Tax Havens and Offshore Planning

Sept. 13, 2010 - PRLog -- A leading reason why many choose to bank, do business, set up retirement trusts, and retire offshore is that many offshore jurisdictions are tax havens. To be called a tax haven means a jurisdiction is tax advantaged in some way. However, not all tax havens are alike. Depending upon the needs of the individual or corporation different offshore jurisdictions will be appropriate.
   
A jurisdiction thought of as a tax haven may levy no significant taxes; have very low tax rates, or only tax income earned in the country. Many jurisdictions have tax treaties with the individual or corporation’s home country barring double taxation of income. In addition, similar to tax incentives offered in countries around the world, an offshore tax advantaged jurisdiction may offer special tax treatment for investment, for retirees moving to the country, and the like. For companies setting up business in an offshore jurisdiction there may be substantial tax incentives such as long term forgiveness of taxes for investing in certain types of business and employing local people. There are six broad classes of tax havens. The following information is current as of this writing.

No Taxes

No tax, tax havens include Anguilla, the Bahamas, Bermuda, the Cayman Islands, Nevis, Turks and Caicos, St. Vincent, and Vanuatu.

Local Income Only

Countries that tax only income earned in the country include Belize, Costa Rica, Liberia, Panama, Gibraltar and Hong Kong.

Low Taxes and Treaty Benefits

The Netherlands, the Netherlands Antilles, the British Virgin Islands, Luxembourg and Singapore all offer low taxes and typically have treaty arrangement barring double taxation.

Special Tax Privileges

Jurisdictions with unique tax laws and provisions include the Channel Islands and the Isle of Man.

Special Tax Treatment of Individuals

A number of countries offer unique tax treatment for individuals. These are Andorra, Sark, Campione d’Italia, and Monaco.

Business Tax Havens

Countries that tend to provide favorable tax treatment to international business companies include Antigua, Barbados, Grenada, Jamaica, and Montserrat.

More than Just Taxes

Offshore planning includes more than finding the jurisdiction with the lowest tax rates, or none. For a business wishing to set up offshore the laws of the country regarding offshore businesses will be crucial. For someone interested in the asset protection and privacy features of many offshore jurisdictions these issues may outweigh some of the tax features.

In setting up an “offshore solution” for business, retirement, and asset protection needs it is common to take advantage of the various offshore vehicles of more than one jurisdiction. With this fact in mind it is important when addressing the issue of offshore taxes, business, retirement, and living to obtain the help of competent counsel, counsel that does business in more than one jurisdiction and that will be only interested in serving the client’s interests.

Another reason for retaining competent and reliable counsel in such matters is that tax laws, like all laws, can change. Working with competent counsel will help the client choose a stable situation in a stable jurisdiction not likely to change laws. Working with an expert in the field will allow the client to receive the most up to date and accurate advice when setting up an offshore solution aimed towards reducing or eliminating tax liability.

NOTE: This article is a general description of tax advantaged jurisdictions and how to approach the issue. For expert advice please seek the advice of competent counsel in these areas.

# # #

http://userbancorp.com

An offshore formations and banking specialist offering offshore structures, formation of companies, foundations, banks and financial institutions, incl government issued financial licenses.

Mail: geir.holstad@userbancorp.com