Offshore Asset Protection BLOG - Bob Bauman

U.S. Money Police Hide Behind “Privilege”

The news today reported that the Bush administration plans to use again a dubious legal tool, the “state secrets” privilege, to try to stop a lawsuit against a Belgian banking cooperative, the Society for Worldwide Interbank Financial Telecommunication (Swift) that secretly supplied millions of private financial records to the United States government, court documents show. The suit alleges that Swift, in secret cooperation with the U.S. government, violated the privacy of an untold number of persons by allow the U.S. access to Swift cash transfer records. 

Swift is a privately run cooperative founded in 1973 and headquartered in Brussels, Belgium that electronically transmits trillions of cash transfers every day to more than 200 countries. The network handles some nine million transfer instructions and confirmations a day with a value of about US$6 trillion. Swift is considered the nerve center of the global banking industry, routing trillions of dollars each day among banks, brokerage houses and other financial institutions. Its secret partnership with Washington, reported in The New York Times in June 2006, gave U.S. Central Intelligence Agency and the U.S. Treasury Department access to millions of records on international banking transactions by private individuals and others.

This massive access was part of an effort to trace money that government police claimed might be linked to financing of terrorism. The Justice Department claims that the suit against the Swift consortium threatens to disrupt the operations of a vital national security program and to disclose “highly classified information” if it continues. No doubt the Bush officials don’t want the world to know just how great a violation of the privacy of millions of people may have been.

---

The Alternative to Burying Your Assets in Your Backyard

If you're interested in protecting your assets, there are several things you can do.

You can bury your money in your backyard or under your mattress. You can put your money in a domestic bank or money market account, and earn a paltry interest.

You can invest in the so-called "safe" investments that your broker recommended on the NYSE (that supposedly produce meager 10% a year for a diversified domestic stock portfolio).

Or you can house your wealth in an offshore region, for superior investments, access to the hottest emerging markets, iron-clad asset protection and financial privacy.

The choice is yours. Click Here to learn more about the offshore option.

---

In 2006 a news story got a lot of coverage in Switzerland, but was generally ignored elsewhere. But to those who advocate offshore financial activity, including recommending Switzerland as one of the world's best asset havens, this was an important story. Datelined from Zurich, it stated that "the United States has confirmed it has been monitoring international financial transactions, including those in and out of Switzerland, for almost five years. The Swiss government remained quiet on the issue, but data protection experts and lawyers were and are concerned by revelations that the U.S. government had been tapping into records of Swift, supposedly looking for evidence of potential activity by terror groups.

In my opinion you better believe that the U.S. money snoops who say they are looking for terrorist cash are also looking for tax evasion, money laundering of all kinds and any other indictable offenses. And they are doing this in violation of the Fourth Amendment guarantees against illegal searches without a warrant. Naturally enough, the question arose as to whether the U.S. government having wholesale Swift access to hundreds of millions of wire transfers since Sept. 11, 2001 has compromised the Swiss banking secrecy mandated by law since 1934.

In Switzerland 99 banks and 254 institutions are connected to Swift, with a daily transaction value of some CHF200 billion (US$160 billion). Although the Swiss Bankers Association says that Swiss banking secrecy had not been endangered or violated, the Swiss Federal Data Protection Commissioner said he was alarmed. And well he might be. Switzerland cooperates in foreign criminal investigations.

But however much the U.S. money police may have seen in the records of Swift wire transfers, Switzerland still is home to fully one-third of all private wealth in the world. It has a centuries old tradition of confidentiality that will only be breached if someone is suspected of committing an action that the Swiss consider a crime. Tax evasion is not considered a crime in Switzerland, though tax fraud (falsifying documentation, for example) is.

The question now is whether the U.S. government money police will be allowed to hide behind the “state secrets” doctrine and conceal just how far they have gone in violating everyone’s privacy.

