15 T-7 TAX HAVENS: THE GREEN LIST OF THE WORLD’S BEST OFFSHORE HAVENS
The collective countries known as the G-7—the industrialized
nations of Canada, France, Germany, Italy, Japan, the United
Kingdom, and the United States—are also some of the highest
tax nations in the world. These seven giants are not the only tax-happy
zealots. Australia and other nations, and organizations such as the European
Union (EU), the Organisation for Economic Co-operation
and Development (OECD), the Financial Action Tax Force (FATF),
and the United Nations (UN), are all working to thwart or even crush
the offshore opportunities of tax-haven nations. The UN also wants to
be the new Global Internal Revenue Service, and if that’s not enough,
they also want to infringe on your Bill of Rights and the Second
Amendment of your Constitution and take your gun away.
Well, if that’s how they feel, it seems only appropriate to have
some counterbalance by providing a convenient reference for readers
and others about the most advantageous havens to bank, invest from,
and put your money for profit, privacy, and protection. If only we
could take away the taxman’s guns.
The OECD has its blacklist, so here is my “Green List” of the
world’s best offshore tax havens, which I call the T-7. This exclusive list
of seven excellent countries includes tax havens, money havens, asset
havens, and offshore banking centers. I have evaluated them using factors
that I explain later in this book including the all-important issues
of confidentiality and safety, and I will revise the list annually.
In order of preference, here are my favorite money havens:
1. Switzerland
2. Liechtenstein
3. Austria
4. Panama
5. Saint Kitts and Nevis
6. Belize
7. Hong Kong
The top four are my favorite offshore banking centers, and the
bottom four are my favorite tax havens and venues from which to conduct
offshore business. Panama overlaps and is excellent in both
areas. All seven can be considered money and asset havens. None of
the T-7 countries have signed a Tax Information Exchange Agreement
(TIEA) with the United States. This is favorable (see Part Three:
Today’s Tax Havens).
Here, then are some of the highlights and characteristics of each
of the T-7 countries.
SWITZERLAND
This Alpine haven is one of the most politically and economically stable
countries in the world.
Unlike the United States, which went off the gold standard in
1971, the Swiss government has mandated that the Swiss National
Bank, under the Swiss Constitution, must back the Swiss franc, the
country’s solid currency, with accumulated reserves including gold.
The value of the gold alone far exceeds the currency in circulation.
This, coupled with a low growth in the money supply, contributes to
economic stability, minimizing threats of inf lation and def lation.
This is a currency to hold, like gold and other precious metals, as a
hedge against inflation and economic uncertainty.
The dollar has lost 300 percent value against the Swiss franc over
the past 35 years. And, it stands to lose more. The Swiss franc has
been the strongest currency in the world for decades, even rivaling
the Japanese yen and the former German mark.
The Swiss system of government places emphasis on selfgovernment
and democracy, as it should, and it begins at the local
level. Citizens meet and have a hand in important local government
decisions. And they control their government, not the other way
around, through a national referendum and initiatives. The central
government has traditionally been weak, as it has not been empowered
to be otherwise. The Swiss system could be considered a model
for democracy, rather than what is being touted on the world today
as democracy. The trend toward globalization is threatening to compromise
even Switzerland, which may one day find its local Swiss
democracy and economy undermined by the economic developments
of the “new world order”—basically the attempted evolution
into a centralized global economy, in direct contradiction to what
democracy is all about.
As an aside: This trend directly contradicts the tenets of democracy.
The question is, what form of government will preside over the
new world order, as the political apparatus will need to catch up with
the new global economy. Will it be a central global government?
Frightening indeed.
Swiss banking is unparalleled. The country remains politically
neutral and defends its 1934 Bank Secrecy Act with strict penalties.
There is also the Swiss insurance secrecy law, which covers policyholders.
They have staunchly opposed the outside forces coming
from the G -7, the OECD, and the EU. In recent years and under
tighter legislation, bankers are now required by law to report “suspicious”
transactions. This may make sense on the face of it, but
involves a subjective decision with the potential to erode Swiss secrecy
on a case-by-case basis. But, although the opposition continues
to push hard to change Swiss ways, the Swiss can be stubborn
when it comes to changing their traditions. Financial safety for
their customers is the cornerstone of their success. That is why,
today, over one third of the world’s assets are managed from
Switzerland. Swiss bankers are the highly trusted money managers
to the world.
LIECHTENSTEIN
This principality is in good company, lying between two other T-7
offshore havens (Switzerland and Austria) and is politically and economically
stable. Liechtenstein is the world’s oldest tax haven; it
passed asset protection legislation as early as the 1920s. Liechtenstein
has strict bank secrecy and only in the case of criminal prosecution
will it be penetrated. The Swiss franc is the national
currency.
