Many people are interested in learning about offshore banking. They’re also keen on opening an offshore account if they get the chance. Wealth solutions firms such as Ora Partners, Wells Fargo, and Fidelity Investments can provide important information and assistance with the process.
For starters, it’s important to understand offshore jurisdictions. An offshore jurisdiction is a country with low to no taxes. It also has corporate laws that optimize financial privacy. The laws they have are also designed to minimize corporate regulatory interference for individuals as well as corporations.
The term tax haven is used synonymously with other commonly used terms. It’s the same as offshore jurisdiction and offshore financial centers. All of this refers to countries that give financial and corporate services to non-residents in an offshore environment.
These places are popular since they specialize in business, financial, and legal services for non-residents. These services also offer financial opportunities such as asset protection, tax reduction incentives, offshore accounts banking privacy, and internationalizing of business structure.
The Pacific region is home to many offshore jurisdictions. These places are quite popular with investors.
Take, for instance, the Cook Islands. This beautiful group of islands is in the South Pacific and was discovered by Captain James Cook, the British naval explorer.
The Cook Islands government permits the incorporation of companies in accordance with the International Companies Act of 1981. The condition is that these companies have a minimum capital of $1,000,000 with no fees based on the capital. There is a one-time $1,000 fee as well as an annual $500 fee payable to the government — and there are no other taxes.
One single corporate director can actually run the company from any location, and bearer shares are permitted. There must be at least a single joint resident secretary as well as a registered local office. However, no agent is required. The words “bank,” “trust,” and “insurance” can only be used by licensed companies, and there are no exchange controls or double tax treaties.
Then, there’s Western Samoa. It is one of the better and more popular offshore jurisdictions for individuals and companies with a high net worth that currently offers restricted offshore banking licenses.
Unrestricted licenses cannot be obtained by anybody other than existing banks. These also require a minimum paid-up capital of $10,000,000. Most applicants find this figure too steep for their liking.
Restricted licenses require a minimum paid-up capital of $250,000. However, the bank’s operations have to be run through a local trust company. It means an element of third-party control is needed. An involvement in the bank’s affairs is required.
It’s a good thing that this kind of local expertise is available. Costs for a restricted license would be $22,500. Application time would be approximately one to three months.
Lastly, there’s Nauru, an independent republic in the Pacific Ocean. It is located approximately 2,500 miles southwest of Hawaii.
This tax haven offers the possibility of setting up an offshore account. There are no requirements for local directors or any local presence except for a registered office and company secretary in Nauru. What’s more, a management organization would typically provide all these services.
Nauru also accepts applications for unrestricted licenses or even in-house type banks. However, in practice, the authorities are not willing to provide unrestricted licenses to anybody other than an already existing bank. There are requirements when applying for these kinds of licenses. The authorities need the applicant to set up an office as well as associated infrastructure in the nation.
The capital required for an in-house bank is low at only $100,000. The entire process is around one to three months.
