Offshore Tax Havens

Tax Haven
Basics,
Explained.
www.OffshoreTaxHaven.info
compiled by
Price: Free
DISCLAIMER
The information contained in this publication is for information purposes and guidance
only. This publication should not be relied upon without obtaining appropriate
professional advice having regard to the client’s direct personal circumstances.
No responsibility for loss occasioned directly or indirectly to any person acting or
refraining from acting wholly or partially upon or as a result of the material in this
publication or for any error in or omission from this publication can be accepted by the
publisher or any author, editor, contributor or consultant or any company referred to
herein.
Nothing in this publication is intended nor should it be interpreted as in any way
sanctioning, advocating or condoning directly or indirectly the commission of any
unlawful act or omission by any person or company in any jurisdiction or the use of
offshore structures for any illegal or fraudulent purpose.
This publication is made available on the understanding that neither the publisher nor
any author, editor, contributor or consultant or Internet service provider or any company
referred to herein is not engaged in rendering legal, accounting or other professional
advice or services.
This eBook is Free of Charge, from offshoretaxhaven.info and
can be distributed freely, as long as it is not altered in any way
and remains Free of Charge .
i
Contents
What is a Tax Haven ? ............................................................................................ 1
Types of Tax Havens and Offshore Financial Centers. ........................................ 2
Double Taxation Treaties .................................................................................................. 2
Low Tax Territories .......................................................................................................... 2
No Tax territories.............................................................................................................. 2
Tax Haven law .................................................................................................................. 2
Asset Protection is NOT only for the Rich. ........................................................... 3
Benefits Of Offshore Privacy ................................................................................. 4
Tax Avoidance v Tax Evasion ................................................................................. 5
Tax Avoidance .................................................................................................................. 5
Tax Evasion ...................................................................................................................... 5
Selecting a suitable Jurisdiction............................................................................. 6
POLITICAL AND ECONOMIC STABILITY ................................................................ 6
LEGISLATION ................................................................................................................ 6
PROFESSIONAL INFRASTRUCTURE......................................................................... 6
COMMUNICATIONS ..................................................................................................... 6
LANGUAGE .................................................................................................................... 6
A list of 50 popular tax havens ............................................................................... 7
The Offshore Company ......................................................................................... 8
What Is A Corporation? ................................................................................................. 10
What Is An IBC or Offshore Corporation?..................................................................... 10
What Are Articles Of Incorporation? ............................................................................. 10
What Are By-Laws? ....................................................................................................... 10
What Are Off-The-Shelf Companies? ............................................................................. 10
What Is A Registered Agent? ......................................................................................... 10
The Characteristic of Offshore Companies ........................................................ 11
Company Name .............................................................................................................. 11
Registered Office ............................................................................................................ 11
Memorandum and Articles of Association...................................................................... 11
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Authorized and Issued Share Capital .............................................................................. 11
Shareholders ................................................................................................................... 11
Directors and Company Secretary .................................................................................. 12
Accounts and Audit ........................................................................................................ 12
How Do I Compare IBC's? .................................................................................. 12
Jurisdiction...................................................................................................................... 12
Agent .............................................................................................................................. 12
Price ................................................................................................................................ 12
An Example Of using an Offshore Company and Offshore Banking............. 13
Operation: ....................................................................................................................... 13
Situation: ......................................................................................................................... 13
Solution: ......................................................................................................................... 13
Requirements: ................................................................................................................. 13
Result: ............................................................................................................................. 13
Shares ..................................................................................................................... 14
Ordinary Shares .............................................................................................................. 14
Bearer Shares .................................................................................................................. 14
Nominee Directors .......................................................................................................... 14
Nominee Shareholders .................................................................................................... 14
Sample Articles of Association............................................................................. 15
Sample Memorandum of Association.................................................................. 17
The Characteristic of Offshore Trust .................................................................. 21
Classifications ................................................................................................................. 22
Applications. ................................................................................................................... 22
Services ........................................................................................................................... 22
Advantages. .................................................................................................................... 23
Establishing an Offshore Trust To Protect Your Assets..................................... 25
The Rich Are Going Offshore! ....................................................................................... 25
Just What Is A Trust... .................................................................................................... 25
A Trust After The FACT Will Not Work! ....................................................................... 26
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What Kind Of Trusts Are Available?.................................................................. 27
Beneficial Trusts: ............................................................................................................ 27
Asset Protection Trusts: ................................................................................................. 27
Discretionary Trusts: ...................................................................................................... 27
WHAT IS OFFSHORE BANKING.................................................................... 28
Why Have an Offshore Bank Account? .............................................................. 29
Economic Woes .............................................................................................................. 29
Government Oppression ................................................................................................. 30
IRS Letter Ruling 9332006................................................................................... 39
IRS Letter Ruling 9332006 shows how to legally avoid millions of dollars in taxes. ..... 39
Ship and Yacht Registration ................................................................................ 40
The TAX HAVEN REPORTER .......................................................................... 41
PRIVACY TOOLS AND TIPS ............................................................................ 43
Evidence Eeliminator ...................................................................................................... 43
The Anonymizer ............................................................................................................. 43
HushMail ........................................................................................................................ 44
e-Gold ............................................................................................................................. 44
The International PGP Home Page................................................................................. 44
ANGUILLA International Business Company ....................................................................... 45
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www.offshoretaxhaven.info
1
Tax Haven Basics, Explained.
What is a Tax Haven ?
A Tax Haven is a foreign country, in which a person or company establishes itself
because of the country’s low or nonexistent taxes.
A tax haven has also been called a Financial Center or Fiscal Paradise.
What is an Offshore Tax Haven ?
An Offshore Tax haven is the same as a tax haven, except that it is located in a country
or jurisdiction not within the country in which you or your company are resident in.
In the 1950’s, there was only a handful of offshore tax havens and their use was
surrounded in "mystique".
There were only a few professionals specialising in offshore tax planning and those that
did, typically made use of limited resources.
Over the last twenty five years, advances in technology and the telecommunications
revolution, have made it easier to both collaborate with other tax planning professionals
and access offshore facilities.
Today's offshore industry is a major global business, utilised by many well know
individuals and companies.
www.offshoretaxhaven.info
2
Types of Tax Havens and Offshore Financial Centers.
There are basically three types of Tax Havens or Financial Centers.
Double Taxation Treaties
The first is a territory that has enacted Double Taxation Treaties with a varied number
of high tax countries, examples of such territories are Cyprus, The Netherlands,
Mauritius and Switzerland.
Basically, the purpose of double taxation treaties are to reduce or eliminate the
possibility of the Income from a company being taxed twice.
These agreements are reciprocal agreements between two countries and vary from
country to country.
Financial professionals within each country will normally have the most up to date
information.
Low Tax Territories
The second type is the “Low Tax” territory. In these territories, there is a set Low tax
rate on Income, that is much lower than most other countries, these range from 1% to
10%.
No Tax territories
The third type is the “No Tax” territory, which is the most popular at the moment.
In No Tax territories, there is No tax on Income that is made outside the country of
incorporation.
For example, a company Anguilla will pay no tax on Income, as long as that income
was not made trading with the Island of Anguilla.
Both treaty and non-treaty jurisdictions have a significant role to play in tax plan-
ning and asset protection.
Tax Haven law
Tax Haven or offshore Company law is normally based on English Common Law.
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3
Asset Protection is NOT only for the Rich.
There is the impression that tax havens are only for the rich. This is increasingly
becoming obsolete.
A tax haven also has big advantages for people on quite average incomes.
What are the advantages ?
Consider an income of $35,000, of which up to 45% is siphoned off in various taxes.
That's $15,750.
If that tax bill was reduced to say 15%, then such a person would have an extra
$10,500 in his or her pocket each year to invest.
Also, the cost of setting up and maintaining the structure would come out of the extra
cash, not existing, so it literally pays for itself.
Be warned some people would see the extra $10,500 and say,
“ if I only pay $500 a year to maintaining the structure, I’ll have an extra $10,000, why
should I pay $1,500 a year.”
It is better to have an extra $9,000 a year and KNOW you are safe, than an extra
$10,000 a year and THINK that you are safe.
To look at the big picture, if you add that figure over a 40 year working life, or even over
25 years and add interest, that saving would grow into a tidy sum.
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4
Benefits Of Offshore Privacy
Offshore Services can assist in the growth and management of global assets, while
prioritizing one or more of the following areas;
1. Financial affairs remain private, through non disclosure, (privacy) protection when a
jurisdiction is selected where it is a crime for a trustee to reveal anything about a client.
2. Lawful reduction of taxes on investment income and growth through structured
international investment planning.
3. Asset protection from the threat of creditors, lawsuits, divorce, corporate negligence,
malpractice, and other financial disasters.
4. Estate planning strategies concerning the disbursement of the individual and/or
businesses accumulated investment income to the designated beneficiaries with
minimal tax liability.