Although the country boasts only 16 banks, it is an important international
financial center. No companies domiciled in Liechtenstein
are subject to income tax on foreign-source income. This little nation is a popular venue for holding and domiciliary companies and
is home to some unique corporate and trust structures. One is the
Anstalt, commonly known as the “Establishment,” which has the option
to be a stock company and the Stiftungs, a private foundation.
These structures and others are described in greater detail later in
this section of the book. Blacklisted by the OECD for refusal to cooperate,
Liechtenstein adamantly refuses to succumb to outside pressures.
As 37-year-old Crown Prince Alois said with a smile, “Bank
secrecy is very firmly anchored in the population.”
AUSTRIA
This is another attractive European haven with a long tradition
of bank secrecy. In recent years at the behest of EU pressures,
sadly, Austria eliminated two unique accounts, the anonymous
Sparbuch, a bearer type passbook account, and the anonymous
Wertpapierbuch, a bearer type passbook account coupled with a securities
and commodities trading account. Regardless, Austria still
prevails as an important money haven with strict bank secrecy. Austria
is also an excellent expatriate haven. You can enjoy Austria’s
many charms and stay close to your money and your gold Philharmonics
(see Part Four: “Prof iles of Retirement Havens and Foreign
Residency”).
PANAMA
A stable democracy with Latin-style politics and a free economy,
Panama is the Latin version of Switzerland or Hong Kong. This narrow
country connecting Central and South America is one of the oldest
tax havens in the world, dating back to the 1920s. Today, it is a
modern international financial center with as strict bank secrecy legislation
as can be found anywhere. There is a tight fraternity among
Panamanian bankers. Panama is a superior tax haven, with no corporate
or personal tax on income from foreign sources, and it is growing
in popularity with expatriates who find the country friendly and
the cost of living reasonable. Panama is home to the Panama Canal
and is a favorable flag-of-convenience country for yachtsmen and
shipping companies. The Panama corporation has armadillo-like
qualities and is useful in international business where strong insulation
is desired.
NEVIS
This is a pure no-tax haven in the spirit of what a tax haven was originally
meant to be. A little two-island nation, known formally as Saint
Christopher-Nevis (Saint Kitts and Nevis), it is completely independent,
having no ties with Britain or any other imperial nation and
makes its laws according to its whims. Nevis is a proactive tax haven
with modern corporate and trust legislation. Nevis strongly supports
its offshore industry and staunchly protects the offshore trade. The
strict bank secrecy in Nevis is close to impenetrable. There are no detracting
treaties or agreements with the United States or any international
organization. There are good legal, financial, and business
support services, including services for offshore e-commerce business.
Nevis, Belize, and the Cook Islands are three of the best jurisdictions
for establishing an asset protection trust. Bearer shares are
permitted to be issued by Nevis International Business Companies
(IBCs) and beneficial owners can enjoy complete anonymity. This
haven is an excellent choice for the quick redomiciliation of a foreign
company. For a swift second citizenship, Nevis and Dominica both
have first-rate Economic Citizenship Programs. Although offshore
banking services are limited in Nevis, the Ministry of Finance has
been working to establish good relations with Swiss bankers for the
benefit of Nevis companies.
BELIZE
Like Nevis, Belize is an attractive no-tax haven with progressive corporate
legislation. Once a British colony, Belize gained its independence
in 1981. This tropical Central American country has been
aggressively promoting itself as an international financial center, and
the future looks promising. There is strict bank secrecy and there are
no treaties or agreements with the United States or other international
organizations. The OECD had blacklisted Belize for a while in
2000 until the country made a few concessions, but nothing dramatic.
However, your IBC will not be able to issue bearer shares and Belize
no longer has an Economic Citizenship Program. Still, the Supreme
Court defends their laws and protects depositors against outside attacks.
This business-friendly haven offers a wide variety of offshore financial
services, and some forthcoming offshore legislation will allow
Belize to expand into a completely independent offshore financial
center providing many more services. Belize is an excellent offshore
e-commerce base, and has one of the strongest asset protection trust
laws anywhere.
HONG KONG
This world-class banking center and tax haven provides strict bank secrecy
and is an excellent location for conducting international business
in the Far East and elsewhere. Even with Beijing’s potential
influence, China has done a pretty fair job at keeping its hands out of
this successful capitalist enclave, as was agreed in their 99-year lease
with Britain. It was also agreed that Hong Kong would continue to operate
under the status quo for 50 years beyond the expiration of the
lease, which ended in 1997, without interference from China. If this
situation should change, two Asian alternatives to Hong Kong would
be Singapore and Malaysia. Hong Kong is a major shipping port. It is
also the Western gateway to China.
More information on the T-7 tax havens can be found in Part
Three: “Today’s Tax Havens,” under the individual country profiles,
complete with offshore business contacts.