Attorney General Gonzales Resigns

For what they may be worth, what follows are my thoughts on the announced resignation of U.S. Attorney General Gonzales. My views are based on my personal history as a member of the bar for 43 years, as a registered Republican all my life, and as a political conservative. During the Gonzales tenure I have been highly critical of many of his decisions and actions that I and many others believe repeatedly have violated the laws and Constitution of the United States.

I agree with Timothy Lynch, director of the libertarian Cato Institute's Project on Criminal Justice, who also has been a critic of Gonzales. He noted the resignation is welcome news for two reasons. First, Gonzales has given the President terribly wrong legal advice on a range of constitutional and legal issues, from habeas corpus to military tribunals to the Patriot Act. Second, there has been a pattern of misleading statements on a host of issues from Gonzales to the Congress, the courts, and the public.

In "Gonzales Must Go," an op-ed written in May, Lynch said: "Truth be told, Gonzales's tenure is more scandalous even than the mess he created by firing eight federal prosecutors. ... Even outside of the context of the war against al-Qaeda, Alberto Gonzales has been an embarrassment. In area after area -- from habeas corpus to separation of powers to executive responsibility -- he has sought to strip out the limits that the Constitution places on presidential power. His fiasco regarding the firing of federal prosecutors is a petty offense when compared to the legal advice that he has conveyed to the President. The real scandal is his disregard for constitutional principles." LINK: http://www.cato.org/pub_display.php?pub_id=8221

What also needs to be said is that while Gonzales himself can and should be faulted, the responsibility for his actions and for the repeated violations of the Constitution must be attributed to President Bush who nominated him and who has acquiesced in these acts and events.

We can only hope that whomever succeeds Gonzales, the United States Department of Justice and the government as a whole will return to the rule of law from which this administration has deviated in ways unprecedented in our nation's history.

The End of Tax Havens?

There's no reason why you would have noticed a few recent news items about tax havens, but that's one of the many reasons the Sovereign Society exists -- to keep you abreast of offshore developments and to explain how events may affect you, your wealth and your freedoms.

One interesting item has Gibraltar's chief minister, Peter Caruana, predicting that tax havens will cease to exist within 10 years because of what he calls "international scrutiny and pressures." Of course the Rock is both a semi-independent British overseas territory subject to control by London, and also a certified tax haven. Gibraltar was once listed by the busybody, left-leaning Organization for Economic and Community Development (OECD) as a harmful tax haven, but it has since reformed its laws to become more "transparent," a favorite word the anti-tax haven crowd uses to mean tax information exchange about individuals among governments, i.e an end to any financial privacy.

Of course Mr. Caruana sang praise for his own jurisdiction, but he might just as well have praised almost the entire offshore financial community, tax havens all. In the last decade almost every offshore jurisdiction haas adopted stringent new anti-money laundering and "know your customer" laws, as well as imposed obligations to report suspicious financial activity. These laws aim especially at drug and terrorism money and most of them are far tougher in fact and in enforcement than those in the major centers of dirty money -- the United States and the United Kingdom.

The real source behind all the pressure and manufactured media hullabaloo against tax havens has been the tax collectors of major welfare state nations, a miserly group that is convinced that everyone and anyone who does business offshore is automatically a tax evader.

The IRS and British Inland Revenue hate the fact that tax havens offer tax free profits and statutory guarantees of bank and financial secrecy. They refuse to accept the fact that  tax competition among nations is good for the world economy because it keeps taxes lower, increases profits and that creates jobs.

---

Join The New American Tax Revolt

What if I said you could legally eliminate all or nearly all of your U.S. tax burden?

That's right, I mean you might never, ever have to pay a single dime in U.S. taxes again...and there's nothing the IRS could do about it.

It's entirely possible when you use a little-known strategy that I'm about to share with you today.

To find out how you can effectively eliminate your U.S. tax burden, click below.

Click here to find out if Expatriation is the right move for you.