Privacy is not available from North American banks, security dealers, accountants,
any government or financial institutions.
Government attitudes towards a citizens right to privacy and tax positions have
changed. Recent amendments to the Income Tax Act will force taxpayers to disclose
their foreign income revenues and their interest in corporate or trust foreign affiliates.
Tax payers must file these disclosures in the foreign reporting section of the 2000 Indi-
vidual Tax forms. (Delay announced on Oct 1/97).
Revenue USA's new computerized monitoring and electronic cross-referencing
surveillance programs emphasize the immediate need of global investors to be warned.
Provide non disclosure protection for your current and future affairs in order to avoid
financial compromise, onerous tax burden, or severe penalties.
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5
Tax Avoidance v Tax Evasion
Tax Avoidance
It is crutial to understand that Tax Avoidance is NOT a crime.
Tax Avoidance is to arrange your affairs to pay the least possible tax you legally can.
Basically, what this means is that you follow the tax rules of your country, so that you do
not pay too much tax.
If you could have paid $1000 less for your car when you purchased it, but didn’t,
because you forgot to read what offers the seller had, how would you feel ?
It is the same with taxes, governments set the rules about how much tax you should
pay, so it up to you to follow those rules to pay the least possible.
They certainly will not remind you, unless you do not pay.
Tax Evasion
This subject is so big I couldn’t possibly cover it here, but basically it is to willfull
attempt to evade or defeat any government tax.
Most high tax countries have a mandatory prison sentence for a conviction of tax
evasion, as well as a fine.
Therefore it is well worth the effort and expence to hire a professional, with the
realavent experience, for all your tax planning needs.
For example, if a United Stated Citizen opens a personal foreign bank account, it is
NOt tax evasion, however, not reporting the interest earned in the account on their U.S.
tax return IS tax evasion.
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6
Selecting a suitable Jurisdiction
The selection of the most suitable jurisdiction for tax planning purposes is difficult and
requires very careful consideration.
Many tax haven jurisdictions are free from foreign exchange controls and have
introduced company legislation to cater for a diverse range of international business
requirements.
It is important to select a jurisdiction that is well suited specifically to your needs.
POLITICAL AND ECONOMIC STABILITY
The jurisdiction must provide political and economic stability. The present and future
outlook should be researched.
LEGISLATION
There are now more than 50 tax havens worldwide providing varying offshore company
legislation, and should provide confidentiality and complete privacy regarding a client’s
business dealings.
PROFESSIONAL INFRASTRUCTURE
The jurisdiction should provide Legal, Banking and Accounting firms, with a verifiable
track record.
COMMUNICATIONS
It is important for a tax haven to have excellent communication facilities, air ports with
regular flights, an efficient postal (mail) services and modern telecommunication
system.
LANGUAGE
Most non-English speaking offshore providers are able to provide multi-lingual
services, but it is also wise to locate in a jurisdiction where you understand the
language spoken there.
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7
A
ANDORRA
ANGUILLA
ANTIGUA
B
BAHAMAS
BARBADOS
BELIZE
BERMUDA
BRITISH VIRGIN ISLANDS
C
CAYMAN ISLANDS
COOK ISLANDS
CYPRUS
D
DENMARK
G
GIBRALTAR
GUERNSEY
H
HONG KONG
HUNGARY
I
IRELAND(REPUBLIC)
ISLE OF MAN
J
JERSEY
L
LIBERIA
LIECHTENSTEIN
LUXEMBOURG
M
MADEIRA
MALTA
MARSHALL ISLANDS
MAURITIUS
MONTSERRAT
MONACO
N
NAURU
NETHERLANDS
NETHERLANDS ANTILLES
NEVIS
NIUE
A list of 50 popular tax havens
P
PANAMA
PUERTO RICO
S
SARK
SEYCHELLES
SINGAPORE
ST. BARTHELEMY
ST. KITTS
ST. VINCENT
SWITZERLAND
T
TURKS AND CAICOS ISLANDS
U
U.S. VIRGIN ISLANDS
U.S.A.
URUGUAY
V
VANUATU
W
WESTERN SAMOA
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8
The Offshore Company
The offshore company, which is also called an International Business Corporation
(IBC) in Caribbean nations , can be defined as any company doing business outside
the country where it is organized.
To people in the United States, this means having the company formed outside the
United States, not subject to the laws of the United States related to its conduct of
company's affairs.
Two characteristics are involved in the principal of operation that make it
possible for an offshore company to avoid becoming subject to the laws of the
United States.
First, the offshore company should be organized outside the United States.
Second, it must conduct its business outside the United States.
A company organized in Anguilla, Belize or the Bahamas is an offshore company
as far as the United States is concerned.
That does not mean, however, that the IRS, the SEC or any other arm of the United
States' government would not challenge the integrity of a foreign company's foreign
status.
Typically, the basis of such challenge is based upon the fact that a company has a fixed
place of business in the U. S.
To avoid the challenge it is important to operate outside the jurisdiction of the
Governmental Agencies of the United States.
Specifically, there are a number of precautions to be observed.
Do not open an office in the United States.
Do not make public offerings in the United States.
It is acceptable to:
Hold shareholder meetings for general or specific purposes.
Maintain bank accounts in the United States, (U.S.).
Maintain brokerage accounts in the U.S.
Purchase real estate for a portfolio in the U.S.
Purchase stocks, and commodities for a portfolio in the U.S.
Issue guarantees not considered by the SEC to be securities, in the US.
The appropriate way to conduct the business of an offshore company is offshore,
without an office in the U.S. and without violating any laws.
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9
The offshore company can:
• Conduct business without reporting to agencies of the United State government.

• Disregard borrowing and lending limits and limits of issuance of stock, debentures
or notes.
• Approach United States citizens offshore (outside the United States) through
publications or through personal contact.
• Preserve perfect confidentiality of the affairs of the offshore company and its
investors, shareholders, clients or associates.
• Make investments, shift them, sale or trade them or make gifts of them without
reporting, to any governmental entity, including the agencies of the United States
government.
• Conduct foreign trade activities in any field, including trading in currencies,
stocks, bonds, loans or merchandise.
• Borrow and loan money, paying or charging any interest desired and feasible, with
terms negotiated between any two parties.
• Purchases goods from one country and sale to other countries or to related or
associated firms with profits held in a third country.
• Buy from any individual any product or service and return the product or service to
the seller under any terms or conditions you consider to be to your interest.
• Hire or retain anyone whom the company desires to hire or retain at any fee the
company cares to pay and pay such fee in any jurisdiction the company chooses
in any currency the company chooses.
• Maintain deposits in any bank in any country you choose.
• Transfer money from and to accounts as you choose.
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10
What Is A Corporation?
A corporation is an entity recognized by law as a separate “person” with limited liability.
A corporation has the option to sell shares, the right to sue and be sued, and has
perpetual existence.
What Is An IBC or Offshore Corporation?
An IBC is a usually tax-exempt corporation which can do business all over the world
except in the country where it has been incorporated.
What Are Articles Of Incorporation?
The Articles of Incorporation is the document which establishes the corporation and
contains basic information such as the name, share structure, and purpose of the
corporation.
What Are By-Laws?
The By-laws, or in some jurisdictions “Articles of Association”, are rules the corporation
creates for its shareholders, officers, and directors. By-laws are adopted by the Board
of Directors as one of the first organizational steps in setting up a corporation. Upon
instruction, we can adopt a standard set of By-laws for a new corporation. Unlike
Articles of Association, By-laws are usually maintained internally but may be publicly
filed if requested.
What Are Off-The-Shelf Companies?
Off-The-Shelf Companies are ready-made, never used corporations that have been created to
meet a client’s immediate needs. Shelf companies are available for Panama only.
What Is A Registered Agent?
A Registered Agent is required to ensure that the corporation has an assigned representative at a
known address to receive all service of process (legal notices) on its behalf. The Registered Agent
forwards these documents to the address of record of the corporation.
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11
The Characteristic of Offshore Companies
Offshore companies can be established in both common law and civil law jurisdic-
tions. The following information allies to companies establish in common law jurisdic-
tions which in relation to tax havens and offshore financial centers are mainly Common-
wealth countries.
Company Name
All proposed company names must be approved by the appropriate Registrar prior to
incorporation. Registrars have the right to refuse any name that they consider
undesirable or too similar to an existing company name.
The use of words such as Bank, Savings, Trust, Banc etc., or any other word that would
imply a meaning for the company that is untrue, are also strictly controlled.
Registered Office
It is a requirement that all companies have a Registered Office situated within the
jurisdiction of incorporation and such address is the legal address of the company for
process and official documents. The companies statutory records are maintained at the
Registered Office but accounting records can be maintained elsewhere.
Dependent upon its Tax Structure the company can conduct its business from the
Registered Office or another location either in or outside the jurisdiction. Change of
Registered Office must be notified to the Registrar of Companies.
