28 INTRODUCTION
Part Three serves as an introduction to most of the countries that are
considered tax havens, and in some instances, countries such as Austria
that are not tax havens in the pure sense, but that deserve introduction
as they have something exceptionally beneficial to offer the
investor going offshore. In Austria, the benefits include superb bank
facilities and strong bank secrecy laws, making this country an attractive
banking, money, and asset haven, although one not notable
for tax benefits. Aspects of banking and banking services such as
asset management make these countries important to consider for
personal asset protection.
You could, for example, bank in Switzerland or Austria, and
then for business purposes and international tax strategies, you
could engage another of the T-7 tax havens like Belize, Nevis, or
Panama to be your tax haven jurisdiction of choice. Together, these
choices would create a powerful combination to shelter your personal
and business assets, investments, and financial activities. You
should consider other asset protection strategies, too, such as an
asset protection trust (APT) in a favorable asset venue like Nevis,
Belize, or the Cook Islands; and of course, you should also explore
the many excellent offshore investment products available.
There are other tax havens not profiled in Part Three because,
as they stand today, they either are, or have become insignificant for
serious consideration. In some cases, they have lost their former
stature among tax havens. A few glaring examples are Nauru in the
Central Pacific, Montserrat in the Caribbean, and Liberia in North
Africa. Too many viable tax havens are available that simply rate
higher; in fact, about 40 worthy tax havens are available in any given
year. Indeed, in Chapter 30, you will find profiles for 40 offshore
havens, but inclusion in itself is not a recommendation or endorsement.
Some havens have fallen from prominence as their benefits
have been greatly impaired by such devices as the Tax Information
Exchange Agreement (TIEA). This agreement has severely hurt the
Bahamas and the Cayman Islands as acceptable venues for U.S. citizens
to place money or otherwise do business. However, because
these tax havens still play an important role in the field, they must
be included.
I have identified several favored tax havens as the T-7 or Green
List of offshore tax havens, but the possibilities are certainly not
limited to these countries. This list is merely a gauge based on my
years of knowledge and experience with tax havens and a general
consideration of the benefits in today’s climate.
Choice of venue or multiple venues has much to do with customized
decisions depending on each individual’s general goals.
Countries like Andorra, Luxembourg, and Denmark could be considered
worthy countries to bank for secrecy purposes. Also, Andorra
and Denmark would both provide a lower profile as they have minimal
or no tax haven attributes. In fact, Denmark is not a tax haven
whatsoever and Luxembourg is more of an investment haven with a
highly developed global banking center.
Certain facts are presented in the profiles, including important
aspects that would be pertinent in the selection process. But this information
is merely an overview and, if interesting, may lead you to
a further investigation of any given country. The profiles provide
highlights, giving you a thumbnail point of reference. Here is the
format used for each profile:
_ Affiliations—Who this country is closely aligned with, such as
an international organization or another country or group of
countries. These affiliations are not complete because a country
may have many possible affiliations, but these are some of
the major ones.
_ Location—The geographic proximity of the country to other
countries and regions for quick reference.
_ Capital and Largest City.
_ Government—The type of government and its relationship, if
any, to another government.
_ Legal System—The basis of the country’s laws—common law and
civil law are the most frequently encountered.
_ Official Language.
_ Stability—An important factor in doing business, administering
financial matters, and banking.
_ Currency.
_ International Time—Based on the country’s location plus or
minus the number of time zones from Greenwich Mean Time
(GMT), which passes through Greenwich, England.
_ Country Code—A specially designated number representing
a country, similar to a city or area code. Access by telephone
requires this code to be dialed after the required access number
for dialing in or out of a country, such as 01 or 011, and so
forth; and the country code is followed by a city code, if any,
and local number.
_ Embassy—The appropriate U.S.-based embassy to contact for
business, travel, and country information, including address
and telephone number.
_ Type of Legal Entities—Legal vehicles used for offshore business.
Other types of legal entities are likely to exist, too. But
the entities included here will be most pertinent to the
reader and the topic at hand. Special purpose entities are
mentioned as well, such as banks, trusts, investment funds, insurance
companies, and shipping. The choice of business vehicle
in most tax havens today is the International Business
Company (IBC).
