Today many unscrupulous companies offering companies and bank accounts in many different jurisdictions with state shopping lists available almost every country is useless any more, many are located in Caribbean islands and mislead customers into thinking they are offshore jurisdictions real with privacy benefits. Wrong!!!
Let’s analyze some of the things to look for when shopping for an offshore jurisdiction.
Bank Secrets – Without this we are not interested. We want banks not to be able to divulge any information about bank accounts including the presence or absence of such bank accounts unless there is an order from the competent court of the country where the bank is located. More secrecy than this has no place today. Lost numbered account. The Sparbuch accounts in Austria are all gone, yes I know people are offering them for sale on the website but they are all long gone and closed. Bank secrecy laws must be incorporated into the laws of the country concerned. Belize doesn’t have bank secrecy laws as written in their laws, people seem to trust them even though there would be no legal penalty for them to disclose bank information if they wanted to do so. We want bank secrecy laws to call for prison and civil penalties for any offences in addition to allowing someone to bring charges against the bank for the offence. Panama meets this test.
MLAT – Mutual Legal Aid Agreement. Many countries have signed this agreement. For a list of countries that have signed this agreement with the US with the permission of the US Government.
It is surprising how many countries have such treaties. Even Panama is in such a deal but the scope is quite limited, see below:
Basically Panama will cooperate in multi-national cases involving narcotics and money laundering (these crimes must be linked to narcotics). They will also be involved in cases of child pornography and actual terrorism. If you’re not a drug dealer and a money launderer (money launderers usually deal with millions of dollars), not a child porn maker, and a terrorist, you don’t have to worry about this. MLAT requires that there first need to be a criminal prosecution case filed in criminal court from the requesting government (meaning no fishing expeditions) then through diplomatic channels involving the embassy, a request is made for information, then reviewed by Panamanian officials and a decision on compliance is made or a request for further information is made so that a determination can be reached. These cases can take months or even years to resolve. Sometimes the country where the bank is known to have been aware of the matter, conducts their own investigation first and this usually requires them to confiscate the relevant records and documents which can delay the process for a long time even years from their trial. the system usually moves very slowly and the statue of restrictions can run out, please don’t interpret this to mean Panama does this on a regular basis it’s just something that happens from time to time around the world. MLAT has no application for civil cases like divorce, bankruptcy, civil judgment, business litigation, any kind of civil litigation, civil tax matters etc. Any tax issues are not covered by this as far as Panama is concerned. Income tax evasion is a civil (non-criminal) offense in Panama. Switzerland cooperates in income tax cases if returns are filed incorrectly like all income is not declared, things are omitted or so the complaining government says. Panama has no extradition treaty. Panama passed this test.
Tax Treaties – Many so-called Offshore Jurisdictions are in Tax Treaties. For a list of countries with tax treaties with the United States click here. Panama does NOT have a tax treaty with any country. Even Switzerland and Belize are in tax treaties as are most offshore jurisdictions. Click here to see a complete list of tax treaty countries with links that allow you to read the actual treaty, a real eye-opener click here:
http://panamalaw.org/countries_with_tax_treaties.html
Types of Bank Licenses – Many of these offshore banks have offshore banking licenses versus regular banking licenses. Let me explain. These island jurisdictions typically have different classes of bank licenses – one class allows banks to do business only with residents of that country, another class typically encountered is offshore licenses that allow banks to ONLY do business with non-residents of the country. , and they usually have a third class license that allows banks to do business with residents and non-residents. It is a natural conclusion that banks with offshore licenses alone are a risky proposition because the government will not allow them to do business with their nationals. The bank we use in Panama is open to Panamanians and never an offshore bank only. Most of the bank accounts offered by various business websites with banks only have offshore licenses.