Memorandum and Articles of Association
Under modern legislation a company can carry on any activity an individual can and it
is only necessary to show in the objects clauses of the Memorandum those activities
which the company is specifically excluded from carrying on.
Authorized and Issued Share Capital
Capital Duty is payable upon the authorized capital in most low tax areas and thus it is
usual to incorporate a company with the maximum authorized capital for the minimum
duty.
The issued share capital i.e. the capital actually taken up by way of subscription or
allotment by the shareholders, may be issued in partly paid or fully paid form or for a
consideration other than cash.
There is no restriction as to the amount of share premium that may be paid.
Shareholders
Shareholders are the legal owners of the company and they may either be individuals
or companies or trustees.
Dependent upon the jurisdiction of incorporation a company may require a minimum of
one or more shareholders.
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Directors and Company Secretary
The Company Secretary can be either a company or an individual. The Directors would
usually reside in an appropriate jurisdiction so that the offshore company would comply
with legislation as to its management and control and thus residence for tax purpose.
Accounts and Audit
It is a requirement in most jurisdictions that all companies are required to keep proper
books of accounts however in some jurisdictions it is neither necessary to have an
annual audit nor to file accounts with the local Tax Official or Public Registry.
How Do I Compare IBC's?
Jurisdiction
The most important item to determine first, is what tax haven shall I use?
You must be fully satisfied that the laws of that country will promote and protect your
wishes. Guaranty Trust Ltd. in Switzerland investigates and publishes an annual report,
rating World Wide Tax Havens with points given under 20 different categories.
Agent
We advise you to use a set-up agent, to help you buy an IBC that fits your needs.
You don't want an IBC set up by some foreign lawyer who is only moderately up-to-date
on tax law. Remember that a lawyer in the Caribbean has no license to lose in your
country if he should provide you with bad advice. As well, who is going to go to bat for
you if Revenue Canada comes calling?
Price
We recommend a Caveat Emptor approach. Beware of too high, as well as too low
of prices. Keep the annual renewal costs in mind. We suggest that $2,000 to $5,000 US
should get you a state-of-the-art IBC in the best jurisdiction.
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13
An Example Of using an Offshore Company and Offshore Banking
The following scenario are provide as illustrations of different methods that real
individuals use to conduct offshore commerce, protect assets, and increase profits.
For obvious reasons, we have changed the Company names. Some have just started
while other have been participating for years. Prior to setting up your offshore business,
we encourage all our clients to consult their attorneys, tax advisors and other local
authorities, with specific reference too their own government jurisdiction's), regarding
local restrictions.
Name: DODD
Operation:
AXG, Ltd, partnership, purchase precious gem stones from around the world. AXG, as
a wholesaler, sells and delivers the stones to retail jewelry stores in the southern
section of the United States.
Situation:
AXG, wants to increase its profits while decreasing its tax liability. For example, the
IBC, purchase the gem stone from the foreign supplier for $100,000. The IBC, sells the
stones to DODD for $150,000. AXG, retails the stones to the jewelry store for $170,000.
The US profits is $20,000 - most of which pays the salaries and overhead of AXG. This
system, called "back to back invoicing" is a main stay in offshore profits retention
Solution:
AXG, sets up an International Business Corporation that pays the invoices of the
foreign suppliers. The IBC, immediately invoices AXG, at a higher total.
Requirements:
One International Business Corporation and bank account or accounting firm in the
domicile.
Result:
AXG, has increased profits by 200% while decreasing tax liabilities by 200%.
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Shares
Ordinary Shares
These are share certificates with the owner's name appearing on the certificate
and on public file. Ordinary shares are used in the case of most European jurisdictions.
Bearer Shares
These are ordinary shares except that the owner's name does not appear on the
certificate nor on public file. Furthermore, mere possession of the share certificate is
deemed proof of ownership. Bearer shares are not possible in the case of most Euro-
pean jurisdictions but are advocated as a positive feature of companies incorporated in
Antigua, Bahamas, BVI, Panama, Turks & Caicos, Liberia etc
Nominee Directors
Whilst the company itself may be incorporated in a tax haven jurisdiction (and will
itself be exempt from tax on foreign earnings), it is important that the directors and
shareholders of the company are similarly protected.
This is because many inland revenues have powers to 'deem' that the directors or
shareholders are receiving an income from the company.
It is normal therefore to appoint nominee directors who are themselves located in a tax
haven location, this may or may not be in the same jurisdiction as the company.
Nominee Shareholders
The Nominee Shareholders are the professional individuals or Trust Deeds who
hold the shares in trust for the beneficiary or his heirs.
In view of the public records not showing the beneficiary's interests it is imperative
that proper power of attorney documents are held by the beneficiary or his legal repre-
sentatives. Typically the beneficiary is provided with a General Power of Attorney
signed by the directors and secretary;
Undated resignation letters signed by the directors and secretary;
Signed but unexecuted stock transfer forms;
Declarations of trust and beneficial ownership signed and sealed by the nominee
shareholders.
Holding these documents, the beneficiary or his legal representative can operate
the bank account and manage the company anonymously and unimpeded.
It is therefore the sole responsibility of the beneficiary to make returns to his
domestic inland revenue if so required by local law.
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15
Sample Articles of Association
Companies Acts 1982 to 1997 Company Limited by Shares -
Articles of Association of:
A. & B. INTERNATIONAL LIMITED
Preliminary
1. The Company is a private Company within the meaning of Section 33 of the
Companies Acts 1963, and subject as herein after provided, the regulations contained
in Part II of Table A in the First Schedule to the Companies Acts 1963 to 1990 (Here in
after called "Table A"), with the exceptions Regulations 1 and 7 thereof, shall apply to
the Company.
2. Regulations 8, 24, 51, 54, 75, 79, 84, 86, 91 and 92-96 inclusive of Part 1 of Table A
as hereinafter modified, together with the following articles, shall be the regulations of
the company.
Lien
3. The Lien conferred by Regulation II of Part 1 of Table A shall apply to all shares of
the Company whether fully paid or not and to all shares registered in the name of any
person indebted or under liability to the Company whether he be the sole registered
holder thereof or shall be one of several joint holders. Regulation II of Part I Table A
shall be varied accordingly.
General Meetings
4. The words "one member" shall be substituted for the words "two members" in
Regulation 50 of Part 1 of Table A.
5. The word "two" shall be substituted for the word "three" in Regulation 59 (b) of Part 1
of Table A.
6. Annual General Meetings
All general meetings of the company maybe held outside the State.
Annual General Meetings however will be subject to the following conditions of section
140 of the Companies Act. 1963.
(a) Either all the members entitled to attend and vote at such meeting consent in writing
to it be held elsewhere or a resolution providing that it be held elsewhere has been
passed at the preceding Annual General Meeting.
(b) The articles do not provide that Annual General Meetings shall be held in the State.
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16
Directors
7. Unless and until otherwise determined by the Company in General Meeting the
number of Directors shall be not be less than two nor more than seven.
8.The first Directors of the Company shall be the persons named in the Statement
delivered pursuant to Section 3 of the Companies (Amendment) Act, 1982.
9.Provided that he shall declare his interest in any contact or transaction a Director
may vote as a Director in regard to any such contract or transaction in which he is
interested or in respect of his appointment to any office or place of profit or upon any
matter arising thereout and if he shall so vote his vote shall be counted. This article is
in substitution for regulation 7 of Part II of Table A.
10. The office of Director shall be vacated-
(a) If by notice in writing to the Company he resigns the office of Director;
(b) If he becomes bankrupt or enters into any arrangement with his creditors;
(c) If he becomes of unsound mind;
(d) If he is prohibited from being a Director by any order made under Section 184 of the
Act;
(e) If he is removed from office by a resolution duly passed under Section 182 of the
Act.
11. The Directors of the Company shall not be required to retire by rotation and
Regulations 97-100 inclusive, of Part 1 of Table A shall be amended accordingly.
Borrowing Powers
12. The Directors may from time to time at their discretion borrow from any person or
persons (including the Directors) any sum or sums of money for the purposes of the
Company and there shall be no limit to the amount that may be borrowed.
Alex Cantone ___________________
9 Lotte Street, Paris, France.
Business Consultant One Share
Roland Scott ___________________
1-68 South Street, Tel Aviv, Israel.
Business Consultant One Share
Dated 1st day of February 1997
Witness for the above signatures: ____________________________________
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17
Sample Memorandum of Association
Companies Acts 1982 to 1992 Company Limited by Shares -
Memorandum of Association of:
A. & B. INTERNATIONAL LIMITED
1.The name of the Company is: A & B INTERNATIONAL LIMITED
2. The objects for which the Company is established are :-
(a)(i) To carry on business as a company managed and beneficially owned by persons
not resident in The Bahamas and as investors in, purchasers and/or sellers of all kinds
of property, real estate and associated investments and to deal whether as principal,
agent or trustee, in such freehold, leasehold, or other property for any estate or interest
whatever, and such building leases, under leases, rights, privileges, and such other
property and rights and interest in property as the company shall deem fit whether in
the Bahamas or elsewhere.