_ Unique Characteristics—Helps determine the unique attributes
of a tax haven that you may find attractive. It also covers
unique situations presently affecting the haven that may
make it more or less desirable. These pointers will help you
narrow your choices in the selection process.
_ Taxation—Brief explanation of any taxes affecting offshore
business.
_ Exchange Controls—Best if there are none.
_ Treaties with the United States—Important considerations for U.S.
citizens using a specific tax haven. Treaties can be advantageous,
such as certain circumstances when an income tax treaty
will be beneficial in avoiding double taxation, or disadvantageous,
such as the Tax Information Exchange Agreement
(TIEA), which is designed so that the U.S. government can get
what would otherwise be confidential financial information on
your activities from financial institutions, possibly defeating
your reason for going offshore.
_ Useful Web Sites—A government web site providing more information
on the country.
_ Business Contacts—Hundreds of hard-to-find business, financial,
and professional contacts for the tax havens profiled.
Some of these contacts have offices and affiliates in other tax
havens as well.
The last profile is Western Samoa. Following that, you will find
Part Four followed by the Appendix containing important business, financial,
and professional contacts located in the United States, the
United Kingdom, and Canada who can assist with many aspects of
wealth protection and offshore activities.
TAX INFORMATION EXCHANGE AGREEMENTS
This type of treaty has had an understandably profound negative
impact on tax havens that have elected to sign a Tax Information
Exchange Agreement (TIEA) with the United States.
This agreement has no redeeming value to U.S. citizens doing business
in these particular tax havens. Information on TIEAs, as they
are known, is being provided here in advance of the individual
profiles of the tax havens, so that you are aware of them before you
read on.
The TIEA was drafted simply to exchange domestic tax information
between the United States Internal Revenue Service and the
tax haven that chose to be a party to it. The TIEA has no benefit to
a private third party like the offshore investor. In fact, the only beneficiary
of such a treaty would appear to be the IRS. Secrecy laws in
financial matters is the linchpin of success for tax havens, and the
single most important reason for their popularity over the decades.
But, a TIEA undermines this purpose. Knowing which countries
have a TIEA in place with the United States is important, and if
financial confidentiality is a concern, you should not do business
with a TIEA tax haven. Forget “bank secrecy” or confidentiality if a
tax haven or other country has signed a TIEA, and this warning
pertains to lawyer relationships in these places, too. This device has
undermined once good tax havens including the Bahamas and
the Cayman Islands. The following 13 countries have signed TIEAs
with the United States and they will surely pay the price for bowing
to this outside pressure. (Other tax havens could concede in the
future):
A total of 20 TIEAs are currently in existence. The other 7 are not
tax haven jurisdictions:
This leaves the following tax haven countries that have not signed
a TIEA and should be considered first:
1. Andorra
2. Anguilla
3. Austria*
4. Bahrain
5. Belize*
6. Brunei Daraussalam
7. Cook Islands
8. Cyprus
9. Dubai (U.A.E.)
10. Gibraltar
11. Hong Kong*
12. Labuan (Malaysia)
13. Liechtenstein*
14. Luxembourg
15. Madeira
16. Malaysia
17. Malta
18. Mauritius
19. Monaco
20. Netherlands
21. Netherland Antilles
22. Panama*
23. Saint Kitts and Nevis*
24. Saint Vincent
25. Seychelles
26. Switzerland*
27. Turks and Caicos Islands
28. Vanuatu
29. Western Samoa
1. Dominican Republic
2. Guyana
3. Honduras
4. Mexico
5. Peru
6. St. Lucia
7. Trinidad and Tobago
1. Antigua and Barbuda
2. Aruba
3. Bahamas
4. Barbados
5. Bermuda
6. British Virgin Islands
(BVI)
7. Cayman Islands
8. Channel Islands (includes
Guernsey and Jersey)
9. Costa Rica
10. Dominica
11. Grenada
12. Isle of Man
13. Marshall Islands
* The asterisk denotes a T-7 tax haven, one of my most favored money havens. Fortunately,
a greater number of tax havens still have turned down the invitation to sign away
their lucrative offshore business than have succumbed. Maybe the remaining countries
have realized the harm they will cause themselves if they do sign a TIEA.