Offshore Asset Protection BLOG - Bob Bauman

NEWS FROM OFFSHORE

SWISS BANKS HOLD ONTO CLIENTS The European savings tax may have driven the cash of some EU residents to Asian tax havens, but the lastest numbers from Switzerland indicate that the Swiss banks have held most of their clients. The main reasons: strict Swiss banking secrecy, plus the ability legally to avoid the EU tax by readjusting types of investments to those that are exempt from the tax. An analysis last year predicted that the tax could cause at least €1 trillion, or US$1.3 trillion, to leave Switzerland and Luxembourg, another country popular with offshore investors. In the hush-hush world of offshore banking, hard numbers can be hard to uncover, but so far, analysts said, most investors in Switzerland have decided to stay put. Assets under management in Switzerland have risen significantly in the last few years, even after the tax took effect, reaching a high of 4.4 trillion Swiss francs, or US$3.5 trillion, in 2005, compared with 3.5 trillion francs in 2004, according to the Swiss National Bank and the Swiss Bankers Association. Investors have not fled Switzerland. Analysts cite many reasons for the decision to stay put including the experience of Swiss bankers and adapted portfolios to avoid tax liability. But most investors also remain confident that, despite pressure from the European Union, Swiss bank secrecy will stay intact. LINK: http://www.iht.com/articles/2006/11/19/business/rwmswiss.php

LONDON: TAX HAVEN FOR BILLIONAIRES We've often talked about London as being the tax haven for the very rich. Low taxation is a big attraction. The UK's tax laws contain provisions that enable non-British-born individuals who live in London, for some but not all the time, to be taxed only on their UK earnings. Non-domiciled resident tax status is a tax loophole that politicians have repeatedly threatened to close but somehow never get around to doing. One reason: There are an estimated 100,000 "non-doms" in the U.K. They're not all billionaires, but all are multimillionaires, and among them are many strong financial supporters of the main political parties. The second reason the loophole stays open: The billionaire ecosystem is an important generator of jobs. They are to be found all along the employment food chain--chefs, gardeners, drivers, nannies, bodyguards and the agencies that supply them. The rich keep London's real estate agents in work. Foreign buyers bought more than half of the London homes that sold for more than £2 million last year. That includes an army of financial advisers--lawyers, accountants, bankers and money managers. London is not only discreet; it is also safe and politically stable. Politicians and bureaucrats are not corrupt, the courts work, property rights are protected. There are elegant shops, luxurious private clubs and good schools for the children--all expensive enough to keep the riff-raff at bay.

LINK: http://www.forbes.com/business/2006/11/16/billionaires-london-mittal-biz_cx_pm_1116londonbillies.html

HALIFAX: NEW OFFSHORE FINANCIAL CENTER The cod are gone, but Nova Scotia is reeling in a new industry from offshore. Halifax is quietly establishing itself as an offshore financial center, capitalizing on the tight and expensive labor market in Bermuda to attract administrative operations from that tax haven's financial institutions. The Bermuda labor restrictions have driven many foreign financial workers there away and blocked others from working on the island tax haven. Now five Bermuda financial institutions have announced or will soon unveil plans to open offices in Halifax. These are expected to lead to the creation of 1,000 administrative positions. Bermuda-based Bank of N.T. Butterfield & Sons Ltd. said it will hire 400 people in the Nova Scotia capital in the next seven years. The Butterfield announcement follows a decision last year by West End Capital Management, affiliated with billionaire investor Warren Buffett, to locate 75 positions in Halifax. The provincial government is encouraging the influx of new jobs with subsidies and tax breaks. Nothing like tax haven competition.

LINK: http://www.theglobeandmail.com/servlet/story/RTGAM.20061116.wxrhalifax16/BNStory/Business/home

CANADA AIMS AT OFFSHORE HAVENS

OTTAWA: The new Conservative federal government, having just shut down one costly tax-avoidance scheme with income trusts, has another in its sights -- offshore tax havens. "There's some significant tax avoidance there," Finance Minister Jim Flaherty claims, after saying the government was reviewing the use of offshore tax havens to avoid paying tax. Using offshore tax havens to avoid paying tax is not illegal but is costly to the government, he says. Statistics Canada revealed Canadian direct investment in offshore financial centres, including tax havens, had soared eightfold since 1990 to C$88 billion in 2003. The largest amounts sent offshore by Canadians went into Barbados, Bermuda, the Cayman Islands, The Bahamas and Ireland, the five countries among 11 nations with the most Canadian assets. The government seeks to prevent "non-resident trusts and foreign investment entities" from using offshore tax havens to avoid tax. The new rules will amend existing income tax rules to help ensure that income earned by Canadians through foreign jurisdictions, including tax havens, is subject to tax as if it had been earned in Canada, Flaherty claimed.

LINK: http://www.canada.com/nationalpost/financialpost/story.html?id=128ee8de-e0cb-4279-b1af-71a851d07634&k=78241

MORE BRITISH LABOUR ANTI-TAX HAVEN ATTACKS

LONDON: The so-called "Monaco Millionaires," the elite group of British business people who reside outside the UK to slash their tax bill, face a crackdown by the UK Revenue & Customs on the number of days they can spend in Britain, after a surprise legal decision. London accountants accuse Revenue & Customs of introducing a stealth tax on the wealthy after it ignored its own guidelines to pursue a case against Robert Gaines-Cooper, a Seychelles based multimillionaire. Some of Britain's most successful entrepreneurs live in offshore havens such as Monaco, the Isle of Man, Jersey and Switzerland to avoid paying income and capital gains tax on UK dividends and assets.