(ii) To carry on business as financial, loans, mortgage and investment brokers and as
property, asset and estate management, business management, accounting and
secretarial brokers, agents, advisors, contractors and consultants in the Bahamas or
elsewhere.
(iii) To acquire and hold stocks, shares, debentures, debenture stock, bonds,
obligations and securities issued or guaranteed by any company and debentures and
debenture stock, bonds, obligations and securities issued or guaranteed by any
government, sovereign, ruler, commissioners, public body or authority (supreme,
municipal, local or otherwise) whether at home or abroad.
(iv) To carry on business as processors, packagers, wholesalers, retailers, merchants,
agents, factors, brokers and distributors of all kinds of goods, services and general
merchandise, plant and equipment associated directly or indirectly with these objects or
any of them and as importers, exporters, mail-order operators, marketers
merchandisers, sales, business, general consultants and general traders.
(b) To carry on any other business of any description which may be capable of being
advantageously carried on in connection with or ancillary to the objects of the company
or any of them.
(c) To purchase, take on lease or in exchange, hire or otherwise acquire and hold for
any estate or interest any lands, buildings, easements, rights, privileges, concessions,
patents, patent rights, licenses, secret process, machinery, plant, stock-in-trade, and
any real or personal property of any kind necessary or convenient for the purposes of
or in connection with the Company’s business or any branch or department thereof.
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(d) To apply for, purchase or otherwise acquire any patents, licenses or concessions
which may be capable of being dealt with by the Company, or to be deemed to benefit
the Company, and to grant rights thereat.
(e) To invest in, hold and develop land and to erect, construct, lay down, enlarge, alter
and maintain any shops, stores, factories, buildings, works, plant and machinery
necessary or convenient for the Company’s business, and to contribute to or the
erection, construction and maintenance of the above.
(f) To invest and deal with the moneys of the Company not immediately required in
such shares or upon such securities and in such manner as may from time to time be
determined.
(g) To enter into partnerships or into any arrangement for sharing profits, union of
interests, co-operation, reciprocal concessions or otherwise, with any person or
company, carrying on business within the objects of this Company.
(h) To sell or otherwise dispose of the whole or any part of the business or property of
the Company.
(i) To purchase, or otherwise acquire all or any part of the business or assets of any
person, firm or company carrying on or formed to carry on any business which the
Company is authorized to carry on or possessed of property suitable to the purposes of
this Company, and to pay cash or to issue any shares, stocks debentures or debenture
stock of this Company as the consideration for such purchase or acquisition and to
undertake any liabilities or obligations relating to the property or business so
purchased or acquired.
(j) To lend and advance money or give credit to any persons, firms, or companies, and
to give guarantees or become security for any persons, firms or companies.
(k) To borrow and raise money in such manner as the Company shall think fit and in
particular by the issue of debenture and debenture stock, mortgages, charges,
perpetual or otherwise, charged upon all or any of the Company’s property (both
present and the future) and undertaking, including its uncalled capital.
(l) To draw, make, accept, endorse, discount, execute and issue negotiable or
transferable instruments of all kinds.
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(m) To remunerate any person or company for services rendered in placing or assisting
to place any of the shares in the Company’s capital or any debentures, debenture stock
or other securities of the Company or in or about the formation of the Company or the
conduct of its business.
(n) To grant pensions, allowances, gratuities and bonuses to officers, employees or ex-
employees of the Company or its predecessors in business or the dependants of such
persons and to establish and maintain or concur in maintaining trusts, funds or
schemes (whether contributory or non-contributory), with a view to providing pensions
or other funds for any such persons as aforesaid or their dependants.
(o) To promote or aid in the promotion of any company or companies for the purpose of
acquiring all or any of the property rights and liabilities of this Company or for any other
purpose which may seem directly or indirectly calculated to advance the interests of
this Company.
(p) To distribute among the members in specie any property of the Company, or any
proceeds of sale or disposal of any property of the Company, but so that no distribution
amounting to a reduction of capital be made except with the sanction (if any) for the
time required by law.
(q) To pay out of the funds of the Company all costs and expenses of or incidental to
the formation and registration of the Company and the issue of its capital and
debentures including brokerage and commission.
(r) To procure the Company to be registered or recognized in any country or place
abroad.
(s) To do all or any of the above things in any part of the world either alone or in
conjunction with others and either as principals, agents, contractors, trustees or
otherwise and either by or through agents, sub-contractors, trustees or otherwise.
(t) To do all such other things as are incidental or conducive to the above objects or any
of them.
It is hereby expressly declared that each Sub-Clause of this Clause shall be construed
independently of the other Sub-Clauses hereof, and that none of the objects mentioned
in any Sub-Clause shall be deemed to be merely subsidiary to the objects mentioned in
any other Sub-Clause.
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3. The liability of the members is limited.
4. The share capital of the Company is US$5,000 divided into 5,000 shares of $1 each
with power to increase the share capital. The shares in the original or any increased
share capital may be divided into several classes and there may attached thereto
respectively any preferential, deferred or other special rights, privileges, conditions or
restrictions.
We, the several persons whose names and addresses are subscribed wish to be
formed into a Company in pursuance of this Memorandum of Association, and agree to
take the number of shares in the capital of the company set opposite our respective
names.
Names and Addresses Number of Shares
and Descriptions of Subscribers taken by each Subscribe
Mark Smith ________________________
Ocean House,
St. Kitts, Nevis.
Business Consultant One
Anna Shouemaker ________________________
11-197 South Street,
Tel Aviv, Israel.
Business Consultant One
Dated 1st day of February 1997
Witness for the above signatures: __________________
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The Characteristic of Offshore Trust
The Concept of trust dates back to the time when the Normans conquered England
midway through the 11th Century. The first trust concept has witnessed an illustrious
history as the common law developed over the centuries and has resulted in the most
efficient tax and wealth planning technique available.
Trust have evolved as an effective means for protecting assets and minimized taxation
of theses assets. The use of trust in asset protection and estate planning find their
origin in the concepts of medieval English equity. They allow for property to be held or
controlled by one person for the benefit of another, eventual the holder.
Generically, a trust is as a legal relationship in which property is held/controlled by one
party (the "Trustee") for the benefit of the other persons or class of persons (the
"beneficiary").
The person who establishes the trust (typically the "Settlor") generally has no further
control or participation in the functioning of the trust. The trust documents is a written
instrument which:
Enumerates the duties of the Trustee, and;
Identifies the beneficiaries and the specific body of assets, and;
Prescribe/proscribes the use and application of such assets, and;
Establishes beneficial interests.
Typically a trust is created by a Deed or Will. The deed or will (the "trust instrument"),
together with the general law of the trust, governs the administration of the trust assets.
Trustees normally charge a fee for their professional services.
The basic provisions of all trusts lie in the three simple requirements:
The Settlor
The Trustee
The Beneficiary(ies)
The Settlor, who is either an individual or a corporate entity, establishes the trust
agreement. The Settlor possesses and own the assets that will be transferred to the
trustee, who take title to the trust assets from the Settlor and acts in a fiduciary capacity
over the underlying trust assets for the benefit of the trust or beneficiaries. The trust
concept has a strong foundation in many common law countries around the world
including most of the leading international Tax Havens and Financial Centers.
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Classifications
A Trust can be adopted to specific requirements, by including different clauses to setup
a verity of trust "typical" such as;
Asset protection trusts
Discretionary trusts.
Interest in possession trusts
Propose trusts.
Applications.
A Trust provides an offshore instrument that can be used to;
Preserve family wealth by avoidance of death duties;
Provide continuity of ownership and management of business assets;
Protect assets against future unknown claims;
Plan for emigration/immigration in the event of changes in law
Reduce or provide taxes in relation to income or assets
Avoided or reduce probate formalities where assets are held in several countries;
Provide pension for retired employees and their dependents;
Protect infant children, aged parents or persons of unsound mind.
Services
Professional provides of trust services, including banks, can prepare trust instruments
to meet the specific requirements and circumstances of the client and the intended
beneficiaries. To provide flexibility to adopt to possible changes in circumstances in the
instruments usually contain provisions for:
Acceptance of additional property/assets into trust;
Appointment of additional beneficiaries and exclusion of any beneficial interest;
Change the governing law/jurisdiction;
The appointment of additional trustees outside the trust jurisdiction.
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The trust instrument can be written to prescribe the way in which the trustees must
administrate and apply the asset of the trust and can provide the beneficiaries with
fixed entitlements representing distributions of trust property (a fixed trust).
However, it is more common today to provide the trustee with wide discretion regarding
investment and/or distributions and guidance as to how the trustees is to exercise these
discretions (a discretionary trust).
