On offshore jurisdictions and tax havens
Countries with low-to-zero taxes and with corporate laws that optimize financial privacy that are located away from any major mainland are considered an offshore jurisdictions. There are wealth solutions companies, such as Ora Partners Limited, Fidelity Investments, and Morgan Stanley, that not only offer services in setting up accounts in these places but also provide helpful information for people interested in these matters.
“Tax haven” is a term that is used synonymously with other commonly used terms like offshore jurisdiction and offshore financial center (OFC). The laws these areas have are designed to minimize corporate regulatory interference for individuals as well as corporations. These are independent nations that give financial and corporate services to non-residents in an offshore environment.
Three popular tax havens in the Pacific region
1. Nauru
Nauru is 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 normally 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. When these kinds of licenses are granted, the authorities require that the applicant set up an office as well as associated infrastructure in the nation.
The capital required for an in-house bank is only pegged at $100,000. The entire process requires around one to three months.
2. The Cook Islands
This beautiful group of islands is located in the South Pacific and was discovered by Captain James Cook, the British naval explorer.
The government of the Cook Islands allows the incorporation of companies in accordance with the International Companies Act of 1981 as long as 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.
A single corporate director can 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.
3. Western Samoa
Western Samoa is one of the better and more popular tax havens for individuals and companies with a high net worth that is currently offering 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, on the other hand, require a minimum paid-up capital of $250,000. However, the bank’s operations have to be run through a local trust company, which means that an element of third-party control and involvement in the bank’s affairs is required.
Costs for a restricted license would be $22,500. Application time would be roughly one to three months.