Offshore Banking - What Is Off Shore Banking? And What Should You Consider Before Opening An Offshore Bank Account?
Offshore banking is a confusing term for many as it is usually associated with rich people hiding their money in foreign countries. The practice however, should not be the preserve of the rich alone. Simply put, off shore banking is placing your money in a different country with more favorable tax regime than your country. The more money you have the more beneficial it is.
If you are engaged in business, for instance, you may consider off shore banking, simply because it will save you some money and possibly help you to grow your business in the future if you have a low cost offshore bank account. In addition, offshore banking also refers to the investment opportunity in these other countries that you choose to bank in.
Before moving your money abroad, it is perhaps adviceable to thoroughly investigate not only the tax system of the country to which you wish to move but the tax system in your country. The tax system in the US or UK is equitable to a fair degree. In fact, some countries tax over 50% of high earner's income, so it will be good to do a little research before embarking on this route.
In addition, choosing offshore banking means you may not be covered by any regulatory bodies such as the FSA (Financial Services Authority) in the UK as such you may be more susceptible to scams. There are many incidents of people who have been swindled with no recourse to complain to any Authority. In addition, offshore banking has been given a bad name as some politicians can use it as a way to channel funds stolen from their countries coffers.
The good news is that most major banks also have offshore operations and will be happy to assist you. Private banks and other Fund Management Houses can also help if you approach them with your needs. Some of these institutions even offer high interest offshore bank accounts and offshore bank loans to cater to the needs of their clients.
Anonymous offshore bank account may soon be a thing of the past, however, as some countries seek to clamp down on tax evasion. For instance, as recent as January 2007 the Inland Revenue in th UK won the right to investigate the offshore bank accounts held by major banks such as HSBC and RBS.
Famous offshore tax havens for the US include the Bahamas ( well known for its "Red Carpet Not Red Tape" policy - There are no taxes levied on capital gains, corporate earnings, personal income, sales, inheritance, or dividends. However there is a 1-2% tax/year on property ownership, and a few import taxes.), Andorra, Barbados and Bermuda. Bermuda tax havens is very popular and is worth some research.
Other well known tax havens especially for the British include the Monaco, Isle Of Man, the Channel Island and Luxembourg.