An offshore trust may be compared with a living trust. Living trust are designed strictly
for estate planning. They are an attempt to avoid probate. They are, however revocable
and do not offer protection from lawsuits, or civil judgments. A professional structured
offshore trust provides for complete confidentiality and protection.
Advantages.
There are many advantages to holding your estate, business, income, and personal
affaires and effects in an offshore trust. There are four reason:
An offshore trust provides the means by which a person, business or entity can legally
and lawfully reduce or even eliminate certain taxes under provisions allowed by the
Internal Revenue Services code itself. The Internal Revenue Code is very specific on
this issue.
"Foreign Estate or Trust. The terms "foreign estate" and "foreign trust" means of which
income of which, from source without the United States, is not includable in gross
income under subtitle A." (IRS Code: 7701 (a)(31)).
Properly setup, those holding an offshore trust have total privacy in the management of
their affairs. In today's society of massive computer banks and easy access to stored
database, the information that can readily be put together about you or your business is
profound.
Privacy has become an important issue and a major concern for nearly everyone.
An offshore trust can lower capital gains taxes substantially. Anyone with the need or
opportunity to sell real property or high-value assets would understand and appreciate
the advantages of a low or no capital gains jurisdiction for wealth retention or wealth
conservation.
This is one of the contributing reasons the wealth have so much. Those utilizing
offshore trust don't have to pay capital gains taxes when a property or assets is sold
and the money goes into the holding of the offshore trust.
A person, business or entity that is properly set up in an offshore trust is virtually lien
and judgment proof. How? The answer is simple: all assets set up in an offshore trust
are owned by the trust, not the person, business or entity.
Your litigate would have to find an attorney versed in the laws off your selected offshore
domicile. And, most attorney are border bound in that they have no jurisdiction
knowledge or expertise outside their own country. Aside from that, most foreign
jurisdictions make offshore trusts they hold lien-proof.
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When establishing a trust, the following trust services should be available;
Consultancy on Proper Trust Structure
Establishment of Trust Deed
Advice on Choice of Jurisdiction
Provide Licensed Trustees
Administration of Trust Assets
Provide Trust Accounting Services.
In addition to the ability to provide effective asset protection by the establishment of a
discretionary trust, the client may find that it is beneficial to establish a trust because it
enables him to:
Reduce his overall tax liability, particularly upon leaving one country or residence in
another.
Make asset available now for the benefit of his family and other beneficiaries while
retaining the ability to continuer to direct the timing and amounts in which the benefits
are receive by selected beneficiaries during this life time.
The selection of a trust jurisdiction by the client and his professional advisors is
perhaps the most important decision when establishing a trust. The following are some
factors to consider when selecting a trust jurisdiction, and it is our policy to discuss
these factors with clients to assist them in choosing the correct trust structure to suite
their particular requirements:
Existing Trust Structure
Risk of Future Tax Changes
Favorable Trust Legislation
Confidentiality
Forced Heir ship
Creditor Protection
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Establishing an Offshore Trust To Protect Your Assets
The Rich Are Going Offshore!
The rich for decades, have been using someone else’s money to make money. They
are in business for themselves by borrowing and leveraging money they borrow to
make more money.
The rich get richer by applying the most powerful wealth-building secrets known today.
Many of these millionaires are building their empires Offshore - outside their
government’s control - while doing business inside their own country; using legal tax
shelters to protect their assets and their future earnings.
This is not like it was in the old days where businesses did business in their own
country. Their government’s new tax laws have forced many of the rich Offshore where
they can legally do business without tax liabilities.
The Rich Are Delaying Or Never Paying Taxes By Setting Up Offshore Trusts & You
Can Do The Same!
Just What Is A Trust...
There are several types of trusts but the Trusts the Rich are using are called a PURE
TRUST. A PURE TRUST is one in which you have two separate ENTITIES, (a Settlor
and a Trustee) forming a contractual agreement between themselves, for the benefit of
a third party (the Beneficiary).
Most trust structures FALL SHORT when they allow one individual to hold two of those
three key roles. It doesn’t hold up that way. You have to have three separate entities to
hold these three separate key positions. Plus, it needs to be an irrevocable structure to
give it validity. That’s what distinguishes a PURE TRUST from others.
Even though there are many different types of trusts, the only one that will pass the test
of scutiny, even from the IRS and other government agencies, is the PURE TRUST!
If, by chance, you have a trust and it does not meet the criteria outlined above, you are
at great risk. Living Trusts and Revocable Trusts, etc. DO NOT stand up to the criteria
needed to properly protect your assets and tax consequences as would a PURE
TRUST.
This brings us to how the Rich use a PURE TRUST, to delay or never pay taxes, on
monies earned Offshore. Since a PURE TRUST in an ENTITY unto itself and is NOT
legally owned by anyone (especially the rich), they (the trust), are only obligated to pay
taxes in the country the Trust was established.
If the Trust was established in a TAX FREE HAVEN such as Anguilla, the Bahamas,
Belize, Gibraltar, etc. there are no taxes to pay.
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The Rich can then take this Trust (from the offshore tax free country) and invest into
THEIR country; buying stocks, real estate, businesses, etc. and have the profits go
offshore (back to their tax free country) and possibly delay or never pay taxes on those
profits.
Delaying or never paying taxes allows the Rich to pyramid their profits by reinvesting
those TAXES (that were never paid) back into more money making investments
opportunities.
If you made $100,000 U.S. a year and were liable for 28% in taxes you would pay
$28,000. Now, if you did not have to pay that $28,000 in taxes and invested that money,
do you realize you have just generated an additional 28% on your investments plus
interest.
This is how the Rich get even RICHER - they pyramid their money by using money they
were suppose to pay their taxes with.
A PURE TRUST is also difficult to penetrate especially if it’s Offshore. Creditors,
lawyers and your government find it difficult to attach the assets of a PURE TRUST.
This is also how the Rich keep what they have.
You Can Now Own Your Own PURE TRUST And Do As The Rich Have Done For
Centuries!
You do not have to be in the dark anymore about hos the Rich pyramid their money and
protect what they have! You can do the same even if you consider yourself "A Little
Guy"!
Asset Protection Should Be Your Prime Objective!
The U.S. government is planning on passing new and restrictive foreign exchange
controls.
Being able to conduct your business and personal affairs outside your government’s
control will allow you these major advantages:
Diversification, Bank Safety, Currency Safety, Tax Safety, Asset Protection...as well as
Privacy.
A Trust After The FACT Will Not Work!
Setting up a Trust after your creditors, lawyers and your government have confiscated
your assets will NOT WORK! You need to set up your Trust before ADVERSITY comes
to your doorstep.
More time means more protection. The sooner you establish a trust the longer the time
you will have the occasion to use or rely on it - it’s this time element that is the key to
effectiveness because the longer your new Trust is in existence the greater protection
you have. More time means more protection.
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What Kind Of Trusts Are Available?
Beneficial Trusts:
In a Beneficial Trust the beneficiaries are specifically named in the trust document, i.e.,
“John Doe will receive the sum of $500,000 on his 21st birthday.” Whilst beneficial
trusts can be of value for asset protection and perhaps inheritance tax purposes,
because there is a specifically named beneficiary (or several), they are all but useless
for tax planning and privacy purposes as the revenue authorities in the country of
residence of the beneficiary will soon become aware of the “inheritance.”
Asset Protection Trusts:
Just as the name says, Asset Protection Trusts are designed to protect assets of all
kinds from claims made against them. They aren’t particularly useful in tax avoidance
matters, but are ideal for people whose lifestyle or profession may leave them
vulnerable to either legal or civil claims. For example, these trusts are widely used to
avoid malpractice suits against doctors and surgeons (especially in the USA), to protect
personal and family assets against claims made by wives/ex-partners in divorce cases,
and to protect businesses against the financial consequences of legal claims.
Discretionary Trusts:
As long as a beneficiary is named in a trust document, or if the beneficiary is clearly
also the settlor, revenue authorities tend to “look through” such trust arrangements and
regard the beneficiaries as the owners of the trust assets and income. Thus it is quite
feasible that beneficiaries can be taxed on assets or income which they never own or
receive, simply on the basis that they could be the owner(s)!
To avoid this problem, so-called Discretionary Trusts were established. These are
arrangements where the actual beneficiaries of the trust are at the absolute discretion
of the trustees. No specific beneficiaries are named in the trust document, and revenue
authorities cannot tax any potential beneficiaries since there is no way of knowing
when, or even if, anyone will benefit from the trust, although tax is (in theory) payable
on the receipt of the proceeds of the trust by a specific beneficiary. But you wouldn’t
have any distributions from the trust made over directly to you anyway, would you? Do
so via an offshore account or via an offshore company linked to the trust.
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WHAT IS OFFSHORE BANKING
Because a bank is located in some place other than your home country or country of
residence, this does not make it an offshore bank.
