What is Offshore Investing?
In the past, offshore investing was thought of
as a tool for the wealthy to avoid taxes, and increase their net worth. Although there are
wealthy people and companies that setup offshore, there are many average wage earners that
are setting up offshore as well.
Some people have simple offshore structures
amounting to no more than a bank account or credit card to allow them access to
international markets. Others have more complicated structures that include IBC's, trusts
and bank accounts.
Offshore investing is not something you hear
about on the evening news, however, it is a billion-dollar industry forcing most of the
world's major financial institutions to locate offices in offshore jurisdictions.
It has been estimated that more than 50% of
world's wealth is located offshore.
Individuals and Corporations have been setting
up offshore for years. Their reasons are plentiful and vary according to their
circumstances. Some reasons you may require our offshore services include:
Privacy and Confidentiality
Some people believe that it is their right to
have absolute privacy in their financial, business and banking affairs. In most countries
it is very difficult, if not impossible, to accomplish this due to the reporting
requirements of government agencies. Many offshore countries don't have these reporting
requirements. In fact, it is illegal in many offshore jurisdictions for the various
institutions and agencies to divulge any information about their clients, resulting in a
high level of privacy and confidentiality.
In today's society, whether you are an
individual or corporation, you are susceptible to law suits. This can place your assets
and future at risk. By setting up offshore, you can shield your assets from creditors and
possible judgments. This can be accomplished through utilization of vehicles such as
trusts, International Business Corporations, bank accounts, and others.
Favourable Foreign Tax Laws
If you feel you are being overtaxed,
personally or corporately, you may want to consider an offshore jurisdiction. There are a
wide variety of countries that have minimal, or no tax legislation that apply to residents
and exempt companies such as International Business Corporations.
Access to International
International markets are offering very
competitive rates of returns on mutual funds, investment certificates and other investment
vehicles. The lack of taxes in the various jurisdictions allows for higher returns in
certain circumstances. This is attractive to many investors.
The laws in may offshore jurisdictions can
make estate planning less complicated. As a result, it may be prudent for one to consider
the utilization of offshore vehicles as part of the estate planning process.
International Banking is very big business. As
a result, some companies are diversifying by creating their own offshore bank. Some
offshore jurisdictions issue bank licenses that have equity requirements as low as
$100,000 or less. Having an offshore bank allows a company to utilize bank services for
its own operations such as loans, mortgages and debentures. Some even have their own
credit cards. Ask a Lakeway Representative for details.
Transfer pricing is the pricing of
cross-border transactions between non-arm's length parties. For example, a company may
have its manufacturing operations situated in an offshore jurisdiction. This offshore
structure would sell its products to its retail operations worldwide, who in turn would
sell its products to the public. One of the objectives here is to trap most of the profits
in the offshore jurisdiction which has no taxes. Anyone considering this should seek
professional advice. A Lakeway Representative would be pleased to discuss this with you.
Inheritances and Gifts
Canada is one of a few countries that does not
tax inheritances and gifts. As these could be a major source of revenue for the
Government, some people feel it is just a matter of time before legislation is introduced.