28 INTRODUCTION

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Part Three serves as an introduction to most of the countries that are

considered tax havens, and in some instances, countries such as Austria

that are not tax havens in the pure sense, but that deserve introduction

as they have something exceptionally beneficial to offer the

investor going offshore. In Austria, the benefits include superb bank

facilities and strong bank secrecy laws, making this country an attractive

banking, money, and asset haven, although one not notable

for tax benefits. Aspects of banking and banking services such as

asset management make these countries important to consider for

personal asset protection.

You could, for example, bank in Switzerland or Austria, and

then for business purposes and international tax strategies, you

could engage another of the T-7 tax havens like Belize, Nevis, or

Panama to be your tax haven jurisdiction of choice. Together, these

choices would create a powerful combination to shelter your personal

and business assets, investments, and financial activities. You

should consider other asset protection strategies, too, such as an

asset protection trust (APT) in a favorable asset venue like Nevis,

Belize, or the Cook Islands; and of course, you should also explore

the many excellent offshore investment products available.

There are other tax havens not profiled in Part Three because,

as they stand today, they either are, or have become insignificant for

serious consideration. In some cases, they have lost their former

stature among tax havens. A few glaring examples are Nauru in the

Central Pacific, Montserrat in the Caribbean, and Liberia in North

Africa. Too many viable tax havens are available that simply rate

higher; in fact, about 40 worthy tax havens are available in any given

year. Indeed, in Chapter 30, you will find profiles for 40 offshore

havens, but inclusion in itself is not a recommendation or endorsement.

Some havens have fallen from prominence as their benefits

have been greatly impaired by such devices as the Tax Information

Exchange Agreement (TIEA). This agreement has severely hurt the

Bahamas and the Cayman Islands as acceptable venues for U.S. citizens

to place money or otherwise do business. However, because

these tax havens still play an important role in the field, they must

be included.

I have identified several favored tax havens as the T-7 or Green

List of offshore tax havens, but the possibilities are certainly not

limited to these countries. This list is merely a gauge based on my

years of knowledge and experience with tax havens and a general

consideration of the benefits in today’s climate.

Choice of venue or multiple venues has much to do with customized

decisions depending on each individual’s general goals.

Countries like Andorra, Luxembourg, and Denmark could be considered

worthy countries to bank for secrecy purposes. Also, Andorra

and Denmark would both provide a lower profile as they have minimal

or no tax haven attributes. In fact, Denmark is not a tax haven

whatsoever and Luxembourg is more of an investment haven with a

highly developed global banking center.

Certain facts are presented in the profiles, including important

aspects that would be pertinent in the selection process. But this information

is merely an overview and, if interesting, may lead you to

a further investigation of any given country. The profiles provide

highlights, giving you a thumbnail point of reference. Here is the

format used for each profile:

_ Affiliations—Who this country is closely aligned with, such as

an international organization or another country or group of

countries. These affiliations are not complete because a country

may have many possible affiliations, but these are some of

the major ones.

_ Location—The geographic proximity of the country to other

countries and regions for quick reference.

_ Capital and Largest City.

_ Government—The type of government and its relationship, if

any, to another government.

_ Legal System—The basis of the country’s laws—common law and

civil law are the most frequently encountered.

_ Official Language.

_ Stability—An important factor in doing business, administering

financial matters, and banking.

_ Currency.

_ International Time—Based on the country’s location plus or

minus the number of time zones from Greenwich Mean Time

(GMT), which passes through Greenwich, England.

_ Country Code—A specially designated number representing

a country, similar to a city or area code. Access by telephone

requires this code to be dialed after the required access number

for dialing in or out of a country, such as 01 or 011, and so

forth; and the country code is followed by a city code, if any,

and local number.

_ Embassy—The appropriate U.S.-based embassy to contact for

business, travel, and country information, including address

and telephone number.

_ Type of Legal Entities—Legal vehicles used for offshore business.

Other types of legal entities are likely to exist, too. But

the entities included here will be most pertinent to the

reader and the topic at hand. Special purpose entities are

mentioned as well, such as banks, trusts, investment funds, insurance

companies, and shipping. The choice of business vehicle

in most tax havens today is the International Business

Company (IBC).

