Offshore Tax Havens



An offshore tax haven is the phrase used to describe a territory or country which has very low tax schemes in place for individuals and corporations. The tax rates in tax havens are generally much lower than those of countries which are not considered to be tax havens. Tax havens are also referred to as offshore jurisdictions. The offshore jurisdictions are those countries which encourage the formation of offshore companies and offshore entities such as offshore business companies, offshore banking, offshore trusts, offshore foundations, offshore limited liability companies and offshore limited partnerships amongst others.



Offshore tax havens can be placed in different categories, for example there are zero tax havens or pure tax havens. This category would include countries such as Dominica, Anguilla, Belize, British Virgin Islands, Bahamas, Cayman Islands, Nevis, St Kitts, Panama, Bermuda, Vanuatu, Seychelles and Antigua among many others. These offshore tax havens place no capital gains tax, corporate taxes, income tax, estate tax, inheritance tax or any type of local taxes on incomes gained by offshore companies, trusts or foundations established in the jurisdiction. Another group of offshore tax havens are those which subject offshore companies and entities to taxes but this is done at a low rate. This would include countries such as Cyprus where international business companies are liable to pay up to 10% taxes on profits gained and Hong Kong where offshore companies registered there and doing business in Hong Kong are charged 16.5% of profits made from doing business in Hong Kong.



The offshore tax havens of the world are notorious for providing privacy and secrecy for offshore corporations and other offshore clients in the various jurisdictions. For the incorporation of offshore companies in most tax havens the names of the company owners and the names of company directors is not made known to the public because information concerning the registration of offshore companies is not made part of public records. Offshore tax havens which keep offshore company records private include Dominica, Nevis, Belize, Panama and the British Virgin Islands. The tax havens are also known to incorporate companies using nominee shareholders and directors as a means of providing added privacy and secrecy for offshore company holders.



Privacy in the tax haven offshore is also awarded to offshore bank accounts and offshore bank account holder. International banking standards makes it impossible to hold anonymous bank accounts but offshore banks are still able to provide a degree of privacy for clients who do offshore banking. The names of offshore bank account holders are only known by the certain employees at offshore banks. Information in offshore bank accounts cannot be given out without the consent of the offshore bank account holder.



Privacy in the tax havens is one of the primary reasons why persons choose to move assets or register companies in offshore havens. Privacy is provided by offshore legislation in the offshoretax havens. Most of the available offshore tax havens have a law which protects information in offshore companies and offshore entities. There are laws which states that the information in offshore bank accounts and information concerning offshore corporations cannot be given out without proper consent. This information can only be given out if there is proof that the offshore corporation or the holder of the offshore bank account is involved in criminal activities or terrorism in which case a court order will be handed out requesting information.



Each offshore haven is unique and has features which make it stand out from the other tax havens. Panama for example is very attractive to clients as offshore companies can do business n and out of Panama unlike most other offshore jurisdictions which prohibit offshore companies from doing business in the jurisdiction. The offshore jurisdiction of Dominica for example has modern legislation which makes Dominica offshore companies very competitive and Dominica is perhaps the only offshore jurisdiction whose legislation guarantees that offshore companies will be granted a tax exemption period of twenty (20) years from the date of registration no matter what happens.



The offshore tax havens are known to provide many benefits to clients and corporations around the world. The tax havens provide persons with the perfect avenues for tax planning and asset protection and helps keep third parties in the unknown where matters concerning corporations and offshore bank accounts are concerned.


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