---

Proof of a sort that tax havens have improved comes from none other than the notorious OECD group, the Financial Action Task Force (FATF), the self-appointed blacklisters of all tax havens, from Switzerland to the Cayman Islands. Last week FATF announced that the Marshall Islands has been removed from the OECD's list of so-called "harmful tax havens" after this tiny Pacific island jurisdiction committed to improving transparency and establishing exchange of tax information.

Interestingly, the only "uncooperative" tax havens still on the FATF hit list are Andorra, Liechtenstein and Monaco - all sovereign nations with strict financial secrecy laws that they refuse to waive in the fact of FATF bullying. And God bless them!

Taxes & Hypocrisy

What must be understood is that the anti-tax haven campaign, now a decade old, is really all about tax collectors using phony reasons (anti-drug, anti-money laundering, anti-terrorism) as public relations covers for curbing the right of individuals to bank, invest and do business anywhere in the world they wish. These phony political attacks patently run counter to all modern economic trends of globalism, expanded world trade, international investment and free exchange of funds among nations.

And for some of the major protagonists, such as the U.S. and the U.K., it is sheer hypocrisy, since those two nations are major tax havens for foreigners who invest there. For example, wealthy "non-domiciled" residents of London pay virtually no taxes on income earned elsewhere, and even those who are paid in the U.K. have a special tax break that greatly reduces their taxes compared to U.K. citizens.

But bashing tax havens has become an international sport amongst  leftist politicians who have always preached "soak the rich" themes in trying to appeal to the poor, hard working masses -- it's called demagoguery. Not to be outdone, the Democrats who now control the U.S. Congress are already passing new restrictions and levying new taxes on offshore financial activity, and I'll have more to say about that stupidity shortly. (President Bush, get out your courage and your veto pen!)

Who Eggs Benedict?

Not to be outdone, it is reported that Pope Benedict XVI is working on an an encyclical that strongly condemns the use of tax havens and offshore bank accounts by wealthy individuals. The Times of London reports that the Pope will argue that tax avoidance and evasion is morally unjust since it supposedly prevents governments from collecting revenues to help society's least fortunate people. ("Render unto Caesar the things that are Caesar's...") That puts use of tax havens right up there along with the mortal sins of abortion, homosexual conduct and birth control. This is one Catholic who wishes the Pope had better economic advisors so that he might understand the beneficial role tax havens play in the world economy. (According to the Council of Vienne [1311], a person who charged interest on a loan was to be punished as a heretic was committing a mortal sin).

Notwithstanding the continuing leftist onslaught against tax havens, I predict they will survive and prosper, just as they have been doing since this battle began ten years or more ago.

And if you want to know how tax havens can help you morally to expand your wealth and religiously protect your assets, CLICK here for the new revision of my classic book, Where To Stash Your Cash: Tax havens of the World.

Extradition - Could It Happen to You?

I doubt that you have read the several news stories published recently about Austria's refusal to extradite Kazakhstan's former ambassador in Vienna to face trial for an alleged kidnapping. An Austrian court last week ruled against extraditing Rakhat Aliyev, who was married to Kazakh President Nursultan Nazarbayev's daughter, because the Austrian court found that it could not guarantee him a fair trial. Aliyev has told Austrian authorities that he thinks his life would be in danger if he returned to Kazakhstan and that the case against him is politically motivated because he said he was considering running for president.

As Ambassador Aliyev now knows all too well, extradition is the surrender and transfer of an alleged fugitive from justice or a criminal by one state, nation, or authority to another. Under the Fourth Amendment in America's Bill of Rights, one U.S. state is obliged to extradite to another state a wanted fugitive. But what if you move "offshore" and make your home in another country.

How likely is it you'd be extradited to face tax or criminal charges in another country? Until now, the answer has been "highly unlikely" - unless you were wanted for a violent crime such as murder, kidnapping or rape. But if Big Brother governments have their way, the list of extraditable offenses will expand to include "tax" and "fiscal" offenses - as well as politically motivated extraditions. But protection for tax exiles and freedom seekers still can be found in a well established body of international law - if politics doesn't get in the way.

