Some very useful tips and information which I found on another blog, just check it out when considering to take your banking offshore, some of it is a kind of scaring people while other points may be useful.
The Future of Offshore Banking
The end of 2009 has marked a turning point for the offshore banking industry. It is no longer easy and safe to open an offshore account without a great deal of preparation, research and careful execution of your financial transactions.The OECD and G20 continue to force international co-operation in tax matters through the exchange of banking information. While the age of "secret offshore banking" has been declared dead by some, this is hardly correct. Nonetheless, we have witnessed a number of important changes.
The OECD and Tax Information Exchange Agreements (TIEA)
By far one of the most visible examples of these changes is the requirement of previously "black" and "grey" listed tax havens to sign a minimum of 12 TIEA with other countries to prevent further action by the OECD. The bulk of these TIEA's have been signed by former British colonies such as Bermuda, Bahamas, Angullia, Nevis, BVI, Cayman Islands as well as Switzerland, Austria and Liechtenstein. A complete listing by jurisdiction can be found here.
One very important aspect of the TIEA is that request for information on a tax payer or offshore corporation must be accompanied by evidence, thus no "fishing expeditions" are allowed or request without evidence. Simply stated, the requesting country must have some evidence of specious transactions that they believe could be tax evasion or tax fraud. Complete examples of how information is shared can be found here.
It is also important to note that the current number of TIEA's signed between the tax havens only represents about 15% of total available options meaning that there are still opportunities with 85% of the current tax havens.
The End of Swiss Banking Secrecy as we know it
Switzerland has long been considered a favorite tax haven of the wealthy because of their past views on tax evasion, which in Switzerland was not a crime. Furthermore it was very difficult to obtain any information from a Swiss bank without significant evidence of crime. That has all changed.
The US Department of Justice filed suit against UBS for their role is assisting US citizens to hide billions of dollars in Switzerland. UBS agreed to a $780 million fine as well as providing the IRS with the names of over 4500 US citizens with offshore bank accounts. These names would normally be protected by banking secrecy but they are no longer. Furthermore, other countries are also attempting to force the Swiss to reveal the names of it's citizens.
US Citizens no longer welcome at more and more offshore banks
Starting several years ago, many offshore banks began declining to open bank accounts for US citizens as a result of the actions by the US government as evidenced above. Many Caribbean destinations as well as most Swiss and Liechtenstein banks will no longer open an account for a US citizen or for a corporation with a US citizen as the director or shareholder. One Liechtenstein bank we know of will open accounts for US citizens however they must complete a form which notifies the IRS of the account.
Tax Amnesty Programs
A number of countries including the US, UK, Italy and Australia have offered tax amnesty programs to encourage people to come forward and report their offshore bank accounts in exchange for waiver or lowered penalties and the promise of no criminal prosecutions. Some accounts find that these programs have brought in billions of dollars in taxes.
The Key to safe Offshore Banking Remains to be "100% privacy" in your financial dealings
As there is no automatic sharing of information between the tax havens with the exception of the EU savings directive on personal accounts, the key to maintaining the secrecy of your offshore account is the privacy and secrecy of your account. The more anonymous and private, the better.
Here are some very important rules of having an offshore corporation or offshore bank account:
1. Never tell anyone you have an offshore corporation or offshore bank account.
2. Never fund your offshore account directly from your domestic bank account, use a transfer service or other anonymous methods we can advise you of.
3. Never send funds directly to your domestic bank account from offshore, again use a transfer service or other methods.
4. Never use the offshore bank issued Mastercard/Visa connected to your offshore account in your home country due to frequent information sharings between Visa/Mastercard and various governments. Instead use an anonymous, non-attached debit card.
5. Never use your offshore bank account to pay personal or business expenses in your home country. Instead, withdraw cash from a non-attached anonymous debit card and either pay with cash or deposit this into your domestic account and then pay it, subject to reporting rules for cash deposits in your home country which may range from $1000 - $9999. Thus it is best to make small cash deposits of $200-$500 at a time.
6. Never use an offshore issued debit card if it has the bank name prominently displayed on it at a local establishment where they know you. You never know who is going to notice that you have an offshore account and report it (bank employees, IRS agents, do-gooders).
7. Have your offshore bank hold your statements and do not receive official mail from your offshore bank at your home or office. Instead use an international drop mail location for receiving these documents and forwarding them to you. We can recommend a location for this if needed.
8. For clients with dual citizenship we recommend using the passport and address with the offshore bank for the country in which you do not reside.
9. Never visit the online banking page of your offshore bank from your home computer unless on a VPN (Virtual private network), proxy or other service that anonymizes your Internet service. Optionally visit an Internet cafe to do your banking. Countries can request ISP provide them with a list of clients visiting certain IP's of offshore banks.
10. Finally, setup a Google alert with the name of your country and the name of your offshore banking country with keywords such as "Tax information sharing ", "double tax treaty", "agree to information sharing", or even "OECD". This will keep you abreast of the latest developments.
Offshore Trends and Predictions for 2010
In 2010 we expect to see a number of additional TIEA's signed between offshore tax havens. It will be interesting to see what happens in Panama and the Seychelles as they have agreed to international tax cooperation yet have not signed any TIEA's.
We further expect the US to continue to use their financial and legal muscle to sue offshore tax havens in order to force them into revealing the names of US account holders. Panama and Hong Kong are two such potential targets of this strategy as most Panama banks use US correspondent banks for USD transfers. In fact, the IRS recently opened offices in Panama and Hong Kong to try and find tax cheats.
While the standard IBC and offshore bank account using the right jurisdictions according to clients citizenship will continue to be the most popular means of operating offshore, the trend for nominee and trust account banking will rise faster as more tax havens sign TIEA's and clients wish to remain 100% anonymous in their beneficial ownership of offshore bank accounts.