Corporate Privacy – This is an important point. I see many websites selling offshore companies from dozens of countries. The only type of corporation that has value in terms of privacy is a stock holding corporation. What is meant by this is that the ownership of the corporation belongs to the person who has the physical share certificate of the corporation. Ownership does not need to be reported or recorded anywhere. Corporate sales do not need to be reported. This is what is called a non-transparent company and is deeply disliked by many governments who think people have no right to privacy. In Panama, the SA Corporation or shareholder companies have no reporting or record-keeping requirements. One only hires professional directors (which we provide) who appear as directors in hundreds of companies and that’s all. Director is published but you don’t need to be your own director, we provide professional director candidates complete with resignation letter and general power of attorney. Corporate privacy is very important as the government has monitored bank transfers including the recent Swift System scandal which showed the US was monitoring Swift Transfers and we don’t know to what extent and for how long, but it’s best to assume the worst. If someone uses Panama Corporation’s anonymous bearer stock there is a lack of transparency because no one knows the ownership behind the corporation, they only know the corporation is receiving or sending the wire and the other side of the transaction. It serves to maintain your privacy to a large extent. Imagine how ridiculous it would be to use an offshore company where ownership is publicized and can be computerized so that within seconds people can find out who is behind the company receiving or sending funds. This is what is being sold all over the internet as an offshore company that misleads people into thinking their privacy is being protected. Once again Panama passed the test.
Tax Free – Offshore jurisdictions must be tax free in the event that income originating from abroad is not taxed by the country where the corporation is domiciled. Panama meets this test like many other countries. Panama also has no capital gains tax for you stock market investors and no inheritance or probate taxes. Panama passed this test.
Weather Considerations – Many of these offshore jurisdictions are located on islands and experience power outages due to storms. Also one should look for risks from volcanoes, tsunamis and earthquakes. What you don’t need is a power outage from a hurricane that prevents you from spending money when you need it. The reason the Panama Canal was built in that place is because there is no risk from hurricanes, tsunamis, volcanoes and earthquakes. Panama passed the test.
Infrastructure – One should look at power generation, telephone systems, and the internet when evaluating an offshore jurisdiction. You don’t want to have to wait days or weeks to be able to use your online banking or to be able to talk to your bank on the phone. Panama was basically built by Americans who just left it in 2000. It has American style phones, electricity, roads, etc. Cell phones and internet in Panama are as good as Canada or the United States. Panama passed the test again.
Government Stability – The last thing you need is to be banking in some tax haven offshore jurisdiction and know a revolution has taken place and you can kiss your money goodbye. Another possibility is what happened in Grenada when there was rampant bank fraud that led to the closure and liquidation of offshore banks with people losing their savings. Panama is a stable democracy. Panama is a UN neutral country so war is unlikely to happen. Panama is in a treaty with the United States on the Panama Canal which was granted to them by the United States in 2000. If the canal is threatened, the United States reserves the right to step in to protect the Panama Canal. This means that if there is a revolution (unlikely because Panama is the most stable democracy) the United States will have fighter jets there in an hour or two and by the next day one can expect to see a naval carrier group in the Gulf of Panama with marine expeditionary force. Next is airlift, paratroopers, helicopters, nuclear submarines and you have an idea. Forget about the invasion, attack or revolution in Panama, it passed the test.
Currency – Panama uses the US dollar as its currency. Banks use US dollars and ATM machines issue US dollars, they even use US coins. This means a stable currency. I know some of you will say they prefer the Euro, but when I say stable, compare it to the Bahamas Dollar or the Grand Cayman Dollar. There are no currency conversion fees in Panama if you use dollars. Panama again passed the test.
EU – Panama ties have no ties that could erode privacy again past the test. There is no income reporting for EU residents or collection of withholding taxes. Your home country tax ID number is not required to open a Panamanian bank account, own a company, buy real estate, etc. Panama again passed the test.
For more information, please visit:
http://www.panamalaw.org
http://www.panamalaw.org/compare_offshore_jurisdictions.html
http://www.panamalaw.org/asset_protection.html