Governments jealously guard the right to govern extradition of criminal suspects from their own country. Treaties that govern official extradition with strict safeguards exist in most countries. However, most extraditions are done informally. For instance, in America and other nations an illegal immigrant isn't usually entitled to a hearing before being sent home. Immigration officials may arrest a "fugitive" working without a legal permit, then hand the accused over to police across the border or put him on a plane home.

There has been a lot of that sort of "informal" extradition in the U.S. news lately. In other "informal" extraditions, fugitives have been abducted from a foreign country and taken to another nation for trial and/or punishment. A famous example occurred in 1960, when Israeli agents kidnapped Adolf Eichmann from Argentina. He was returned to Israel to stand trial for Nazi war atrocities committed during World War II, convicted, and later executed.

Extradition by Kidnapping is Legal

Don't be too shocked, but the United States has used kidnapping as a judicially approved extradition method. In 1990, agents of the U.S. Drug Enforcement Agency (DEA) kidnapped Dr. Humberto Alvarez-Machain from his medical office in Guadalajara, Mexico to stand trial in Los Angeles for the alleged murder of DEA agent Enrique Camarena Salazar. U.S. District Judge Edward Rafeedie denounced the government's weak case and found the kidnapping violated the U.S.-Mexico Extradition Treaty.  The judge concluded that Dr. Alvarez-Machain was abducted at gunpoint in Mexico by "paid agents" of the United States, tortured by his abductors and injected with mind-altering drugs. The Mexican attorney general demanded the extradition of two DEA agents on charges of kidnapping, but the United States ignored the demand. The abduction was widely criticized internationally.

In 1990, Judge Rafeedie dismissed the case against Dr. Alvarez. The government appealed, and in 1992, the Supreme Court reversed this decision. But by then, the doctor was home in Mexico. The Court ruled, in effect, that barring language specifically banning kidnapping in the relevant U.S. extradition treaty, it is legal to kidnap criminal suspects for extradition to the United States.

In 1989, in another "unofficial" extradition, U.S. armed forces invaded Panama, hundreds of Panamanians died in the military attack and the U.S. deposed dictator Manuel Noriega. When Noriega surrendered he was taken to Florida, where he was tried and convicted on federal drug and other criminal charges, in spite of defenses based in part on extradition law and treaties between the two nations.

This September Noriega will be released after 17 years in prison. In the last year the U.S. government has arrested business officials of two Internet gambling companies as they passed through U.S. airports in transit to other countries. In both cases the companies in question were located and operated outside the U.S., but the government claimed they violated American laws by allowing U.S. citizens to gamble using their systems.

The U.S. has also obtained the extradition from the United Kingdom of several  business persons accused by the U.S. of involvement in the Enron scandal. This, in spite of the fact that the U.S.-U.K. treaty did not allow extradition for the alleged crimes and under British law the offenses were not criminal. The conclusion we can draw from all this is that if a government, especially the United States, wants one of its citizens badly enough, it will get him or her, no matter where they may live offshore.

"Formal" Extradition

Formal extradition, by comparison, is a complex process governed by the terms of bilateral treaties between the nations involved. Unless the host nation is willing to relinquish a fugitive, retrieving him can be impossible - unless the requesting government resorts to kidnapping or other the coercive methods I have described. Formal extradition begins when a diplomatic agent for the requesting nation asks the host nation to surrender the fugitive. Even if there is an extradition treaty between the two nations, the sanctuary nation will not always surrender the individual. The decision will depend on its interpretation of the treaties, as judged by its own courts, as in the recent case in Austria.

