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 Business News | January 2005 
Going Offshore How-To For Entrepreneurs
 OffshoreBiz.com
To gain tax breaks and a competitive edge, sometimes you to have to look over the horizon. In much the same way that early explorers set out to seek fame and fortune in other lands, today’s savvy entrepreneurs are looking to go offshore.
 A couple of decades ago, there were few offshore centers, and those that existed were surrounded by myths of illicit activities. A lot has changed since that time. The offshore industry today spans the globe and involves half the world’s financial transactions by value. It is estimated that more than $2 Trillion dollars flow through offshore centers every day.
Going offshore could very well be a viable financial strategy for many entrepreneurs - assuming you understand the ins and outs of the offshore world. You're not alone, however, if you're unsure about traversing the complicated waters to tax havens like Belize, Panama and Switzerland. The ride can get pretty murky out there, and the last thing you want to do is find yourself - not to mention your business - in a legal quagmire.
First things first: Don't take this journey solo. Enlist the help of a qualified professional, preferably an experienced consultant. And if possible, select a consultant physically located in the jurisdiction that you are interested in. Qualified consultants set up companies and open bank accounts for clients every day and can help you avoid pitfalls. Finding the right help can reap substantial rewards - think guaranteed privacy, premiere asset protection, various tax-shelter options, and higher and safer investment returns - and certainly prove well worth the risk and effort it takes to get there.
THE BASICS
The professional name increasingly used to identify a legal tax haven is an International Financial Center (IFC). An IFC is a nation or independent legal jurisdiction that has passed important legislation to protect and attract international clients. To date, there are about 59 jurisdictions throughout the world that have taken steps to be known as IFCs.
Sophisticated global money managers consider the use of IFCs to be a safe and reasonable way to conduct business. And every single day, more folks discover the benefits that come with taking at least portions of their assets offshore. In fact, according to Arnold Goldstein, a widely published expert in offshore matters and the president of Arnold S. Goldstein & Associates PA in Deerfield Beach, Florida, "about one in four entrepreneurs who earn over $100,000 a year now enjoy use of one or more safe-haven jurisdictions."
A recent issue of the American Institute of Certified Public Accountants (AICPA) newsletter unequivocally endorsed offshore planning. The publication printed a bulletin last year that stated the following: "To prepare for the 21st century, CPAs must be aware of the hottest, most important tax-savings and asset-protection devices. Once thought of as reserved for the very rich, offshore planning is available for virtually all clients and should be part of overall planning."
WHY GO OFFSHORE?
Asset protection is certainly one of the leading benefits offered by these kinds of tax havens, since assets held offshore are essentially immune from seizure and hostile litigation. A quick look at the growing predatory litigation phenomena, ever-present throughout the North America, pretty much tells the story of why business owners and professionals are worried about the need for asset protection: 5 percent or less of the world's population resides in the North America; about 20 percent of the world's economy is in the North America; 70 percent of the world's lawyers reside in the United States; and a staggering 94 percent of all the world's lawsuits are made in the United States. And lawsuits on a commission basis - referred to by the U.S. legal system as "contingency litigation" - are against the law in just about every other country in the world.
Money that's held offshore is immune from almost all forms of judicial proceedings. There are literally millions of individuals and companies who maintain offshore accounts in safe-harbor jurisdictions--and they sleep better at night for it, too.
Another benefit offshore accounts offer entrepreneurs is privacy. Why is this privacy important? Because privacy and risk planning go hand in hand. Offshore clients seeking confidentiality in their affairs can protect their business strategies.
In an increasingly hostile environment, privacy is essential to risk planning. The clientele of offshore trust companies typically seek confidentiality in their affairs to protect assets from disasters, unwarranted third-party interferences and an ever-growing burden of unnecessary disclosure. It's a trust company's business to provide legal structures and, in some cases, private banking services to protect client assets, ensure privacy, and reduce risk, taxes and costs.
And if investing in global securities, including top-performing mutual funds not available to certain citizens, interests you, an offshore company allows you that option. Standard & Poor's Guide to Offshore Investment Funds reports on 6,800 offshore funds and includes an in-depth survey of the top 350 performing investments. Some of these funds have achieved five-year returns of 800 to 900 percent. Standard & Poor's guide also reports that the one thing these 6,800 funds share in common is their tendency to refuse U.S. investors. Their reasoning is simple: They want to avoid pestering from taxing and regulatory authorities in the United States.
ISLAND PARADISE
What constitutes a favorable offshore jurisdiction, you may ask? A desirable jurisdiction is one that's politically neutral, that follows a policy of free trade and that does not interfere with the commercial activities of corporations established there. A good offshore location provides legal assurances of personal and corporate privacy and is language-compatible. Other factors include telecommunications, time zones and the availability of professional infrastructure. Characteristics of popular jurisdictions include being democratic and also English-speaking, having a legal system derived from British Common Law, and greatly favoring corporations that are nonresident in nature.
The beautiful country of Belize, located in the Western Caribbean, represents the idyllic view of a tropical island paradise. The climate is nearly perfect for both people and the lush, tropical vegetation that grows there.
The British colonized British Honduras in the 17 th century. It was originally settled by British and Scottish pirates who used it as a safe haven from which to intercept treasure ships bound for Spain.
A Belize offshore company is known as an International Business Corporation (IBC). The Belize IBC is widely reported as having the best asset-protection features of any corporate structure anywhere in the world. Being a relatively new entry to the offshore banking world (1990) Belize had the benefit of studying and then extracting extracting the best features of offshore legislation from jurisdictions such as Switzerland, Isle of Man, Cayman and Hong Kong and Panama. Belize offshore companies are exempt from all taxes.
Generally speaking, offshore banks have a much better safety record than domestic banks. One reason people know so little about offshore banks is that they are prohibited from advertising in the United States-- unless they're willing to comply to all the same regulations U.S. banks have to follow. Which, of course, would destroy the whole point of going offshore and all of the advantages in doing so.
TAKING THE PLUNGE
The offshore world is surrounded by its own mystique and language, and for some, this aura can be disconcerting. It's worth remembering, however, that the real differences between an offshore jurisdiction and one considered to be "onshore" are few. Any entrepreneur who has at least a reasonable grasp of his or her domestic business practices is ready to begin navigating the world of international financial centers--provided they're based within the jurisdiciction of the British Commonwealth.
Forming a corporation offshore and properly structuring all of its activities will assure an individual increased privacy and greatly improved asset protection. And, assuming you're able to implement one simple tax benefit, it might easily pay for the entire process and will likely put you on the trail of huge savings in the future. Once you have your offshore business in place, there are countless other options to not only increase your asset base, but earn even greater returns, enjoy tax-deductible offshore travel, and more.
The decision to utilize a consultant to form and operate an offshore corporation is easy to implement, and the costs are generally very reasonable. However, keep in mind that if tax avoidance is the only--or primary--motivation for going offshore, expect to run into some obstacles. But if your goals are to access new markets, take advantage of business and investment opportunities that are unavailable at home, regain your privacy and protect your assets from frivolous and predatory litigation, use of an offshore corporation can reap extraordinary benefits. If you're truly entrepreneurial at heart, this option may be the right one for you.
TOP OFFSHORE HAVENS
Anguilla, Barbados, Belize, Cayman Islands, Gibraltar, Guernsey, Ireland, Isle of Man, Jersey, Liechtenstein, Nevis, Panama, and Turks & Caicos Islands.
Belize is a leading Caribbean offshore jurisdiction, and many visitors are intrigued about offshore banking. Click HERE for FAQs for offshore banking in Belize. |
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