| Many entrepreneurs and individuals have heard about | | | | tax-efficient international transactions without defying |
| offshore banking, but are unsure about the benefits, | | | | the law. |
| the legal implications and even what it is exactly. By | | | | When determining where to locate a corporate |
| gaining a better understanding of what offshore | | | | offshore account, various factors need to be taken |
| banking really is entrepreneurs can decide whether it | | | | into consideration. Firstly, offshore banking |
| is relevant to their company, and to what extent it | | | | jurisdictions are often in remote locations with |
| can benefit them. | | | | poorly-developed communications technologies, which |
| Technically speaking, an offshore bank is simply a | | | | can complicate banking queries or issues and even |
| bank in a jurisdiction other than the one in which the | | | | impede on bank/client relations. |
| client resides. A person living in France who has a | | | | Furthermore, since the September 11 terrorist |
| bank account in the US technically has an 'offshore | | | | attacks, offshore banking is sometimes associated |
| bank account'. However, the term offshore banking is | | | | with terrorist group and criminal money laundering. |
| more commonly used in reference to offshore | | | | That being said, various offshore banking locations, |
| banking in jurisdictions that provide tax benefits to | | | | such as Singapore and Hong Kong, remain reliable and |
| the client. For example, living in France and having an | | | | are highly respected in the business world. |
| offshore bank account in Panama, a jurisdiction often | | | | Offshore banking in Singapore and Hong Kong not |
| perceived as being a tax-haven. | | | | only offers significant tax benefits when appropriately |
| By opening a corporate account in an offshore bank, | | | | structured, but typically provides excellent internet |
| entrepreneurs can benefit from favourable interest | | | | banking technologies that are secure, user-friendly |
| rates as interest received is typically tax-exempt. | | | | and highly efficient. While Singapore and Hong Kong |
| Furthermore, offshore bank accounts can be | | | | provide such benefits, their jurisdictions are not |
| structured for multiple currencies so that | | | | regarded as tax havens and are approved by the |
| entrepreneurs can avoid paying foreign exchange | | | | OECD despite having strict client confidentiality laws. |
| commissions on money transfers, and reduce their | | | | Important recent developments on the policies and |
| company's exchange rate risk. Overall, having an | | | | laws related to offshore banking and tax evasion are: |
| offshore account presents many logical and | | | | 1. The Isle of Man's efforts to impose further Tax |
| attractive benefits for entrepreneurs and their | | | | Information Exchange Agreements (TIEAs) and |
| business. | | | | Double Taxation Agreements (DTAs). |
| It should be noted that offshore banking can | | | | 2. A Bill being considered in the US that would tighten |
| sometimes be perceived as tax evasion, and as a | | | | existing laws for offshore companies, increase |
| result many countries that provide competitive tax | | | | transparency requirements and impose severe tax |
| benefits also make double tax agreements with | | | | evasion fines. |
| other nations, whereby account-holder information | | | | 3. Switzerland's recent efforts to co-operate with |
| and tax information is exchanged in order to identify | | | | OECD requirements by signing its 11th TIEA and |
| tax evaders. The Organization for Economic | | | | revealing previously secure client confidentiality details. |
| Co-operation and Development (OECD) has also | | | | 4. The G20's decision to enforce OECD guidelines and |
| created strict guidelines in order to monitor and | | | | work together to penalize tax evaders. |
| reduce the abuse of tax systems, such as the | | | | That being said, these laws apply to individuals and |
| Savings Tax Directive. | | | | corporations who abuse overseas tax benefits. It is |
| It is, therefore, important to recognize that offshore | | | | still possible to plan efficient tax procedures in |
| banking can only be secure, confidential and legitimate | | | | offshore bank accounts within legal boundaries, |
| when the account location is properly researched in | | | | however advice and assistance from knowledgeable |
| light of the company involved. Professional services | | | | individuals is recommended in order to avoid |
| and consultancy firms exist to assist companies with | | | | unintended tax evasion. |
| the decision making and procedures involved, to | | | | Locations to consider for offshore banking include |
| ensure that the company can make use of | | | | Singapore, Hong Kong, Cyprus, Dubai, and UAE. |