Top 5 Offshore Banking Myths
It was commonly perceived that the sole purpose of an offshore bank account was to store drug money and other forms of black money from weapons trading, terrorism, prostitution, and piracy! Unfortunately, this debauched view of offshore, or international, banking is one of the reasons that have made many business people and entrepreneurs shun away from the idea of opening an offshore bank account. In fear of being associated with such illicit activities, these enterprising individuals have forgone the opportunity of offshore asset protection and haven’t been able to make use of some of the world greatest banking jurisdictions. By the end of this article some of the stigmas of offshore banking should be explained and the fact separated from the fiction in order to give a clearer understanding about the concept of banking in an offshore jurisdiction.
Offshore Banking Myth #1- Offshore Banking is Illegal
Perhaps one of the more common misconceptions regarding offshore bank accounts, many people believe that offshore banking is either illegal or related to illegal activities. However the fact is that opening up an offshore bank account is 100% legal provided that the correct procedures for each individual jurisdiction are followed. Today, with more Mutual Legal Assistance Treaties (MLAT) in place, criminals have less opportunity to illegally use offshore bank accounts. Instead, large share of offshore deposits are made by fortune 500 companies and high net worth individuals looking to protect their assets with legitimate tax minimization strategies.
Offshore Banking Myth #2 – Offshore Banking is Solely for Tax Evasion
Offshore banks neither support nor encourage tax evaders, but rather, provide a legitimate option for tax planning. These bank accounts serve as an alternative financial instrument to investors who want to protect and diversify their assets. Some benefits that offshore bank accounts provide are:
- Protection from political or economical turmoil in resident country
- Reduced tax burden compared to resident country
- Asset protection from potential legal action, including situations such as divorce.
- Currency diversification
Offshore Banking Myth #3 – You Need Lots of Money to Open an Offshore Account
Yes, there are an endless number of high-end private banks lining up behind the worlds high net-worth individuals. These banks wont be interested in a relationship worth anything less that a couple of million dollars. However, the good news is that there are also an equal number of other banks for the middle class customer. As much as you might feel it is a waste of time and effort trying to establish an offshore account worth a mere thousand dollars or two, this is an option and there are advantages to be enjoyed.
Offshore Banking Myth #4 – You Need to Visit the Bank to Open an Account
More often than not, it is not necessary for the client to travel to the jurisdiction to open an offshore account. This is especially true for the bigger banks that have put due diligence procedures in place to allow bank accounts to be opened entirely by phone, fax, email, and courier. While some banks require appearance at their location, using the services of an experienced corporate services firm, such as Healy Consultants Group PLC, can make this process more convenient as there is already an established relationship between the bank the corporate services agent.
Offshore Banking Myth #5 – Offshore Banking is Tax-free
No, it’s not. In most cases you don’t have to pay taxes in the offshore banks jurisdiction. However, a number of countries, such as the US, tax worldwide income and as such is advisable to research the taxation laws of the country in which you are resident in order to breaking any laws. There can be other taxes such as withholding tax to consider also.
Some may find that the process of setting up an offshore bank account can be troublesome and time-consuming, which may be true if done alone with no planning. However, by engaging the services of an experienced agent who can assist you choose the right jurisdiction to suit your needs and manage the account opening process will make the process smoother and allow you to enjoy the benefits.
Healy Consultants Group PLC is a corporate services firm providing international clients with a range of company formation and corporate advisory services. Headquartered in Singapore, the firm has an exceptional knowledge of Singapore company registration and International Banking services. Visit our website below for detailed information on the firms services-https://www.healyconsultants.com/