The legal principle of "specialty" requires that when extradition is granted, the requesting State may put the fugitive on trial only for those specific offenses on which the request was based. Of course, once fugitives are returned to the country that wants them, there is little a foreign government can do, except protest, if the person extradited is tried for additional crimes, or suffers punishment not permitted in the host country, especially capital punishment.

Another important principal is "dual criminality," which allows extradition only when the alleged acts of a fugitive are recognized as statutory crimes in both countries. Violations of this principle are a common basis for refusal of formal extradition requests.

MLATs

Extradition in many countries is augmented by a newer series of "Mutual Legal Assistance Treaties" (MLATs). These agreements promote cooperation in the exchange of information and evidence in criminal investigations. The U.S. network of MLATs is the world's largest. Using MLATs, U.S. prosecutors can request search warrants be served in foreign jurisdictions, freeze foreign-owned assets before trial and demand access to financial records located abroad. All these tactics "encourage" defendants to return "voluntarily" to the United States for trial.

Any "Safe Havens" Left?

To avoid extradition a fugitive can flee to a jurisdiction with no extradition treaties with the country that is in pursuit. Civil law countries may be protective, since many of them ban extradition of their own citizens. But don't count on the United States to be a safe haven. The U.S. government has the authority to arrest and detain a foreign citizen for extradition without an independent showing of "probable cause" in a U.S. court that the accused committed a crime abroad. All that's required is a statement from the requesting country merely alleging probable cause exists. On this basis, the U.S. government can hold a foreigner in jail for extradition.

What About You?

At the present time, it is relatively easy to avoid extradition unless you've committed a serious crime listed as grounds for extradition in the relevant extradition treaty, if one even exists. This list of extraditable crimes, however, is growing rapidly. The United States is at the forefront of this expansion movement. When it lacks solid grounds for its extradition demands, the U.S. government often uses as justification catch-all criminal "tax fraud" or "mail/wire fraud" provisions of its extradition treaties. More recently, "racketeering" and "money laundering" are the crimes alleged. And "terrorism" has been added to the list.

A leading international tax consultant in Washington, D.C. told me (off the record, since he must deal with the IRS constantly) that most nations are reluctant to extradite anyone from their countries for alleged tax offenses. Foreign tax laws usually apply criminal penalties only to intentional tax fraud, such as false filings. Many countries treat failure to file as negligence rather than evasion or fraud, since their systems require filing of an estimated income statement. On that statement the government bases tax bills that are sent later.

If you're on the run from the police for crimes you actually committed, there are few safe havens. Most countries don't want to shelter known criminals. But often, the situation is more ambiguous. Perhaps you've been accused of a crime you didn't commit, the charges have been trumped-up or you merely believe that because of your political or economic status, like Kazakhstan's former ambassador in Vienna, you may be targeted for arrest, imprisonment and confiscation of your wealth.

In such situations, you may have little recourse but to relocate to a country without an extradition treaty with your home country, or one that excludes the particular crime or crimes of which you're accused.

For More Information...
* United Nations Model Treaty at LINK: http://www.unodc.org/pdf/model_law_extradition.pdf
* Source for U.S. treaties is the State Department's Treaties in Force series, LINK: http://www.state.gov/www/global/legal_affairs/tifindex.html
* U.K. extradition treaties,  Index to Treaties  published by Her Majesty's Stationary Office. LINK: http://www.hmso.gov.uk/

Update On Panama Corporations Web Site

An attorney in Panama has responded to my post, "Panama Corporations Now Online,” with some helpful clarification:

He says: 1) the Internet web site does not allow instant establishment of a Panama corporation. It usually takes at least 24 hours before the new corporation is entered into the Public Registry after using the web site; 
2) Whatever fee a local Panama lawyer or incorporation service charges, US$300 of the charge goes to the government as an advance annual tax. A maintenance of US$300 is collected as tax every year thereafter. Most Panama attorneys charge about US$500 including the tax.
3) The new web site http://panamaemprende.gob.pa only grants business licenses to corporations and partnerships already entered into the Public Registry. Individuals using it must have a Panama residency card (cedilla);
4) The old method of paperwork registered around 36,000 incorporations in 2006.
5) The web site has several shortcomings: a) payments must still be made in person to the National Bank of Panama; (no credit card or online payments are accepted) b) current license owners and businesses subject to special government supervision, (banks and insurance companies, for example) cannot amend their licenses online.

