OFFSHORE COMPANIES AND TAX-FREE.

BUSINESS STRUCTURES.

The virtual certainty that 65% of the world's hard currency is held in offshore banks and that around 40% of the world's trade in goods, especially services such as consulting which are transacted through offshore international finance centres, proves that in spite of the problems with the Organisation for Economic Co-operation and Development (OECD), this is an area of massive growth and potential for both individuals and companies.

Regardless of changes that occur due to OECD pressure or a particular finance centres government, the question will always remain "Which is the best jurisdiction to establish my offshore structure?" In actual fact the products offered by most Tax Havens are virtually mirror images of each other. The decision will largely depend on the quality of after sales service, objectives and goals of the purposed corporation or trust and the Clients own personal and business circumstances. There are however a number of factors that must be considered, these are the principal indicators that determine the merits of a good offshore centre:

1. Political and Economic Stability. - The offshore jurisdictions should not be subject to violent political factions, civil unrest, poor economic performance or the likelihood of invasion or military coup.

2. Quality of Communication. - Good telecommunications capabilities is more important than the location of the Tax Haven. By using state-of-the-art communications your chosen jurisdiction must be able send and receive electronic transfers, and your representative must be able to receive instructions by letter, telephone, fax, or telex or any other means.

3. Language. - It is essential that you are able to have your instructions understood by your representatives, nothing is worse than going through two or three different members of staff, none of whom understand what you want.

4. Legal System. - Good legal foundation with modern corporation laws is essential. Jurisdictions who base their legal system on English common law, with local modifications, are very popular and this applies to any offshore centre which was or still is under British control.

5. Confidentiality and Secrecy. - Acceptable levels of privacy are important and valuable when conducting business offshore. The offshore centre must have the ability to control and sanction unauthorised disclosure of information relating to its offshore clientele and their financial affairs.

6. Exchange Controls. - It is important that you can freely move your money in and out of the country. The best situation is to bank in a country with no exchange controls. Money that is restricted from movement can be easily subject to possible seizure. It is important to keep in mind that companies may open bank accounts in jurisdictions other than the jurisdiction of the corporation.

7. Banking and Professional Services - Selecting a bank for the corporate account is equally as important as selecting the jurisdiction for the incorporation. The jurisdiction should offer superior and state-of-the-art banking, as well as professional services such as accounting, legal, management and trust services, these should all be readily available if required.

8. Taxation. - Jurisdictions that have no tax treaties with other countries are often the best choice unless the tax treaty fulfils a function in your tax planning

9. Restrictions imposed on IBC's. - You should be able to conduct your business legally without unnecessary restrictions.

10. Cost of Formation, Annual Fees & Services. These should be realistic and fulfil your requirements to an acceptable degree.

11. Location. - Although not of such great importance today as in the past, certain ingredients may be vital e.g. time zone, banking hours etc. The reason they are vital is because a 10-hour time difference means you are never open at the same time.

12. Government Attitude. - A government that welcomes offshore business and possibly offers financial incentives sends a positive message to offshore investors. Many jurisdictions actively promote themselves as a tax haven and welcome offshore business and investment capital, while others just tolerate it. A government that does not completely support the activities of their offshore industry can adversely change their policy overnight. There are currently just under 40 major offshore finance centres in the world. Offshore finance centres were formerly known as tax havens, but just like the Golliwog on the Robertson's Marmalade jar some things just don't quite fit into today's world! Especially with the OECD, FATF, IRS, EU, SEC and any number of other government bodies snapping at their heels. A partial list of Havens, sorry finance centres, are listed below. What is very clear is that if any country complies sufficiently with OECD requests for exchange of information and tax changes, one thing is certain with nearly 40 major offshore centres and in excess of 30 minor players who would be keen to fill the gap, if the business was there, Offshore Finance Centres are not likely to become extinct for some time, the only thing that limits the number is the amount of clients who use their services, as with everything supply and demand dictates that not every country can be a tax haven!

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Caribbean: Anguilla, Antigua, Belize, Bermuda, Bahamas, Barbados, British Virgin Islands, the Caymans, Costa Rica, Dominica, Grenada, Netherlands Antilles, Nevis, Panama, St Vincent, Turks and Caicos; Europe Offshore: Channel Islands, Cyprus, Gibraltar, Guernsey, Isle of Man, Jersey, Malta, & Sark; Europe Mainland: Austria, Hungary, Latvia, Liechtenstein, and Luxembourg & Switzerland; Pacific Rim: Cook Islands, Hong Kong, Marshall Islands, Nuie, Thailand, Philippines, Singapore and Vanuatu.

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