Offshore Investing + Tax

As a resident of most westernised countries, you are required by law to pay tax on your world wide income. However, income can be quite different from capital growth, and it is this distinction that can make the difference when investing (please check with suitably qualified domestic advisors).

International Finance Centre (formally referred to as Tax Havens) are an integral part of offshore investing because they can allow your investment to grow and compound without subtracting tax; which means it grows much faster.

WHAT IS An International Finance Centre?

An International Finance Centre is defined as any country that has laws and regulations in place allowing foreign investors, whether they are corporations or individuals, to reduce their tax liability by the use of offshore structures.

The common misconception that the use of International Finance Centres must in some way be illegal is totally incorrect. So while ‘tax evasion’ is illegal, ‘tax avoidance’ is not. This distinction is crucial.

Most International Finance Centres began in small island nations which were trying to create a viable source of income. Being unable to compete internationally in export or production, they gave rise to the idea of creating international financial centres, catering specifically to international entities.

Rather than charging a percentage of earnings as tax, most International Finance Centres instead charge fess on administering funds, companies, trusts, agencies and similar financial entities.

International Finance Centres have also come under fire, in the past, due to a small number of regions being lax regarding illegal activities. However, the majority of these jurisdictions have strict laws in place to prevent this type of activity.