---

Unlock the 'Money Secrets' the World's Financial Elite Have Quietly Used for Decades...

• Invest freely in top performing foreign stocks, investment grade bonds, mutual funds, and currencies not readily available in the investment-restricted U.S.
• Buy a luxury home at a 60% discount to comparable properties and pay NO REAL ESTATE TAXES for the next 15 years
• Legally shield your wealth from predatory lawyers and other busybodies; with iron-clad financial privacy laws
• Create your own international corporation and do business anywhere in the world - without leaving home, filing financial accounts or paying taxes to the local government

To discover how the very same opportunities are now waiting for you in Panama, click here.

---

And from our own observation of the web site, the "English" version of the web site does not work at present.

Thanks for the clarification goes to http://mypanamalawyer.blogspot.com/ a blog for discussion of issues of interest to foreigners relocating to Panama

Another Reason to Go Offshore

Quite often I write about wealthy Americans or citizens of other nations moving offshore to find a new or second home, lower taxes, greater asset protection and more financial and personal privacy.

But there is a another group of migrants, many of them educated and professional Americans (and others), who are going offshore to find better jobs and, for the Americans, a major tax break that U.S. law allows -- the foreign earned income exclusion.

Today's New York Times (Aug. 20)  describes the lives being led by several Americans who have moved to the United Arab Emirates to teach there in a new university. Says The Times : "In this country where foreigners do most of the work, there are migrant maids and migrant masons, migrant tea boys and migrant typists, all doing what most migrant laborers do, menial tasks for meager wages. Then there is Peter Mitias, the migrant professor. An economist with a Louisiana doctorate and a Mississippi drawl, he shocked his friends when he left a tenured job in Virginia for the American University of Sharjah, a school conjured from nothing by a sheik in the suburbs of Dubai. But when he lists the benefits of working abroad, Mr. Mitias crows. He has free housing and utilities. (“Sweet!”) He has international experience on his résumé. (“Huge!”) He has cheap household help, good schools for his children and a BMW and a Mercedes he was able to buy by paying no income tax. Not to mention plenty of American fast food. “Papa John’s delivers to my house,” he said. “It’s all here!”

The tax break to which Prof. Mitias refers is known as the "foreign earned income exclusion."

It allows a U.S. citizen who lives and works outside the U.S. to exclude up to $82,400 of foreign earned income from U.S. income taxes. If both of you work it's possible that you and your spouse could earn a tax free $164,800 annually offshore, plus lower taxed housing allowances an offshore employer pays.

---

Where Will You Go When Things Get Worse In America?

The U.S. Cash Crash: How long before the U.S. dollar bottoms out and is worthless! taking your retirement and investment portfolio down with it?

De Facto Deficit: It's there, it's huge and it's getting bigger at the hand of a government in denial.  How long before it pushes us into 3rd world status?

Socialism Security: As the U.S. government continues to tighten its grip on you and your wealth, will you be able to re-discover opportunity and freedom?

To learn what you can do, click here.

---

This is not a tax deduction, credit, or deferral. It's an outright exclusion of your offshore earnings from gross income, so you pay no U.S. income tax on that amount. To qualify for these benefits you must: 1) establish a "tax home" in a foreign country; 2) pass either the "foreign residence test," or the "physical presence test"; 3) actually have earned income; 4) live in the U.S. for no more than one month per year; 5) file a U.S. income tax return for each year you live abroad.

Usually your "tax home" is where your principal place of business is located, not where you live. The term "tax home" is broader when determining eligibility for the foreign earned income exclusion. Confusion over this point stings many Americans overseas. If you work overseas and still maintain a U.S. residence, your tax home remains in the U.S.