An offshore bank must be specifically licenced as such under the appropriate offshore
banking legislation for the location of the bank.
There are two different types of banking -
• Regular onshore banking
• Offshore banking
Regular onshore banking is subject to the tax rules, foreign exchange rules and
charges of whatever country the account is in.
For example, there is a Royal Bank of Canada and a Bank of Nova Scotia in Antigua
but, they are local onshore banks and there are taxes on foreign currency transactions.
They are also subject to foreign exchange regulations and are not covered by the
offshore banking confidentiality and asset protection legislation.
Offshore banking on the other hand is tax free, there are no foreign exchange
regulations attached to the accounts and all account information is confidential.
Most offshore banks, particularly in the Caribbean, are smaller than the large multi-
national banks but they do provide confidentiality and personal service that you do not
get with the larger multi-national banks.
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Why Have an Offshore Bank Account?
You may be asking yourself why you should have an offshore bank account if you
are receiving good service from your convenient neighborhood bank.
On the surface it may not make sense to bank elsewhere, and the advantages of such
a move may be questionable to you. Let us examine the reasons for embarking on
something that for most people is very unfamiliar and unconventional.
We have grown accustomed to our easy lifestyles with modern conveniences and
familiar practices. To be asked to do something different that appears to be less than
conventional is requesting a lot, even if to our advantage.
This is part of being human.... noone likes change.
Our comfort level over the decades though, has given us with a false sense of
security and blind trust in our political leaders, government and institutions, propelling
us into the danger zone.
So why change ?
Economic Woes
Just a short time ago, politicians, the media and commentators would never have
dreamed of using the "D" word or expressing that a depression is possible. But today,
the possibility is discussed openly and Americans can foresee that such a dreaded
event will come to pass.
It is a frightening thought, but nonetheless, the speculation and possibility is real.
When all of the banks were closed across America over a three day holiday weekend
back in the early '30s, Americans were not as aware of the impending disaster as they
are today. The global roller coaster stock markets in October-November 1997 are signs
of their potential volatility.
Ask yourself, can you afford to suddenly be cut off from your liquid assets, the lifeblood
of modern civilization that is essential to survival?
What if tomorrow you were restricted from withdrawing your money from your local
bank account or removing items from your safe deposit box?
What if gold and silver were banned and possession were suddenly illegal?
What if you and your money or other assets were suddenly restricted from leaving the
country?
What if your countries curency becomes worthless and is no longer accepted or re-
placed by a fiat currency or other questionable monetary unit?
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All of these possibilities can happen.
What are you doing to prepare yourself?
How much cash do you have on hand?
Is your refrigerator well stocked?
Can you grow your own vegetables?
It’s a concern that each individual should personally address.
Am I prepared for change?
Am I willing to accept what may be handed down?
Do I have alternatives?
Yes, I agree that a major depression or drastic deterioration in our government is
an extreme scenario, but one which shrewd persons will likely consider, prepare for and
devise a plan of action for should there be a national catastrophe.
We were surprised at the sudden fall of the USSR.
Are we immune to abrupt change?
Government Oppression
History shows us that governments that are fearful of their citizenry and their possible
unacceptable actions, try to oppress them through a variety of means including;
restricting rights,
restricting travel,
restricting the free flow of money,
restricting speech,
controlling the media, and other similar oppressive strategies.
In Communist countries, government action against the people is more overt and more
physical.
All of these acts are being inflicted on people right this minute somewhere in the world.
A Chinese citizen cannot leave the country, a Latin American cannot send money out
of the country, a Communist citizen cannot speak negatively about their government
without being threatened. These practices are as old as man himself.
Hopefully these tragic events will never happen to you.
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Fortunately in most countries worldwide, we have had considerable freedom, let us
hope it remains that way.
As citizens, we have the duty to protect our rights that guarantee our freedom, or else
we expose ourselves to possible highhanded government practices.
Therefore, we should guard our interests, families and futures. Consider the
unexpected and realistically speculate on how you might handle severe financial
hardship.
It sounds far-fetched, but ask anyone who has ever experienced oppression at the
hands of their government. We have all heard the stories in the media. It really hits
home when you know or meet people who struggled to survive.
Fear of oppressive governments, adverse political actions and economic instability play
havoc on our emotions. These are some of our darkest human fears, even for those
who have never experienced them firsthand.
There are many devices to induce cooperation at the disposal of a government
determined to exercise its power. But those are limited to their reach.
A government can impose restrictions as we have seen here, but only to the extent of
their ability to control.
A person concerned about the future of their country or their own well-being, may plan
ahead and move some of their money and assets out of the country which threatens
them.
They may secure a second passport to insure unrestricted travel in the event theirs is
confiscated, cancelled or expires. This is happening and has happened repeatedly
throughout history.
Today, Latin Americans are doing it, Hong Kong residents did it, and many Communist
citizens are doing it. It is a means to preserve one's wealth, health and freedom.
Once their money is safe, they leave their country in advance of restricted travel, if
possible.
Sometimes a person is forced to move their money and themselves to another country
under very difficult circumstances because movement of assets and travel may be
forbidden.
Advance preparation and thought is worth its weight in gold, and this is where an
offshore bank account is invaluable.
The need for such an account may not seem paramount, but that is the best time to
establish it. Regardless of nationality, it is wise to think ahead while there is still time,
before unpleasant limitations and restrictions are imposed.
There may never be a need for the account other than to provide peace of mind.
Although most people worldwide are free to travel with few restrictions and move their
money and assets around at will, there are some signs that these freedoms could be
restricted.
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For example, in the United States, gradually, over the past 20 years or so, the U.S.
government has created and enforced new requirements for its citizens to meet.
Often these changes are made in the name of crime prevention.
Reporting requirements have been implemented to monitor the movement of money,
who is moving it, and to where. Mandatory legal requirements include the filing of
certain forms when specific financial transactions take place.
Citizens and financial institutions are legally bound to comply under threat of fines,
imprisonment and passport restriction. These laws are probably frequently violated by
innocent citizens unaware that they exist.
Treasury form 4789, Customs form 4790 and Treasury form 90-22.1 must all be filed at
times. For instance, 90-22.1 is required to be filed disclosing the existence of a foreign
bank or financial account and its location.
Other similar requirements are expected to be inforced worldwide.
Other controls come in the form of tax laws. Here are some that may affect you. Most of
these will apply only to U.S. citizens engaged in offshore business, but it serves as an
example of further restrictions in operating outside the realm of U.S. territory. It is a way
to reach outside its boundaries and maintain influence over citizens.
These laws are:
Foreign Personal Holding Company Tax
Passive Foreign Investment Company Tax
Accumulated Earnings Tax
Effectively-Connected-With-U.S. Tax
Foreign Source and U.S. Income Tax
Foreign Earned Income of an Individual
Tax Treaties
If you fall into one of these areas, one or more of the following IRS forms must be
completed.
They are Form 5471, 926, 3520, 3520a, 1042, 1042a, 1020NR corporation, 1040NR
individual.
Consult your tax accountant for further information.
These requirements are a mild form of oppression and further coincide with the
deprivatization trend in the United States.
Although these are disclosures of various kinds, which in themselves can have adverse
affects, they stop short of actually preventing you from doing business outside the U.S.,
earning foreign income, investing overseas, banking offshore, moving to a foreign
country, taking your money or assets elsewhere or bringing them back.
Exchange controls could be the next step in the U.S., they have experienced them in
the past, but they would be detrimental to the planners' goal of a global economy.
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If you have an offshore bank account, you have succeeded in preserving a portion of
your assets from your own government.
Even a small amount of money during difficult times may prove to be a lifesaver.
This is not to suggest closing your local account, since it has its purpose, but rather to
maintain sums for convenience sake and daily living costs.
Government oppression in any of its many forms, or economic catastrophes are the two
worst possibilities, but may be less of an immediate concern to readers.
There are more immediate reasons to bank offshore that can improve your life.
Privacy being top of that list.
Privacy
Privacy is an increasingly important commodity which helps insulate against gov-
ernment oppression, and intrusion from other people and corporations.
Erosion of privacy is prevalent today.
Both government and the private sector are guilty.
The deprivatization trend is growing to perverse proportions.
The result is the deterioration of individual rights. There are many reasons for wanting
privacy.
Discrimination
Persons of a minority fear discrimination because of their political, religious, racial or
other status reasons. Both government and the private sector are responsible.
Poor people are discriminated against, rich people, business people, black people,
white people, immigrants, people that drive new cars, members of unorthodox religions,
people who own guns, people who have different ideas, short people, tall people, ugly
people, beautiful people, discrimination is endless.
You may fit into one or more of these categories and it may be causing you distress.
It could be affecting your marriage, your job, your financial position, your health, your
future. Often, privacy can protect individuals from being select targets of groups or
other people with sharply differing attitudes.
Excessive Government
Excessive government and its oppressive behavior is another important motivation for
privacy.
