Can You Trust Any of the New Offshore Jurisdictions?

Contributed by CS&P Fiduciaire. [www.carloscevola.com]

Over the past two years several island countries decided to become offshore jurisdictions in order to generate more income.  Obviously tourism and local products were not earning sufficient income.  This line of thinking was: “Maybe if we call ourselves an offshore jurisdiction our lawyers and banks can make some money?”

What Does it Take to Create an Offshore Jurisdiction?

In 2008, Trinidad & Tobago Islands announced they were going to create an International Business Center (IBC) to assist their weak economies.  Their Minister of Finance went to New York and met with credit agencies and investment banks to set it up.

Price Waterhouse Coopers accounting firm advised Trinidad on how to change their tax laws so they can compete with other offshore jurisdictions.

Then Jamaica jumped into the let’s become an offshore jurisdiction fray.  Their newspapers reported that Jamaica will become an offshore jurisdiction IBC too.

In 2008, the Caribbean Investment Forum (an organization of Caribbean IBC Islands) held a meeting which reported that the former British colonies Caribbean islands like British Virgin Islands, the Cayman Islands, and the Bahamas all received the majority of their funds from British banks and corporations.  These former British colonies capitalized on their relationship with the United Kingdom (UK) to obtain more business as offshore jurisdictions for UK banks, citizens, and corporations. 

Then the Dominican Republic (DR) also announced that they too wanted to become an offshore jurisdiction.  One of Jamaica’s largest newspapers criticized the DR for wanting to become an offshore jurisdiction only because they were in a financial crisis with a debt default and the DR had an “unsophisticated local financial market”. 

Several expatriate groups which sponsor forums worldwide regarding offshore corporations, banking, and the best offshore jurisdictions, criticized Jamaica’s ability to compete with nearby offshore jurisdictions like the Cayman Islands and Panama. 

How can poor third world islands with heavy debt become offshore jurisdictions by simply creating an International Business Center? 

Here are 5 questions you need to ask about how a country can convert into an offshore jurisdiction.  The answers to these questions should help you to decide which offshore jurisdiction is best to invest your money and assets.

1. Is this offshore jurisdiction politically stable?  How long has their present government system been in place?
2. How long has this country been a tax haven offshore jurisdiction?  How does their corporate, banking, and tax laws treat foreign investments?
3. Does this offshore jurisdiction have enough legal entities for sufficient estate planning and ease of conducting business?
4. Do they have strong financial secrecy laws?  How are they used?  Do any exceptions to their secrecy laws exist?
5. Are foreign investors taxed in this offshore jurisdiction?  Are there tax treaties and/or tax information sharing agreements with my country?

These 5 question groups allow you to decide which offshore jurisdiction has been tried and tested, is politically stable, has the best corporate and bank secrecy laws, is ideal for asset protection and estate planning, doesn’t tax foreigners, where you can easily conduct business, and doesn’t have tax information access for your country.

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