Offshore Investing – Why Is It Underutilised?
There are many stigmas attached to the ideas of international, or offshore corporate bankaccounts, as well as offshore companies. Basically, this refers to the practice of investingassets or setting up a company in a jurisdiction other than your place of residence, hence theterm ‘offshore’. The truth is that offshore banking and offshore company formation arelegitimate strategies if done correctly in respect to the laws of the investment jurisdiction andlaws of person’s, or company’s, resident jurisdiction.Unfortunately what most people see are stories in the media about cases in which thesefinancial tools have been misused for things such as tax evasion and money laundering, andso the result is a perception that these strategies are not an option. Without internationalmarkets, the majority of businesses today would not exist. Globalisation and technologymeans international business operations are not just for large multinational companies.Entrepreneurs and small business can just as easily take advantage of offshore opportunitiesto maximise efficiencies.Some of the most common reasons why offshore investing is underutilised are actuallymyths. They include:1.
It’s illegalAs outlined above many assume that setting up an offshore account or registering an offshorecompany is illegal because of publicised cases of criminal activities. However, these arestrategies that can help to legally minimise tax obligations and improve operationalefficiency.2.
It has a bad reputation, only criminals use itIt is true thatoffshore bank accountshave been used for illegal activities. It is also true thatgovernments such as the US, UK and Australia have implemented programs to fight taxevasion by finding cases of people, or businesses, hiding financial assets. However, there arealso plenty of successful entrepreneurs who legitimately implement offshore investmentstrategies.3.
I can’t afford it, it’s not for meThis is not true.Offshore company incorporationand setting up a supporting company bankaccount does not require high wealth. There are jurisdictions that do not require high capitalinvestment.4.
You need special privileges to open international bank accounts and companiesThere are certainly due diligence requirements, which vary depending on the jurisdiction.However, this shouldn’t be an obstacle for a legitimate business that is properly structuredand operated. In fact these due diligence requirements are a necessary aspect to helpeliminate illegal practices within this industry.
While the strategy of offshore companies and bank accounts may seem challenging, andrequire some research and planning, there are jurisdictions such as Singapore and HongKong that provide many incentives for entrepreneurs and established businesses and have