You may be forced to fight in a war that is not morally acceptable to you.
Until Vietnam, most Americans probably felt it was their patriotic duty to fight for their
country when our leaders engaged us in war.
But that apparently changed with Vietnam.
In the future, will we may be asked to fight a war that we cannot accept, where we feel
our government is not representing our interest or wishes?
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Excessive government is expensive to administer. Increasing government influence
here and abroad and expanding bureaucracy require sufficient revenue.
More employees are necessary to implement new programs, enforce new laws and
keep the public from getting restless.
All of these pursuits place a burden on the government's ability to fund them.
Where will the money come from?
Taxes, of course.
To receive more taxes, the government has to increase taxes, create new taxes,
increase enforcement measures or expand the economy so that there is more to tax.
Today, the combined levels of the United States government and its many
departments, employ approximately 50% of the U.S. work force.
That certainly helps the employment figures, but it is quite a financial hurdle.
Few people would probably pay taxes if there were not laws enforcing them to do so.
Taxes are not voluntary, although they refer to it as "voluntary compliance." Who wants
to give away 50% of every hard earned dollar?
To some extent, governments are justified in demanding exorbitant taxes as there
is an enormous bureaucracy to support, and at this stage of the game, insufficient
collection of taxes could spark economic disaster.
The standards that determine tax avoidance and tax evasion change. Avoidance is
to legally circumvent paying taxes and evasion is blatant defiance of the tax laws.
But the laws change.
What was okay to avoid yesterday, may make you a criminal tomorrow.
Where does it stop?
For many U.S. and foreign citizens, it stops when they are fed up with it and feel
that it jeopardizes their prosperity and well-being.
Most of us are compelled to comply even if we do not know where the money is to come
from. We fear possible negative repercussions.
Therefore, advance tax planning is critical.
Information Snoops
Information about us that we have no control over can adversely affect us. Whether it is
cheap gossip, or a credit rating, true or not, it can push us to want more privacy.
Some truths can be as negative as a lie. The lie is probably not flattering and could
become the basis for action against you in one form or another or a truth, positive or
negative about your life can also be used against you.
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Nothing is sacred, just look at a copy of Forbes 400. Not even a billionaire can hide,
and this is only one example. There are thousands.
You can probably think of at least one form of discrimination that touches you or your
family.
The Internet has made gathering and finding information a lot easier. You have
probably seen the adverts for “Instant Credit Reports.”
There are now vast amounts of information about us available on computers and for a
fee, anyone can get it.
Lawsuits and Asset Protection
Litigation has become a national pastime. President Bush (senior), during his
Republican convention, addressed the problem by figuratively declaring war on trial
lawyers.
Most lawsuits are probably not warranted.
It becomes easy to sue when lawyers are willing to work on a contingency basis rather
than charge the client by the hour for services rendered plus related expenses.
It is a way for lawyers to get more business and make more money, and the plaintiff in
the suit has the opportunity to pick up a chunk of money with little effort.

The practice is so abused, that some medical people such as ob/gyns cannot even get
malpractice insurance because the risk of lawsuits is so high, leaving their practice and
their assets unprotected.
Incorporation has always been a means to protect personal assets from a business
lawsuits, but that is not enough.
Today, shrewd tax havens based on common law are enacting legislation that
specifically addresses the needs of American professionals and business people for
protection of their assets.
Although trusts have long been around, "asset protection trusts" are a new means for
professionals and business people, with or without adequate insurance to armor-coat
their assets.
In some cases, it is the only alternative a professional has to survive, giving them the
chance to continue their practice. Without malpractice insurance, a professional cannot
remain in business for long without losing everything to lawsuits.
Threat of Crime
White collar criminals prey on individuals and companies.
There are a wide variety of ways that your money can be pilfered against your will, or
even with your cooperation.
An officer of your company may embezzle corporate funds, or you may succumb to a
high pressure telemarketing salesman and spend your last $100,000 on a piece of
"art" you have never seen.
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Privacy may save you from being victimized in untold ways.
Privacy is very difficult to attain without being conscientious.
An offshore bank account is a simple, fast and inexpensive way to cloak your financial
affairs.
Considering that dozens and dozens of files are maintained on every citizen in this
country covering every aspect of their lives, obtaining privacy in the 20th century is no
easy task.
With the computer revolution, it is doubtful that unwarranted intrusion into our personal
lives will disappear anytime soon.
Chances are, the 21st century will bring more of the same.
Therefore, those persons who lace value in their privacy need to learn how to get it and
how to enjoy it.
There are dozens of methods at the disposal of the intruders and just as many ways for
the well informed to protect themselves.
Individuals can benefit from an offshore bank account and avert many of the daily
threats to their wealth and health. But, beside the reasons already given, there are still
others.
Financial Incentives
Offshore banking is much more than simply having a bank account in a
foreign country. Think about these benefits for a moment.
Diversify your investments, holdings and location.
Hedge against drops in the value of your own country's currency. By holding
another more stable currency, you can protect against loss of purchasing
power.
Diversify internationally. Discover new chances for opportunity.
Gain prestige.
Demonstrate sophistication.
Get greater financial flexibility.
Gain increased convenience when traveling.
Gain increased convenience to receive foreign funds.
Exercise your right and freedom to have a foreign bank account.
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Bank in tax havens that have specific secrecy laws punishable by fines and
imprisonment.
Avoid disclosing your nationality or political alliance to others.
Keep your physical location a secret by using an offshore account.
Expose yourself to other customs and practices.
Gain total anonymity.
Gain the benefits of superior banking and courteous service.
Seek safety from unstable financial institutions at home.
Receive higher returns and interest on deposits.
Get asset protection for deposits and investments.
Gain easy access to funds by check, wire transfer or debit card.
And more!
There is a wide selection of banks with which to do business.
Banks cater to different types of clients including the rich, businesses, investors, for-
eigners, local residents, etc.
Banks offshore include Merchant Banks, Commercial Banks, Private Banks, Foreign
Banks, branches of banks, international banks, offshore banks, deposit-taking
institutions, they are all there.
And every bank is unique. They have special interests and place emphasis on certain
areas of their business. They offer various interest rates depending on the type of
deposit and various charges for their services.
Some banks will give more personalized service than others.
There are banks that offer a wide range of services, some of which we do not see in
American banks.
A single bank may not provide all of these services, but this is what can be found
offshore.
Here is what you can do with your offshore bank account.
• Open a current account and write checks, some are interest bearing.
• Open a deposit account and receive a passbook. Earn higher interest.
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• Make time deposits. Receive best interest rates.
• Open accounts in different currencies or a multi-currency account. U.S.
dollar accounts are common.
• Purchase foreign currencies.
• Receive detailed bank statements.
• Avoid local taxes.
• Purchase all types of bonds.
• Establish precious metals accounts.
• Open securities accounts or have the bank buy and sell in their name on
your behalf.
• Invest using margin accounts and forward contracts.
• Let the bank hold your valuables in their vault through a custodial account.
• Real estate can be purchased through some banks.
Banks located in tax havens will often perform incorporation services, provide nominee
directors and management, and tax services.
They can establish an IBC coupled with an Asset Protection Trust or managed account
and manage your portfolio.
The bank can invest on your behalf using their judgment and knowledge of investments
and markets.
They can open a safe deposit box in a foreign country.
This report is written to help you financially diversify, protect your assets, expose
yourself to new opportunities and guard against the unexpected. And hopefully in the
process, you will earn more interest and make more profits.
While offshore, begin thinking of how to reduce your tax liability through advance
planning by engaging U.S. and offshore professionals.
Banking offshore is not the sole answer to today's problems, but it has literally
saved lives and life savings in this century. The Swiss Banks by T.R. Fehrenbach,
McGraw-Hill, 1966, illustrates this point best.
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IRS Letter Ruling 9332006
IRS Letter Ruling 9332006 shows how to legally avoid millions of dollars in taxes.
IRS -LTR 9332006 ™ Full Text
The use of an offshore testamentary trust to receive a U.S. persons assets only upon
his death might afford some definite tax advantages, especially if the trusts assets are
revocable by a nonresident alien individual or corporation. IRS LT. 9332006 confirms
that upon his death, assets held in a foreign trust will no longer be subject to U.S.
taxes, and not considered part of the U.S. person's U.S. estate, even if there are U.S.
beneficiaries for the foreign trust.
