In the last 15 years a number of significant factors have changed the way companies and individuals conduct their business and financial affairs.
- Political Factors
The post-Glasnost era has led to the political and economic reform of the important markets in Central and Eastern Europe.
The move towards democracy in certain regions of Asia, Africa and South America has enabled business people to acquire information and invest in new markets.
The transitional stages towards liberalisation of these emerging markets have been marked by long periods of political and economic instability.
Now we can see investors in these emerging markets seeking new ways to structure their investments so as to hedge against these risks of instability through tax efficient and secure jurisdictions.
- Economic Factors
Some businesses have expanded to such an extent that they have outgrown their national borders and transformed themselves into multinational groups. The removal of traditional economic barriers has led to increased mobility and availability of products, services and capital, thus transforming these multinational groups into global businesses.
The rapid growth of these emerging markets, with the associated increase in competition, has led to strategic planning being a high priority for businesses wishing to develop successfully. As a result of these changing economic factors, businesses have realised the need to design and implement an effective international tax strategy to maximise their shareholders’ value.
Tax and financial professionals are now having to align tax and company goals into an overall corporate strategy.
- Social Factors
The increase in personal wealth across the social spectrum has led to an escalation in the number of people living and working abroad.
This increase in the international mobility of the workforce means we are now exploring the differences between domicile and tax residence in great detail, in order to reduce overall tax liability.
The increase in the incidence of legal claims made against professionals has led to individuals increasingly structuring their assets to protect them from third party claims.
The use of a trust as a form of wealth holding can present significant advantages in terms of asset protection, tax reduction, confidentiality and inheritance planning.
- Technological Factors
Advances in technology have given both individuals and businesses rapid and efficient access to information on international markets and jurisdictions. This has produced with it a new range of services including on-line consultants and e-commerce.
The structuring and control of business and financial affairs between different international jurisdictions via the Internet presents major advantages in terms of taxation and confidentiality.
- Government and tax authorities
The socio-economic and political factors that are driving global change have led tax authorities in various countries to impose stricter controls on individuals and companies. This compromises the confidentiality of the financial affairs of many companies and individuals.
By creating international corporate structures, it is possible to ensure the confidentiality required by companies and individuals with respect to their financial affairs.
Two decades ago, the offshore industry was still relatively small and was perceived as the domain of only multinationals and high net-worth individuals. Offshore jurisdictions were considered to be centres of somewhat unregulated financial activity operating at the fringes of tax legislation. This false perception can be dispelled today as it is estimated that 60% of the worlds’ money supply (approx. US$6 trillion) each year, flows through or is held offshore.
Laws relating to international business and offshore centres are complex with sophisticated legislation in connection with trusts, taxation and corporate structure. The regulations involved in monitoring such offshore business are strict, and the professionals working within it are of the highest calibre.
Thus, an individual or a company should consider the possibilities of going offshore through a well-designed and implemented tax strategy. Moreover, they should choose a more prominent international business and offshore centre, which has legal, accountancy and investment related infrastructures, and which can provide tax efficient and innovative financial products in a secure and well regulated fiscal environment.
The decision needs to be taken in a structured manner, only after seeking professional advice on:
- Incorporating Offshore
- Establishing an International Trust
- Choosing an International Jurisdiction
- Private and Corporate Banking
- Tailor-made solution through International Tax Planning Structures
The content of this article is intended only to provide general guidelines related to this particular matter. For your specific circumstances, full specialist advice is recommended.
To receive more information on offshore services or to discuss the particulars of your international tax planning needs please contact us.