Well yes!

This is probably the most commonly considered advantage of going offshore; any sane business or individual is always looking for legal ways to reduce tax liabilities right?

Well, a properly structured offshore arrangement can significantly reduce the levels of an individual’s or business’ tax liability.

Certain offshore jurisdictions have low or even no tax legislation applicable to residents and exempt companies.

An option worth exploring with your tax adviser’s help?

Asset Protection

Asset protection is all about putting you most precious possessions out of reach.

For a business, placing assets offshore means you are placing them beyond the reach of an opponent, a law suit or a prospective creditor.

For an individual this may seem like quite an extreme option; but anyone can be sued or get divorced and offshore asset protection might be the right consideration for some people to make.

By making assets unattractive or legally unobtainable by third parties, asset protection is achieved.

Accessing International Investment Opportunities

There are a number of high return investment opportunities that are only available offshore, and many of the world’s stocks are traded from outside your country of residence.

These are just two reasons to consider choosing offshore.

A further advantage to trading offshore is of course the lack of taxes in certain jurisdictions which can potentially add great value to any gains made!

Privacy

Big brother is increasingly interested in everything we do; government agencies make reporting demands on banks and other financial institutions, and so often the levels of privacy we feel we deserve cannot legally be achieved close to home.

Quite the opposite is the case in a number of offshore jurisdictions where the reporting of an individual’s information is actually illegal!

Therefore moving business activities, assets and transactions to an offshore jurisdiction can help with privacy and confidentiality.

Of course and rightly so, the privacy afforded will not protect anyone engaged in criminal activity such as terrorism.

Estate Planning

As individual wealth and net worth increases, more and more people risk loosing a considerable amount of their estate in income and excise taxes.

Certain offshore jurisdictions can make financial planning easier in this circumstance and thereby reduce these liabilities.

This ultimately enables an individual to pass their estate on to those they want to benefit - with minimal tax and liability problems.

Transfer Pricing

Transfer pricing is a controversial and complex way for a multinational company to reduce or even wipe out its tax liability! Here’s how it works in layman’s terms: -

If a part of a multinational company sells (or ‘transfers’) a product (e.g., tangible or non-tangible goods, knowledge or service) to another part of the multinational, a price can be applied to that ‘sale’….this is the ‘transfer price’.

This price can be any figure; it does not have to relate to the actual value of the product sold or transferred.

The price can of course be set at such a level that it reduces or even negates the entire multinational’s tax liability!

Add to this an arm of the multinational in a tax friendly offshore jurisdiction, and if any company profits were made, they could be trapped in the offshore location as part of the ‘transfer pricing’ process.

So, is investing offshore an option of interest to you - either as an individual or for the benefit your company? If it is, Tax Consultants Guide can tell you that there are specialist investment companies out there who can advise and guide you. And as a starting point your own financial or tax consultant may have information to help you.

Tim Glenville publishes friendly and informative tax and financial advice in plain english.
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