The Future of Offshore Banking
The end of 2009 has marked a turning point for the offshore banking industry. It is no longer easy and safe to open an offshore account without a great deal of preparation, research and careful execution of your financial transactions.The OECD and G20 continue to force international co-operation in tax matters through the exchange of banking information. While the age of "secret offshore banking" has been declared dead by some, this is hardly correct. Nonetheless, we have witnessed a number of important changes.
The OECD and Tax Information Exchange Agreements (TIEA)
By far one of the most visible examples of these changes is the requirement of previously "black" and "grey" listed tax havens to sign a minimum of 12 TIEA with other countries to prevent further action by the OECD. The bulk of these TIEA's have been signed by former British colonies such as Bermuda, Bahamas, Angullia, Nevis, BVI, Cayman Islands as well as Switzerland, Austria and Liechtenstein. A complete listing by jurisdiction can be found here.
One very important aspect of the TIEA is that request for information on a tax payer or offshore corporation must be accompanied by evidence, thus no "fishing expeditions" are allowed or request without evidence. Simply stated, the requesting country must have some evidence of specious transactions that they believe could be tax evasion or tax fraud. Complete examples of how information is shared can be found here.
It is also important to note that the current number of TIEA's signed between the tax havens only represents about 15% of total available options meaning that there are still opportunities with 85% of the current tax havens.
The End of Swiss Banking Secrecy as we know it
Switzerland has long been considered a favorite tax haven of the wealthy because of their past views on tax evasion, which in Switzerland was not a crime. Furthermore it was very difficult to obtain any information from a Swiss bank without significant evidence of crime. That has all changed.
The US Department of Justice filed suit against UBS for their role is assisting US citizens to hide billions of dollars in Switzerland. UBS agreed to a $780 million fine as well as providing the IRS with the names of over 4500 US citizens with offshore bank accounts. These names would normally be protected by banking secrecy but they are no longer. Furthermore, other countries are also attempting to force the Swiss to reveal the names of it's citizens.
US Citizens no longer welcome at more and more offshore banks
Starting several years ago, many offshore banks began declining to open bank accounts for US citizens as a result of the actions by the US government as evidenced above. Many Caribbean destinations as well as most Swiss and Liechtenstein banks will no longer open an account for a US citizen or for a corporation with a US citizen as the director or shareholder. One Liechtenstein bank we know of will open accounts for US citizens however they must complete a form which notifies the IRS of the account.
Tax Amnesty Programs
A number of countries including the US, UK, Italy and Australia have offered tax amnesty programs to encourage people to come forward and report their offshore bank accounts in exchange for waiver or lowered penalties and the promise of no criminal prosecutions. Some accounts find that these programs have brought in billions of dollars in taxes.
The Key to safe Offshore Banking Remains to be "100% privacy" in your financial dealings
As there is no automatic sharing of information between the tax havens with the exception of the EU savings directive on personal accounts, the key to maintaining the secrecy of your offshore account is the privacy and secrecy of your account. The more anonymous and private, the better.
Here are some very important rules of having an offshore corporation or offshore bank account:
1. Never tell anyone you have an offshore corporation or offshore bank account.
2. Never fund your offshore account directly from your domestic bank account, use a transfer service or other anonymous methods we can advise you of.
3. Never send funds directly to your domestic bank account from offshore, again use a transfer service or other methods.
4. Never use the offshore bank issued Mastercard/Visa connected to your offshore account in your home country due to frequent information sharings between Visa/Mastercard and various governments. Instead use an anonymous, non-attached debit card.
5. Never use your offshore bank account to pay personal or business expenses in your home country. Instead, withdraw cash from a non-attached anonymous debit card and either pay with cash or deposit this into your domestic account and then pay it, subject to reporting rules for cash deposits in your home country which may range from $1000 - $9999. Thus it is best to make small cash deposits of $200-$500 at a time.
6. Never use an offshore issued debit card if it has the bank name prominently displayed on it at a local establishment where they know you. You never know who is going to notice that you have an offshore account and report it (bank employees, IRS agents, do-gooders).
7. Have your offshore bank hold your statements and do not receive official mail from your offshore bank at your home or office. Instead use an international drop mail location for receiving these documents and forwarding them to you. We can recommend a location for this if needed.
8. For clients with dual citizenship we recommend using the passport and address with the offshore bank for the country in which you do not reside.
9. Never visit the online banking page of your offshore bank from your home computer unless on a VPN (Virtual private network), proxy or other service that anonymizes your Internet service. Optionally visit an Internet cafe to do your banking. Countries can request ISP provide them with a list of clients visiting certain IP's of offshore banks.
10. Finally, setup a Google alert with the name of your country and the name of your offshore banking country with keywords such as "Tax information sharing ", "double tax treaty", "agree to information sharing", or even "OECD". This will keep you abreast of the latest developments.
Offshore Trends and Predictions for 2010
In 2010 we expect to see a number of additional TIEA's signed between offshore tax havens. It will be interesting to see what happens in Panama and the Seychelles as they have agreed to international tax cooperation yet have not signed any TIEA's.
We further expect the US to continue to use their financial and legal muscle to sue offshore tax havens in order to force them into revealing the names of US account holders. Panama and Hong Kong are two such potential targets of this strategy as most Panama banks use US correspondent banks for USD transfers. In fact, the IRS recently opened offices in Panama and Hong Kong to try and find tax cheats.
While the standard IBC and offshore bank account using the right jurisdictions according to clients citizenship will continue to be the most popular means of operating offshore, the trend for nominee and trust account banking will rise faster as more tax havens sign TIEA's and clients wish to remain 100% anonymous in their beneficial ownership of offshore bank accounts.
