We've covered the top 5 emerging offshore jurisdictions for 2016. In today's post, we'll cover top 5 offshore company formation/banking trends that you should watch for in 2016.
Read on to discover what's – and what's not – when it comes to incorporating offshore jurisdictions into your wealth protection plan for the upcoming year, so that you can strategize accordingly.
Five offshore trends for 2016
Here are five offshore company formation and banking trends for the upcoming year that you should pay attention to:
1. More regionalized/localized offshore banking services
The mounting pressure from the tightening regulations (such as the IRS'), mean offshore banks need to revise their rules and regulations accordingly – country by country. It's much simpler to focus on local and regional clients than trying to accommodate as many jurisdictions as possible.
Hong Kong-based offshore banks, for example, focus on Mainland China's clients. The same goes to Singapore, and other jurisdictions.
2. Better offshore service from major International banks (with some exceptions)
With the crackdown on banking secrecy, tax cheats and offshore asset protections in general, “hiding” your assets on a tiny offshore bank in an obscure location is no longer a sound wealth protection strategy. That said, major banks with sound offshore divisions, such as HSBC and Citibank, will capitalize on their brands and expertise to offer better service, more investment possibilities, and stronger security & safety.
There are some exceptions, though – private banks such as those in St. Vincent, Luxembourg, Malta, and other emerging offshore jurisdictions are offering top-notch service with wide array of wealth management and investment services (e.g. Trading in local stock markets, precious metal investing, real estate purchases, etc.)
As always, history, track records, and professional recommendations play a very important role in offshore banking – regardless of size.
3. New, emerging offshore centers in Central Asia and Africa region
Mike Ingram, a market strategist from BGC Partners, said that there are some countries in Central Asia and Africa that can become the new offshore centers. He further explained that there can be countries that look at the gap in the market as an opportunity to secure offshore clients. It would be interesting to see how OECD and the emerging, non-signatory offshore jurisdictions will react and respond to the market changes.
As an asset holder, now you have a decision to make: Will you explore the new centers or stick to the established centers and comply for the need to provide your financial information to your home country's tax authority.
4. More globalized businesses headquartered offshore
Although perceived as driven by tax benefits, establishing an offshore company is not all about tax saving; there are more benefits that you can enjoy headquartered in a stable offshore jurisdiction like Hong Kong and Ras al-Khaimah (RAK): Safety, security and investment possibilities (e.g. Buying local properties.)
Those 'perks' are some of the reasons why more global businesses – particularly online businesses - are establishing or moving their headquarters to an offshore jurisdiction.
This rising trend makes sense: If you establish an online business that involve no physical location to operate – such as online magazines/blogs, e-commerce site that holds no physical stocks, and many other types of business – you don't need to get taxed on transactions that you don't do in your home country.
5. Expect more crackdown, but more businesses go offshore
Naturally, there will be more offshore jurisdictions that are signing the information exchange agreement (96 in total, so far - 56 jurisdictions are committed to undertaking the exchanges by 2017, 40 more will be joining by 2018.) This means that the 'wiggle' room is getting smaller for individuals and businesses wanting to protect their assets legally.
That said, seems illogical, but there will be more businesses going offshore for tax purposes. Local businesses in Crickhowell (a small town in Wales, United Kingdom) are doing so, and other may follow suit. The fix? When the Governments and tax authorities can find solutions against Starbucks', Facebook's and other multi-million dollar companies' super-low taxes – which will take years – even decades – to crackdown.
So, there you go – 5 offshore company formation and banking trends for 2016. There are challenges for individuals and small business owners who want to go offshore, but the opportunities are still there – if you know how to respond to the trends.
As always, consult with your trusted legal advisors on your next step, and talk with reputable International Corporate Services for options.