The Future of Offshore Banking

The Future of Offshore Banking

By Gissela Martinez

We will try to show the political positions of the countries that are not in favor of the tax haven offshore jurisdictions and the position of the tax haven countries. The countries most outspoken against offshore banking and offshore corporations are Australia, UK and USA.

Today there is a great outcry from these and other countries about the tax saving benefits afforded to citizens of certain countries by going offshore. These countries claim that their constituents are cheating them out of billions of dollars of taxes by going offshore. Many people live in other countries and need to own offshore bank accounts, offshore corporations, offshore real estate, etc.

The Mercosur countries engage in free trade and easy border controls with no passports, just national identity cards for border crossings. The UN says its member countries must enact certain kinds of laws to control narcotics and states these laws and insists on enforcement policies. So Mercosur countries are now worrying about their own problems more and less about the narcotics issues in the USA and other nations. I think you will see more of the same type of thinking when it comes to offshore banking, offshore corporations, offshore foundations, and offshore stock brokerage accounts etc.

One offshore formation agent went to the USA and was able to open eight USA bank accounts in one day. In the USA and UK no bank reference letters are required to open a bank account, neither are any professional references required. One can buy USA corporations or UK corporations without any of the due diligence requirements that are required from offshore jurisdictions.

Let’s look at history a little to see how things deteriorated in the past regarding offshore privacy and offshore banking. While some of them avoid income taxes instead they impose taxes on goods imported. A cruise ship docking at these ports usually carries 2500 people. The offshore corporations would pay a few hundred dollars a year in taxes but that was it. Tourists returning from these countries by ship or air might find themselves stuck in long lines while they are searched and interrogated by authorities of various affected countries, which would quickly and seriously discourage tourism to these countries.

The EU position on this was they must get the USA to understand their banking laws call for privacy. Today the most privacy-oriented jurisdiction in the world is Panama. Panama has 400,000 corporations registered there. Panama banks follow tight anti-money laundering laws as well as know your customer laws. The anonymous bearer share corporations combined with Panama bank secrecy laws make for the best privacy in the world today. Panama is also in no tax treaty with any other country and is fairly unique in this regard.

Panama is a small country and the international banks employ 15% to 20% of the workforce. Panama has 400,000 corporation registered there who each pay $300 in annual corporate taxes. Panama will and has resisted attempts to compromise banking secrecy and corporate secrecy.

The British Virgin Islands used to offer anonymous bearer share corporations. A few years ago they gave in to pressure from the UK and stopped issuing new bearer share corporations but they did make allowances for the existing bearer share corporations to remain anonymous for 10 years.

It is also a possibility that some other nations may enter into the bank secrecy arena in the near future and some other nations may return to bank secrecy as well. Only time will tell.