Introduction to Offshore Banking
George Soros is known as the wealthiest speculator of all time. His trading all took place in the Netherlands Antilles, where his earnings compounded tax free. If you think he has this advantage only because of his wealth read on.
Here is a list of trend followers with operations offshore:
- John W. Henry Global Strategies Ltd. (A)
- Sjo Global Fund Ltd. (B)
- Eckhardt Futures LP
- Mark J. Walsh Global LP
- Chesapeake Fund Ltd.
Today, investing arenas are without borders. Investors may reside in Chicago or Kuala Lumpur, but geographic locales no longer need be a deterrent to investing globally. Offshore or non-US investments allow for more rigid controls on privacy. Privacy in an age of big brother is crucial to many investors. The US government along with numerous other over regulated industrialized societies have continued to threaten individual investor's privacy rights. Offshore funds are inherently private, a big selling point for global investors.
In examining offshore solutions one must be concerned with numerous issues. Services the trader or investor may need: fund organization, corporate management, domiciliary services, accounting and administration, shareholder services, banking and custodial issues, and computer data transmission.
Example Tax Haven Jurisdictions
- British Virgin Islands
- Isle of Man
- Turks & Caicos Islands
Basic Offshore Issues
- What does the investor want?
- Where is the investor located? One or multiple countries?
- Does one have sufficient capital?
- Resources and environment of offshore location. i.e. One can fly to Bahamas from NY and be back all in one day. Time zone discrepancies may be important.
- Costs associated with offshore funds.
- Unique problems of jurisdiction one is in.
- Regulations are not static. Formed in one, administered in another, listed in another. Are you flexible?
- Taxes. If you can't get results or have money, forget worrying about taxes.
- Remember, in the end it is purely an economic choice to go offshore.
What is Offshore Banking
Most people do not have the slightest understanding of offshore Banking. They simply accept the distortions they read or hear about offshore banking as some form of clandestine activity. Or they ask their lawyer, accountant or financial planner, who advises that it's either too risky, illegal, immoral or unethical.
Unfortunately, those that promote offshore banking have done little to alleviate fears and suspicions of the public. These promoters have given the governments and bankers the ammunition needed to keep the public in a state of fear or suspicion regarding offshore banking, investments and opportunities.
There is not and will never be a law restricting the sending of funds outside the USA. As a country dependent on International trade the American economy would be destroyed. How? Since all US global trade is transacted in US dollars, there would be no exports or imports, due to the fact that the United States would not be able to buy and sell goods.
If you wanted to, you could move or transfer some or all of your money out of your bank or credit union to anywhere in the world. This is entirely legal. US banks and the IRS disseminate negative propaganda dealing with offshore banking, making it seem unsafe or some type of criminal act. Why? Banks desire to keep money in their institutions to use for their own profitable purposes.
Most US banks themselves accept deposits from people overseas and often invest in foreign stocks and hold accounts with foreign banks. On the other hand the IRS wants to keep money in US banks where every dollar earned in interest can be taxed.
Another reason the US government has constructed US banking law in its present form is to prevent competition. The internet changes that forever. Now opening an account with an offshore bank is as simple as writing a formal letter to the institution and requesting information about their various services and the appropriate application forms. Most offshore centers never have to see you in person.
All offshore banks are regulated in one form or another, but the regulations are usually far less restrictive than US law. Less restrictive regulations abroad allow foreign banks more freedom in locating the best investments worldwide. Allowing them to pass on and share their profits with their customers. Additionally, the majority of the worlds largest and strongest banks are non-US banks.
Forming an Offshore Corporation
As our world becomes smaller, and few businesses are local or even strictly national, there is an increasing need for internationalization. We think, plan and work with an eye toward expanding our horizons both at home and abroad. The use of a corporate vehicle as a means of this expansion is nothing new.
No longer will a domestic corporation satisfy one's needs. The average business person today is far more sophisticated than the business person of even ten to fifteen years ago. Corporate structuring and planning have achieved higher levels of complexity than ever before while the need for anonymity remains strong.
Entrepreneurs must keep pace and be constantly on the look out for new ways to profit. One way is to have a clear understanding of the characteristics of foreign corporations and how they may be put to advantageous use.
Most popular jurisdictions have a legal system derived from a major western country and greatly favor corporations which are non-resident in nature. Most professionals prefer their western style legislation since it provides a familiar basis for legal interpretation and facilitates understanding of their laws in international practice.