The Channel Islands, Jersey and Guernsey, physically closer to France than the UK, are remnants of the historical effects of William the Conqueror, who acquired the British Isles in 1066. A substantial measure of self-government and certain privileges (tax, trusts and otherwise) were their reward for their loyalty to the UK Crown in 1204. They were thus referred to as “offshore,” i.e. not part of larger land areas.
As such, it is a fact that the European nations that created the concept which has proven successful at leveling the playing field now seek an excuse to contain and suppress international efficiency.
The State of Delaware initially entered the arena after they realized the greater corporate registration revenues available by providing more flexible corporate laws. They now strive to distinguish themselves as a “Corporate Haven” and not a “Tax Haven”, but a rose by any other name smells just as sweet.
Concurrently, the European micro centers of Luxembourg, Liechtenstein, Monaco, Andorra, and larger Switzerland and Austria had already served cross border industrialists, nobles and intertwined sovereigns for centuries. These started giving way to similar but more efficient centers like Panama, Bahamas, the Caymans, BVI, Bermuda and eventually Belize among others.
The Offshore Industry And North America
In the US, more details are required to obtain a driver’s license than to form a corporation. In Belize, a licensed practitioner at the minimum must secure a passport copy, utility bill as proof of address and two bank references on a person wishing to incorporate an International Business Company (IBC).
They are bound by Know Your Customer principles and a Code of Conduct. The US Department of Commerce has estimated that approximately $2 trillion US is held in US banks deposited by foreign persons. It is there because of US exemptions on interest income.
Reasons For Going Offshore
The law of English trusts arose in the Middle Ages from the time of the crusades under the jurisdiction of the King of England. The “common law” regarded property as an indivisible entity, as it had been done through Roman law and the continental version of civil law. Where it seemed unfair to let someone with legal title hold onto it, the King’s representative, the Lord Chancellor who established the Courts of Chancery, had the discretion to declare that the real owner “in equity” (i.e. in all fairness) was another person.
While privacy and tax minimization are major reasons investors go offshore, it is not a preponderance of persons who do so for illicit activity. One is entitled to arrange his affairs in the most efficient and economical manner. In fact, offshore is not illegal as the propaganda asserts. Not to report/pay due taxes back home (“onshore”) is illegal, but most people using offshore structures in fact do so.
If properly arranged with cross-border professional advice, the structures work in resourceful harmony. Because this has worked so well and because even UK and US courts recognize the legality, is the reason for the attempt to find other moral reasons not to allow offshore centers to continue. We have become a victim of our own success. Further, there are various reasons people wish for anonymity. Kidnapping or the targeting of affluent persons has become an industry in many countries.
Tax reports are sold to third parties and some countries have over- zealous investigative branches of government (some governments spy on their citizens and others utilize this information for extortion and repression). People guarding against economic espionage to protect the success of their patented business models seek out confidentiality and trust. In the US now, one can purchase almost anyone’s Social Security number and address or it can be stolen from garbage, obtained online or via wireless extracted from large store computers,
Offshore Financial Supervision In Belize
The International Financial Services Commission (IFSC) of Belize licenses and regulates among other tasks, all local practitioners. There are 69 IBC agents, 38 Trust agents, 15 International Insurance Service Providers and about 24 more licensed agents for less known offshore activities (though a few of the aforesaid offices overlap).
Their annual fees average $5,000.00 and most are required to place capital requirements in local banks. The services and products sold pay to the government a minimum of 100.00 USD with a similar sum annually (for IBC’s). As at 2011, there were about 96,000 IBCs on record (though some may have since been struck off the register for non renewal).
Trusts are harder to number, having only recently been required to register and even then, the actual figure is private. As stated, there are also emerging areas that are not accounted for in the following conservative estimate (that does not take into account capital deposits and are based on minimum government charges).
– Article contributed by Attorney-at-law and offshore practitioner Emil Arguelles.