Offshore Financial Centers
What is an Offshore Financial Centre?
Typically, an offshore financial centre (OFC) is a jurisdiction with low taxation that specializes in furnishing company formation and trade services to non-resident offshore companies, and investing opportunities for offshore capital.
Many states and nations design their policies with the goal of attracting business from foreign investors who want to be as tax-efficient as possible. These nations, known as offshore financial centers, have tax policies and bodies of corporate law which provide a good financial climate for large investors who want to minimize tax exposure and regulatory interference.
Offshore financial centers offer a number of attractions to foreign investors. One of the ways they go about this is by developing bodies of corporate law that are friendly to corporations.
The state of Delaware in the US, for example, drew business to it in the early 1900's by enacting laws that made it far easier to form and manage a corporation. Other centers that are known for the efficient structure of their corporate law include Panama and the British Virgin Islands.
Although financial regulations are generally enacted with the best of intentions, they tend to make business more complicated than it needs to be for a number of investors. Many offshore financial centers have responded to these concerns about regulations by adapting a more business-friendly regulatory structure.
Nations that have made a name for themselves by building a business-friendly regulatory structure include Panama, Nevis, Mauritius, and Seychelles, to name a few.
Many investors place a high value on the security of their funds, which is not entirely respected by their home jurisdictions. Although this is not true of all offshore financial centers, nations such as the Bahamas, Seychelles, Belize and Mauritius have designed their privacy laws with the concerns of foreign investors in mind.
Because privacy laws are constantly shifting in this day and age, it is frequently wise to speak with an advisor about selecting an offshore financial center based on privacy concerns.
An offshore financial center can be concisely described as a state or nation which has designed its laws in a way that attracts business investors. Some nations make it easy to manage corporations founded in their jurisdiction; others have an especially sensible regulatory structure or stringent privacy laws.
When selecting a suitable offshore financial center, be sure to consider all of your investments' unique needs. At Sovereign Management and Legal, we are poised to help you identify these needs and subsequently develop an offshore market strategy that suits you perfectly.
Choosing an Offshore Financial Center: Top 10 Criteria
Selecting an offshore jurisdiction is an integral part of establishing an offshore structure or financial account. The jurisdiction that you choose should have at the very minimum, the following 10 characteristics:
- A Full Fledged Tax Haven - no capital gains tax, no interest income tax, no inheritance tax, etc.
- Favorable Incorporation Laws - the corporate laws of the country should enable you to hold "Bearer Shares", have directors from any country, inexpensive, and be able to incorporate Private Interest Foundations.
- Stable Currency With No Currency Restriction Regulations - there should be no restrictions on the movement of funds in or out of the country.
- Strict Privacy Laws - there should be strict privacy laws that protect your banking information and corporate book information from anyone, including foreign governments.
- Stable Government - the government of the country should be stable and should use the opposite legal system of your domestic country (if your country uses common law, you should seek a country that uses roman law). The country should be safe to visit.
- Stable Economy - the economy of the country should be stable.
- Excellent Banking System - the banking system of the country should be advanced both in areas of banking infrastructure, government auditing, and technology.
- Excellent Communications System - the communications systems of the country should be technologically advanced in comparison with first world countries.
- Language Compatibility - the language of the country should be suitable for your understanding.
- Time Zone Compatibility & Close Location - the time zone of the country should be such that you can contact your offshore provider or financial institution during your normal domestic business hours & fly to the country quickly if necessary to handle business.
Offshore Jurisdictions from Sovereign
Sovereign Management and Legal specializes in asset protection through the formation and administration of anonymous corporations, IBCs, foundations, trusts and other structures in key offshore jurisdictions.
We believe you can benefit from a multi-jurisdictional approach to your offshore planning, based on the needs of your business and where you need to open accounts.
Therefore, although we can incorporate in almost any jurisdiction, the following have special appeal:
One jurisdiction cannot do it all, however!
Panama offers the best all-around option of any jurisdiction, for reasons of cost effectiveness, privacy, minimal obtrusiveness and flexibility. It is closely followed by Dominica and Nevis. Belize and Seychelles are very popular and that is well-deserved but have become more obtrusive than before. All jurisdictions have their niches and strengths and so we do not like to limit our choices solely based on convenience.
Other popular offshore jurisdictions such as British Virgin Islands, Cayman Islands, Anguilla, Turks & Caicos and the Channel Isles are beginning to see the troubles associated with their lack of true independence and association with the EU by proxy of the UK (since they are still her colonies). These and others have succumbed to pressure from the EU, UK and USA in recent years, but still may have their uses for more specialised needs.
Some have adopted undesirable measures; signed information exchange agreements, mutual legal assistance treaties; and tax information exchange agreements which are largely one-sided agreements in favor of the larger countries.
In fact many of these island jurisdictions, such as Caymans and BVI, contain clauses at the end of their respective constitutions which essentially give the British Crown, through its proxy Governor, the right to enact laws and regulations without any vote at all.
Even though many of these jurisdictions would not be considered privacy jurisdictions in the same way as Belize or Panama, we can tailor solutions that utilize nominees, along with Panama foundations or Belize trusts that will provide maximum anonymity where legitimate business reasons require it.
We have correspondents in almost every other major offshore jurisdiction, so if you have special jurisdictional requirements or preferences outside of these that are listed in this site, please contact us and we will give you the pros and cons of your choice(s).