_ Unique Characteristics—Helps determine the unique attributes

of a tax haven that you may find attractive. It also covers

unique situations presently affecting the haven that may

make it more or less desirable. These pointers will help you

narrow your choices in the selection process.

_ Taxation—Brief explanation of any taxes affecting offshore

business.

_ Exchange Controls—Best if there are none.

_ Treaties with the United States—Important considerations for U.S.

citizens using a specific tax haven. Treaties can be advantageous,

such as certain circumstances when an income tax treaty

will be beneficial in avoiding double taxation, or disadvantageous,

such as the Tax Information Exchange Agreement

(TIEA), which is designed so that the U.S. government can get

what would otherwise be confidential financial information on

your activities from financial institutions, possibly defeating

your reason for going offshore.

_ Useful Web Sites—A government web site providing more information

on the country.

_ Business Contacts—Hundreds of hard-to-find business, financial,

and professional contacts for the tax havens profiled.

Some of these contacts have offices and affiliates in other tax

havens as well.

The last profile is Western Samoa. Following that, you will find

Part Four followed by the Appendix containing important business, financial,

and professional contacts located in the United States, the

United Kingdom, and Canada who can assist with many aspects of

wealth protection and offshore activities.

TAX INFORMATION EXCHANGE AGREEMENTS

This type of treaty has had an understandably profound negative

impact on tax havens that have elected to sign a Tax Information

Exchange Agreement (TIEA) with the United States.

This agreement has no redeeming value to U.S. citizens doing business

in these particular tax havens. Information on TIEAs, as they

are known, is being provided here in advance of the individual

profiles of the tax havens, so that you are aware of them before you

read on.

The TIEA was drafted simply to exchange domestic tax information

between the United States Internal Revenue Service and the

tax haven that chose to be a party to it. The TIEA has no benefit to

a private third party like the offshore investor. In fact, the only beneficiary

of such a treaty would appear to be the IRS. Secrecy laws in

financial matters is the linchpin of success for tax havens, and the

single most important reason for their popularity over the decades.

But, a TIEA undermines this purpose. Knowing which countries

have a TIEA in place with the United States is important, and if

financial confidentiality is a concern, you should not do business

with a TIEA tax haven. Forget “bank secrecy” or confidentiality if a

tax haven or other country has signed a TIEA, and this warning

pertains to lawyer relationships in these places, too. This device has

undermined once good tax havens including the Bahamas and

the Cayman Islands. The following 13 countries have signed TIEAs

with the United States and they will surely pay the price for bowing

to this outside pressure. (Other tax havens could concede in the

future):

A total of 20 TIEAs are currently in existence. The other 7 are not

tax haven jurisdictions:

This leaves the following tax haven countries that have not signed

a TIEA and should be considered first:

1. Andorra

2. Anguilla

3. Austria*

4. Bahrain

5. Belize*

6. Brunei Daraussalam

7. Cook Islands

8. Cyprus

9. Dubai (U.A.E.)

10. Gibraltar

11. Hong Kong*

12. Labuan (Malaysia)

13. Liechtenstein*

14. Luxembourg

15. Madeira

16. Malaysia

17. Malta

18. Mauritius

19. Monaco

20. Netherlands

21. Netherland Antilles

22. Panama*

23. Saint Kitts and Nevis*

24. Saint Vincent

25. Seychelles

26. Switzerland*

27. Turks and Caicos Islands

28. Vanuatu

29. Western Samoa

1. Dominican Republic

2. Guyana

3. Honduras

4. Mexico

5. Peru

6. St. Lucia

7. Trinidad and Tobago

1. Antigua and Barbuda

2. Aruba

3. Bahamas

4. Barbados

5. Bermuda

6. British Virgin Islands

(BVI)

7. Cayman Islands

8. Channel Islands (includes

Guernsey and Jersey)

9. Costa Rica

10. Dominica

11. Grenada

12. Isle of Man

13. Marshall Islands

* The asterisk denotes a T-7 tax haven, one of my most favored money havens. Fortunately,

a greater number of tax havens still have turned down the invitation to sign away

their lucrative offshore business than have succumbed. Maybe the remaining countries

have realized the harm they will cause themselves if they do sign a TIEA.