The Times (Nov. 17) reports that according to UK tax guidance note IR20, people who wish to be considered non- resident must not spend more than 183 days in any single year in the UK. Over four years, the average number of days per year must not exceed 90. Since 1993 the UK tax collectors have discounted the days of arrival and departure from the total. A lot of people fly in every Monday and go home on Wednesday evening, which counts as one day. This allowed them to work 50 three day weeks a year in the UK and still have only spent 50 days here under existing Revenue guidelines.

But the taxman, ignoring their own official tax rules, pursued Mr. Gaines-Cooper because, it argued, he retained sufficient ties to the UK to be considered a resident. The British-born 69-year-old was a member of the Rolls-Royce Owners’ Club, enrolled his son at Eton and traveled to the UK for Royal Ascot and pheasant shooting. The tax collectors sought to count every night he spent in the UK, turning the traditional Monday-to-Wednesday visit from one day in the UK to two days. The Special Commissioners found in the government's favor. Mr. Gaines-Cooper plans to appeal in the High Court, although that may take 12 months.

LINK: http://business.timesonline.co.uk/article/0,,13130-2457272,00.html

MORE ABOUT SINGAPORE

I've recently mentioned SINGAPORE several times as one of the rising tax havens of the world.

I visited there a year ago for a trust law conference that demonstrated that the local trust laws have been fully updated on a par with leading offshore trust nations such as Bermuda or Panama. Since then Singapore has strengthened its banking secrecy laws patterned after those in Switzerland. Now Singapore is actively recruting wealthy business persons as residents.

It's a match made in financial heaven because the island city-state is seeking to establish itself as Asia's newest private banking hub by luring the planet's super-wealthy away from places such as Hong Kong and Switzerland.

Singapore's strengthened bank secrecy laws are one enticement but the government also is allowing foreigners, especially Europeans, who meet its wealth requirements, to buy land and become permanent residents. The goal is to attract private wealth from across Asia, as well as riches that Europeans and other
Westerners are moving out of Switzerland and Europen Union nations to avoid new tax and reporting laws there. Many Swiss banks, such as Bank Julius Baer with which the Soveriegn Society has working contacts, are beefing up their operations in Singapore to capitalize on the new business opportunities.

The number of private banks operating in Singapore has nearly doubled, to 35, in the past six years, officials say. Authorities estimate that money managed by private banks in Singapore has grown 20%t each year since 2000 to more than $US200 billion ($262 billion) today.

For more see: LINK: http://www.smh.com.au/news/business/calling-all-moguls-a-new-haven-for-mega-rich/2006/11/17/1163266777444.html

Remembering Milton Friedman

MILTON FRIEDMAN, champion of free market economics and intellectual godfather of the Reagan and Thatcher era of conservative political ascendancy, died last week the age of 94. All the comments I have seen about his passing, regardless of the authors' political views, left, right or center, seem to agree that, as one of them put it, "few economists in the last century have come close to matching Professor Friedman’s influence over global policy and public events. Unlike John Maynard Keynes, his name did not become literally synonymous with a set of theories and prescriptions but his contribution to the development of economic thought was almost certainly as profound as that of what has come to be called Keynesianism." He is rightly called the champion of the free market economy, a basic tenet of those of us at the Sovereign Society.

I have met many famous people in my many years, including every US president from Eisenhower to George H.W. Bush (the father), as well as many other persons of note. But of one of my most memorable encounters was on evening during the 1960s in Chicago when I was privileged to share a table with Milton Friedman and a group of young conservatives. We were there for a meeting of the Mont Pelerin Society at a time when being a young conservative on an American campus risked ridicule and worse. I was then national chairman of Young Americans for Freedom, a national youth group that had much to do with drafting Barry Goldwater to run for president in 1964. Professor Friedman was a strong supporter of our youthful actvities and often spoke to our gatherings.

What impressed me that evening about Professor Friedman apparently also impressed many others; his brilliance, logic and his ability to express clearly deas, and yet, his gentle demeanor, even when debating staunch opponents. He chatted with us, young college students, as thought we were his peers, warmly commenting on out views. He made us feel that we were right at home with this great man.

In the 1960s and early 1970s, as socialism advanced around the world and capitalism seemed increasingly under siege, Milton Friedman offered the most cogent and passionate defense of the idea that free markets and free peoples are not only more efficient than centrally planned systems but morally superior.

In Capitalism and Freedom, published in 1962, Professor Friedman argued for comprehensive economic and political reforms to liberate individuals from the heavy hand of government. He won the Nobel Prize for Economics in 1976 for his work on consumption theory, where he revised the Keynesian view that consumers always adjust spending according to simple changes in income.

But it was as one of the progenitors of what came to be called monetarism that he made the rare leap from academic ivory tower to the front pages. As the capitalist world suffered from accelerating prices in the late 1960s and 1970s, he argued that inflation was a monetary phenomenon and could be cured only if central banks capped the growth of money supply.

For all his greatness, I will never forget that Chicago evening where I experienced the real Milton Friedman, a very great human being, as well as a champion of human liberty and economic freedom.