Offshore Investing : is it all that evil?

Offshore investing has recently been demonised in the media, thanks to the release of the so-called  Panama  Papers. This case paints a  picture of  investors stashing their money with some legal company located in an obscure location where tax rate is next to nothing.

Offshore Investing ?

Offshore Investing refers to a wide range of investment strategies  that capitalise on advantages and disadvantages offered outside of an investor’s home country.

Offshore Investing: Advantages

Tax Reduction – Many countries  offer tax incentives  to  foreign investors. The favourable Tax rates in an offshore country are designed to promote a healthy investment that attracts outside wealth. In recent years, however many governments  have become increasingly aware of the tax revenue lost to offshore investing, and have created  more defined and restrictive laws  that close tax loopholes.

Offshore Investing: Asset Protection

Offshore centres are popular  locations for  restructuring ownership of assets. Though trusts  or an exisiting corporation , individual wealth ownership can be transfered from  people to other legal entities.

Confidentiality

Many offshore jurisdictions offer the benefit of secretary legislation. These countries  have enacted laws  establishing strict  corporate and banking confidentiality. However, this secrecy doesn’t mean that offshore investors are criminals with something to hide. It’s also important to note that offshore laws will allow identity disclosure in clear instances of drug trafficking, money laundering or other illegal activities.

Diversification of Investment

In some countries, regulations restrict the international investment opportunities of citizens. Many investors feel that such restriction hinders the establishment of a truly diversified investment portfolio. Offshore accounts are much more flexible, giving investors’ unlimited access to international markets and to all major exchanges.

Disadvantages

Tax Laws are Tightening — Due to political pressure, tax agencies are tightening up on many of the traditional tax efficiency-enhancing measures.

How safe is offshore investing?

Popular offshore countries are known to offer secure investment opportunities. More than half of the world’s assets and investments are held in offshore jurisdictions and many well-recognised companies have investment funds located in offshore locations. Like every investment you make, choose a reputable investment firm. It is also a good idea to consult with an experienced and reputable advisor to get the best possible advice, especially if you are looking to protect your assets, or are concerned with estate planning or business succession.

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