To qualify for the foreign earned income exclusion you must establish both your principal place of business and your actual residence outside the United States. A complicated test that determines if you get this exclusion involves counting the maximum number of days you're in or out of the U.S.A. But the foreign residence test is easier for most taxpayers to pass. You must establish yourself as a bona fide resident of a foreign country for an uninterrupted period that includes an entire taxable year; and you must intend to stay there indefinitely. If you don't pass this test,  you're considered a transient and wont qualify.

U.S. tax law says your residence is a state of mind. It's where you intend to be domiciled indefinitely. To determine your state of mind, the IRS looks at the degree of your attachment to the country in question. A number of factors, none of them decisive are examined.

The bottom line; you must establish clearly yourself as a member of a foreign community. This unusual tax break is only for those who live and earn offshore. The Sovereign Society gives expert advice on this and other offshore tax matters. And we can even suggest the best tax-free places to live and  work. In fact we will be conducting a Sovereign Society tour to the United Arab Emirate in 2008.

If you want to know more about what life would be like in scores of foreign countries, CLICK here for more about my latest edition of The Passport Book.

Panama Corporations Now Online

Following a successful example set by the British overseas territory of Anguilla several years ago, the Republic of Panama has just made available an Internet web site that allows instant establishment of a Panama corporation. This cuts down what in the past could have been days or weeks waiting for the human bureaucracy to process documents and issue a corporate charter. It also cuts out the need for a local lawyer or incorporation service, which usually charged in the range of US$1000 for incorporation.

The new web site (see below for the URL) is far more successful than expected.  The Ministry of Economy and Finance (MEF) had predicted about 1500 incorporations Online within a year. Beginning on July 1st that number was passed by mid-July when there were 2,132 incorporations in just 20 days for business ranging from beauty shops to financial services. From January to July 2007, under the old method of paperwork registering there were 6,062 incorporations.

Panama's business corporations Law No. 32 of 1927, is modeled after the U.S. State of Delaware's corporation-friendly statutes. There are about 400,000 corporations registered in Panama, second only to Hong Kong's 450,000. A Panama corporation can maintain its own corporate bank account and credit cards for world management of investments, mutual funds, precious metals, real estate, and trade. Corporate income free of Panamanian taxes can be spent for business purposes worldwide.

Panama, and many other nations that have fairer tax laws than the U.S., levy taxes only on a "territorial" basis. That means Panama only taxes business activity and income earned within the borders of Panama. Whether you are a Panamanian or a foreigner living in Panama, this also means your offshore business and profits are, for the most part, tax-free. These rules apply to both residents and non-residents, as well as to corporations, trusts or other entities registered in Panama and operating within Panama or overseas. Thus, corporations used for offshore purposes are not liable for income tax in Panama, unless they actually generate income within Panamanian territory. And, as an added tax-free bonus, interest-bearing accounts paid by Panama banks are not taxable as income in Panama.

Warning - The IRS Per Se List

Having an offshore corporation in a tax haven such as Panama may sound appealing and may avoid local taxes, but there is a serious downside when it comes to U.S. taxes on a offshore company controlled by an American. For U.S. persons who control the shares in a foreign corporation there are major limitations on U.S. tax benefits that would otherwise be available to a corporation formed in the United States.

That is because the foreign corporation probable is on what is known as the IRS "per se" list of foreign corporations, which appears in IRS regulations, section 301.7701-2(b)(8)(i). The listed per se corporations are barred from numerous U.S. tax benefits. This means that U.S. persons cannot file an IRS Form 8832 electing to treat the corporation as a "disregarded entity" or a foreign partnership, either of which is given much more favorable tax treatment. Under IRS rules, the foreign corporation that engages in passive investments is considered a "controlled foreign corporation," which requires the filing of IRS Form 5471 describing its operations. U.S. persons also must file IRS Form 926 reporting transfers of cash or assets to the corporation.

