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Offshore Banking Myths

Tax Haven Myths

Many things are said and assumed about offshore tax havens. However, common perceptions are not always accurate as much of this rumour and speculation is, in fact, misinformed. It is always important to speak to an offshore consultant with experience before conducting any offshore business or setting up any offshore entities so that you select the right offshore jurisdiction for your needs.

Tax Havens all have zero tax

This is not true. Not all offshore tax havens have zero tax. There are varying levels of taxation in different offshore financial centres and the rates may differ if you are an individual or an offshore company. Ireland, for example, is a corporate tax haven and offers a substantially discounted level of taxation for companies which relocate there. Some tax havens have zero tax, others have a lower rate of tax and a minority have a ‘standard’ rate of taxation, in line with home jurisdictions, but they offer taxation incentives in other ways or have an extremely high level of asset protection.

Offshore Tax Havens are all exotic islands.

Not true. Some offshore jurisdictions are glamorous islands in warm locations but many are not. It is interesting to note that Delaware in the United States and the Isle of Man are included as tax havens. These offshore financial centres offer comparable levels of tax to more exotic offshore locations and, in some cases, offer far greater benefits: it depends upon your personal circumstances.

Offshore Tax Havens are just for criminals

Not true. There is the possibility that the proceeds from some criminal activity would end up in offshore financial centres and jurisdictions but the majority of individuals and businesses that use these locations are completely legitimate. It is interesting to note that a recent study into the proceeds of criminality stated that the majority of illegal funds are actually held in banks and financial centres in the United States.

Most people select an offshore tax haven location as a wise decision to aid in their financial planning. Whether it is to protect their children from inheritance taxation or to reduce the amount of personal tax paid, an offshore bank account or offshore trust is the perfect vehicle with which to do this.