Use of Offshore Tax Havens

 

A decade ago, the advantages of tax havens were not taken into account for business or investment activities. As offshore havens became more easily available and accessible in the ever-changing economic environment and modern communication facilities, the rewards and payback of tax havens became very attractive and are now an integral part of international endeavors. Even the unsophisticated investor is familiar with offshore havens services and advantages they offer.

As people gain wealth they naturally want to protect it from unnecessary taxation, unwanted creditors, unexpected litigation and extravagant heirs. Offshore International Business Companies (IBC) and offshore Limited Liability Companies (LLC) located in offshore havens are an irreplaceable tool for investors (small or large) to achieve asset protection and preserve their wealth in a more tax efficient way. Asset protection is further enhanced with the use of offshore trusts and foundations, and are both vehicles for estate and wealth planning, while privacy is heightened through the use of nominee services.

The IBC and the LLC are offshore entities that cannot trade or be involved in any activity in the country of incorporation, with the exception of payment of government fees, payments for the services of lawyers, and accountants, if necessary. Such companies are exempt from all types of taxes. An offshore tax shelter IBC/LLC can be involved in activities with another offshore company incorporated in the same jurisdiction. There is no exchange control restriction on such companies. Confidentiality of your activities is guaranteed also, which is one of the main attractions that offshore havens offer.

The Main Reasons to Use an Offshore Haven are:

  • Offshore havens guarantee confidentiality of your activities.
  • By having your assets and business dealings away from your home in a safe offshore haven, you minimize your tax liability.
  • Offers asset protection against possible litigation.
  • Inheritance Planning can be done more efficiently through a tax haven.
  • The transfer of your estate to your heirs will be cheaper, faster and away from public eyes

The Use of a Tax Haven:

For Investment purposes; you can hold your investments (shares, stocks, bonds, cash etc) in a personal holding company, which will provide a better return and more privacy. There will be no income tax, no tax on interest or capital gains tax to pay on the disposal of your investment in the country of the offshore IBC.

For asset protection and the ownership of real property and land; the advantages of buying assets through an offshore entity are not just limited by the asset protection from possible litigation. A Dominica IBC, Anguilla IBC, BVI IBC, Nevis IBC, Belize IBC, Seychelles IBC, Panama Corporations, and Gibraltar non-resident companies, Nevis LLC Anguilla LLC and Belize LLC can be the ideal vehicle for investment. So too are Nevis foundations, Anguilla foundations, Panama Private Interest foundation and Belize foundations, Nevis trusts and Belize Offshore trusts.

By buying your property through an offshore entity, you might avoid paying capital gains tax (CGT), stamp duty and inheritance tax on sales that are normally subject to capital gains tax. For instance, if you are non-resident in the UK, you will pay no CGT on the sale of your property, providing the owner company is not trading or managed and controlled in the UK. Stamp duty will be avoided, if the IBC/LLC is the legal owner of the property, by selling the entire issued share capital of the offshore company. Under Dominica Law and the laws of Anguilla, BVI, Belize, Nevis, Panama and Seychelles, no stamp duties or any other tax will be payable on the relevant share transfer. UK and Caribbean markets offer excellent opportunities for property investments.

For E-commerce - by introducing an offshore IBC into your business, you will be more price competitive, as you will impose no VAT, sales taxes or any other similar charges on your customers. All your profits will be tax-free.

For International Trading - by incorporating an offshore company in a tax haven, you will be able to deal with your suppliers/customers directly. The profits arising on the difference between the purchase and sales price will stay in the tax haven and will be tax-free.

A tax haven can be used as tax shelter for inheritance tax planning, for ownership of intellectual property (royalties, copyright, patents, etc), for professional services to receive remuneration fees to minimize tax liabilities.

The Use of a Tax Haven is not Limited to the Given Examples.

In addition to the advantages discussed above, LLC and IBC incorporation in one of the offshore tax havens opens the doors for offshore banking. In all offshore havens the law enforces banking services secrecy through penalties, fines and imprisonment for disclosure of client’s information without prior consent. Information regarding your account can only be disclosed to an outside agency if they can prove to the relevant court of the company’s involvement in criminal activities.

Offshore banking for your offshore company will enhance the advantages already offered by offshore havens:

  • In a tax haven you will profit from higher interest rates than in your own home country
  • Confidentiality will be reinforced in offshore havens
  • Asset protection will be improved in offshore havens
  • Accumulation of funds in your savings accounts is quicker due to the tax-free interest.

We would be happy to assist you with implementation of your ideas on how to maximize the benefits of tax havens to suit your needs and requirements.