,
- An ILP may conduct any lawful business anywhere in the world but not with any resident of Brunei.
- At least one general partner must be a Brunei trust company, an IBC, or another ILP.
- General partners are liable for debts and obligations of the Limited Partnership but limited partners are not.
4) International Trusts (IT).
- This is a modern and comprehensive trust legislation.
- Brunei International Trusts must be settled by non-residents,
- At least one trustee must be a licensed resident.
- Generally, only non-residents may be beneficiaries of an International Trust.
5) International Insurance.
- Comprehensive legislation covers long-term insurance, general insurance, re-insurance and captive insurance business.
- The levels of capitalisation vary, beginning at US$ 75,000 (expect an increase) for a captive insurance company.
- Management of an insurer must be approved and must have sufficient knowledge and expertise.
- No taxes are payable by international insurers registered in Brunei.
6) International Banking.
- There are four classes of bank licence available: Full International, International Investment Banking,
- International Islamic Banking and Restricted International Banking Licences.
- Banks may be formed by registration as an International Business Company
- Or register a branch of an established bank as a Foreign International Company.
- International banks pay no tax.
I do consider this jurisdiction as one of the safer, more reputable tax havens.
There are currently ten licensed consultative organizations to choose from – they operate under very strict and high standards and are very informative.
The best way to check them out as is usually the case with anywhere else in the owrld, is in the flesh. Take a short vacation to Brunei and you may be well convinced.
And oh, yes.
If anyone wishes to check them out, do so at your own risk and due diligence.
And any such endeavours should be done legally.
Not long ago a headline read, “Off Shore Tax Haven in Labuan Island”. Labuan? That little resort island off the Malaysian coast?
Is Malaysia A Tropical Paradise Tax Haven?
It can be. Provided you’re an overseas investor – meaning you are not resident in Labuan Island. Enacted by the Government of Malaysia, it has become one of the best offshore tax havens in Asia, and surprisingly little known too.
So, this little tropical resort with all it’s tropical spendour is a well disguised financial hot house. The unwitting visitor might not realize it at first. But the predominance of well heeled and often famous “visitors” make this little place appear unusually well appointed too. Taking a stroll into the banking or financial district, you’ll find the services for offshore banking, offshore trusts, offshore investing. All of these activities can be quite difficult to navigate for the newcomer, but never fear, there’re always the trusty offshore company formation experts (under strict Government Laws) and services to guide you.
So what has such a tropical paradise got to do with getting international tax moneys? Let’s call it friendly international competition that the world over is competing on.
Tax Havens As Money Launderers?
Even the so called wealthy and developed countries of the world are in on this battle. Sometimes called a money launderer’s paradise by the big industralized nations, they actually serve a great purpose in leveling the financial playing field where income and reducing tax rates are concerned for those people trapped within the jurisdictions of overly high income taxes.
The greedy over taxing governments that continuously fund their own coffers with tax payers cash suddenly have to reduce their income taxes to compete for those same dollars to stay at home.
Oh, another thing, ALL INVESTIGATIONS OF MONEY LAUNDERING in those jurisdictions have found very tiny percentages (less than 1%) of fight capital is really not so. In fact, the biggest money laundering problems are really within the borders of those big industrialized nations themselves – the very same ones that claim tax haven drive criminal activity! Come now, shame on them for telling the world such fibs. CLICK HERE and read about it.
In fact, most people using tax havens are legitimately doing so within the rules of their local laws and international law too.
The way I see it, there’s nothing wrong in retiring early and enjoying living life the way you want it to be.
Shameful Double Standards
Oh, shhh….once in a while, if you travel to these parts of the world, you’ll get to meet and see on international and industrial celebrities and the occassional government or former government official who make use of these shall we call them…ahhh…Facilites?
But no pictures please! You’ll not like what those jurisdictions will dictate to you if even attempt to do so. Don’t just take my word for it and go see for your self and see for yourself the tax savings wonders of an offshore company formation.
In Toronto during a business promotion fair, Royal Bank representatives, Hong Kong Bank, and a couple of others were offering Offshore Banking services very openly. Right, the Hong Kong Bank or HSBC has been doing this for a generation; but The Royal Bank? This is a common occurance today.
There are very few Offshore Banking and Business Centres set up into law that have that huge potential of being close to a financial and business juggernaut. Macao recently comes to mind.
The State of Brunei, Abode of Peace is the country’s official name. Located on the North Western coast of Borneo, it was once a British protectorate, from 1888 to 1984, today’s Brunei is a mixture of polo fields and golden mosques; the new and the old with huge revenues and surpluses almost exclusively from petroleum and natural gas, enjoying one of the highest per capita incomes in Asia. And residents are income tax free too.
1) International Business Companies (IBC). 