LTR 9332006 -- ISSUE (4). UPON A SETTLOR'S DEATH, WILL THE PORTION OF
THE TRUST TREATED AS OWNED BY THAT SETTLOR CEASE TO BE SO
TREATED EVEN IF THEN TRUST BENEFICIARIES INCLUDE UNITED STATES
PERSONS? Section 679(a)(2) (A) provides that the rules of section 679(a)(1) do not
apply to "a transfer by reason of death of the transferor." While section 679(a)(2)(A)
does not expressly address the tax consequences of the termination of foreign grantor
trust status by reason of the grantor's death, the legislative history of the enactment of
section 679 (H.R. Rep. No. 658, 94th Cong., 1st Sess. at 209 (1975); S. Rep. No. 938,
94th Cong., 2d Sess. at 218 (1976)) provides that "an inter vivos trust which is treated
as owned by a U.S. person under [section 679] is not treated as owned by the estate of
that person upon his death." Accordingly, any portion of the Trust that is treated as
owned by a Settlor under the rules of section 679 shall cease to be so treated upon that
Settlor's death.
< end text>
In 1970 the IRS issued the following ruling (only part of the ruling is included here, but
the IRS' entire Revenue Ruling 69-70 is in my book - Tax Havens of the World) to
study...
Revenue Ruling 69-70 states: "An individual beneficiary who is resident of the United
States is not taxable on a distribution from a foreign trust considered to be owned by a
nonresident alien grantor under subpart E of subchapter J of the Code" - these are the
exact words of the Internal Revenue Service tax writers - i.e., tax lawyers working for
the Treasury department writing your tax law. They are people from Harvard, Stanford,
and other big name institutions.
But, if you don’t instruct someone (in your U.S. WILL) to transfer the U.S. assets
offshore to the foreign trustee, you’ll be missing the boat to the tax heaven. You must
include this information, and be very specific as to the amount you want transferred to
the foreign trustee, and this information must be in your U.S. WILL – before you die!
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Ship and Yacht Registration
Since the 1920, shipping companies have been using offshore centers for ship
ownership, ship registration and management. Open registries, are one of the oldest
features of this industry. There are three types of open register:
Independent Registry
An Independent Registry is one run by a sovereign state The Panamanian Regis-
ter is an example of an independent registry and since 1920’s; Panama has been one
of the most popular locations for the registration of US owned vessels.
Offshore Registry
Offshore registers, Countries that wish to provide a special registry offering a more
liberal operating environment establish offshore registries, such as the Norwegian
International Registry.
Dependent Registry
Grand Cayman Islands and other British ports of registry are examples of depend-
ency registries as their basic law and standards are based on those of the United King-
dom.
Traditional shipping centers are experiencing completion from developing
centers such Grand Cayman. Another recent change was the 1993 European Union
Directive on VAT which has a dramatic effect on the yacht owners in Europe.
Selecting a Port of Registration
What must be considered?
1. Initial registration cost
2. Ongoing costs.
3. Classification body fees
4. Taxation – including crew.
5. Crewing requirements, especially nationality and social security regulation.
6. Stability of the country of registry.
7. Will mortgages laws and security satisfy lenders?
8. Will safety standards satisfy insures and how will insurance view the country of
registry?
9. The necessity or otherwise of maintain a corporate or other presence in country of
registry.
10. Risk of requesting in time of war or national emergency.
11. Cabotage and view of unions and port authorizes
12. General reputation of the registry.
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The TAX HAVEN
REPORTER
Interested in finding out more about the world’s leading financial centers?
Want to learn about the U.S. tax laws governing foreign investment by U.S. taxpayers?
Try a 12 month subscription to the Tax Haven Reporter ($200/12 issues)
and receive FREE a copy of his 330 page, 7th edition - Tax Havens of the World
(regular price = $80).
The Tax Haven Reporter
Find out how Big 6 accounting firms exploit IRS Revenue-
Ruling 69-70 to pass foreign source income onward to U.S.
beneficiaries free from Federal Income Taxes!
It’s legal to do if you know how.
Don’t miss out.
This book and newsletter is an invaluable reference source. Over 7,000 copies of the
book have been sold with a Satisfaction Money-Back Guarantee, and only one book
has ever been returned!
One international tax lawyer (graduate from NYU School of Law) with offices in Geneva
and London (Imperial House) writes:
“I would like to repeat that I find your analysis of the Tax Code to be excellent. I enjoy
each and every issue of the Tax Haven Reporter. I commend you on your
jurisprudential reasoning and treatment of international tax matters discussed in your
newsletter.”
The author of Tax Havens of the World, lives and works in sunny Nassau, Bahamas.
Over the last 10 years, he has registered more than 1700 International Business
Companies (IBCs) .
Offshore companies can trade in the U.S. Stock Market free of capital gains taxes.
An IBC or foreign trust can receive US bank CD interest or treasury bond interest 100%
free from all taxes -U.S. and other.
TM
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42
Over 20 tax havens are covered in the book TAX HAVENS OF THE WORLD ($80)
including Anguilla, the Bahamas, Caymans, Switzerland, Vanuatu, Bermuda, Barbados,
Hong Kong, Singapore, Channel Islands & the Isle of Man (famous havens used by
modern British businessmen), Camplone, Panama, Antigua, Liberia, Gibraltar, Cyprus
(shipping tax havens), and little Nauru (3rd smallest nation in the world), and many
more.
Also covered are;
the Exempt Companies,
the International Business Corporation (IBC),
the Foreign Trust,
the Foreign Personal Holding Company,
Exempt Shipping Companies,
Exempt Offshore Banks,
Exporting U.S. products tax free,
the important U.S. Income Tax Treaties,
and Australian & Canadian tax havens.
Of great importance to the American planner is a complete disclosure on How to
Legally Avoid the USA’s Controlled Foreign Corporation (CFC) legislation.
For your copy,
with a Satisfaction Money-Back Guarantee,
go to
http://www.offshoretaxhaven.info
www.offshoretaxhaven.info
43
PRIVACY TOOLS AND TIPS
Evidence Eeliminator
Deleting “Internet Cache and History” will NOT protect
you because any of the Web Pages, Pictures, Movies,
Videos, Sounds, E-mail, Chat Logs and Everything Else
you see or do could easily be recovered to Haunt you
forever!
How would you feel if a snoop made this information
public to your Spouse, Mother & Father, Neighbors,
Children, IRS, Boss or the Media?
It could easily Ruin Your Life!
Solve all your problems and enjoy all the benefits of an
“As New PC”, Evidence Eliminator can Speed-Up your
PC/Internet Browser, reclaim Hard Disk space and
Professionally Clean your PC in one easy mouse click!
CLICK HERE TO DOWNLOAD NOW!
http://www.evidence-eliminator.com
The Anonymizer
Many people use the Internet under the illusion that their actions are private and
anonymous.
Unfortunately, it isn’t so.
Every time you visit a site, you leave a calling card that reveals where you come from,
what kind of computer you have, and other details about your identity and viewing
habits.
Most sites keep logs of all your visits. In many cases, this keeping of
records may violate your right to privacy.
Now, Anonymizer provides more than just anonymous web surfing.
Anonymizer Email gives the world easy-to-use access to high security
anonymous e-mail.
Stay tuned for new services, right around the corner: anonymous web publishing under
United States free speech laws, anonymous dialup in 8 major U.S. cities, secure
protection of your Anonymizer connection, and large-scale licensing of the Anonymizer
server.
Check it out now at http://www.anonymizer.com
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44
HushMail
HushMail is the world’s premier secure Web-based email system. They offer ease of
use and total end-to-end security. Thanks to a unique key pair management system,
HushMail eliminates the risk of leaving unencrypted files on Web servers. HushMail
messages, and their attachments, are encrypted using OpenPGP standard algorithms.
These algorithms, combined with HushMail’s unique OpenPGP key management
system, offer users unrivalled levels of security.
What you get:
Free Open PGP encrypted email,
Free managed PKI solution,
Free 2MB storage space,
Free digital signing.
Get yours free at http://www.hushmail.com
e-Gold
e-Gold is an electronic currency, issued by e-gold Ltd., a Nevis corporation, 100%
backed at all times by gold bullion in allocated storage.
e-Gold is one of the best ways to safely pay on-line.
Open a free account https://www.e-gold.com
The International PGP Home Page
Download and use the latest version of PGP for the international, non US based surfer.
PGP is the encryption program for all privacy seekers.
Easy to install and use in minutes.
Best of all it’s free!
Download it now at http://www.pgpi.org
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45
ANGUILLA International Business Company
Interested in establishing your own Offshore Company ?
Interested in protection your Assets ?
Interested in Investing Offshore ?
We can offer full company formation services in Anguilla, by our team of Lawyers,
Barristers and a Consultants specialising in U.S. Tax law.
The corporation comes complete with banking forms and institutional banking contacts
in Bermuda, Isle of Man and Anguilla
Total price = US$2,500
Includes AP trusts, banking forms, complete company documentation, barrister’s
assistance in opening company bank account, registered office, etc.
(Price also includes a foreign testamentary trust for the American taxpayer)
If you have questions, we’ve got the answers.
Visit our web site for more information
http://www.offshoretaxhaven.info
For our Offshore Company Request Form, click on to;
http://www.offshoretaxhaven.info/offshoreorder.html
www.offshoretaxhaven.info