A U.S. person who controls a foreign financial account of any nature that has in it $10,000 or more at any time during a calendar year must report this to the IRS on Form TD F 90-22.1. There are serious fines and penalties for failure to file these IRS returns and criminal charges can also be imposed. As a general rule, U.S. persons can be guilty of the crime of "falsifying a federal income tax return" by failing to report offshore corporate holdings.

Any eventual capital gains an IRS-listed per se corporation may make are not taxed in the U.S. under the more favorable capital gains tax rate of 15%, but rather as ordinary income for the corporate owners, which can be a much higher tax up to 35%. There is also the possibility of double taxation if the a foreign corporation makes investments in the U.S., in which case there is a 30% U.S. withholding tax on the investment income at the U.S. source.

Under U.S. tax rules, no annual losses can be taken on corporate investments by a foreign corporation, which must be deferred by the U.S. owners until the foreign corporation is liquidated. However, compared to these IRS restrictions, there may be offsetting considerations, such as exemption from foreign (in this case, Panamanian) taxes, which may be more important in your financial planning.

Therefore, it is extremely important that U.S. persons obtain an authoritative review of the tax implications before forming a foreign corporation for any purpose, including holding title to personal or business real estate.

If you have you been thinking about establishing a business or a second home in Panama you can click below to learn how you can make this happen in my new edition of Panama Money Secrets.

LINK: http://web-purchases.com/190SPMON/W190H720/

LINK: Panama corporate registry Online http://panamaemprende.gob.pa

Welcome to Hong Kong & Singapore – They Want You

Some few countries in the world have special immigration programs that welcome foreigners as residents and eventual citizens if they are willing to invest and create local jobs. Although not generally known, both the United States and Canada have such programs, but so do Singapore and Hong Kong, financial hubs in the heart of the Asian growth area.

Both economies consistently rank as the world's freest. In its 2006 Index of Economic Freedom, drawn up by the US-based Heritage Foundation think tank, Hong Kong and Singapore were first and second respectively in rank for the freest economies. Having visited both of these vibrant city-states I can attest to the fact that life there would be not only be comfortable, but highly interesting and potentially very profitable.

Hong Kong Quality Migrant Admission Plan

Hong Kong remains one of the freest economies in the world, as well as a major offshore financial center with a strong common law system governing banking and finance, even though it is controlled ultimately by a Communist government in Beijing. On balance, semi-democratic Hong Kong remains relatively free, a reflection of Beijing's need for this historic city-state as a financial powerhouse and gateway for business with the world.

Although the Communist government in Beijing has ultimate control, the Special Administrative Region (SAR), as Hong Kong is called, continues to enjoy its freedom and sets its own immigration controls. It has a very liberal visa policy for visitors. People from more than 170 countries and territories may come to Hong Kong visa-free for visits ranging from seven to 180 days. Professionals and businessmen are welcome to work and invest in Hong Kong. Persons applying for permission to reside, work or study, or invest for more than 180 days are required to obtain visas or entry permits before arrival.

For wealthy investors, Hong Kong is also a residential haven. If you are prepared to invest the equivalent of US$833,000 in the local economy, and pass a background check, under a special investors immigration program you can obtain a renewable residence visa. But don’t expect to find a cheap apartment, property prices are among the highest in the world. But there are also other less costly programs for would be immigrants. Since 1997, over 200,000 talented professionals have come to Hong Kong to work or reside through various immigration admission plans.

To further enhance Hong Kong's competitiveness amid the world's economic integration, the HKSAR Government launched in June 2006 the Quality Migrant Admission Scheme ("QMAS"). (The QMAS is not applicable to nationals of Afghanistan, Albania, Cambodia, Cuba, Laos, Democratic People’s Republic of Korea, Nepal and Vietnam). The QMAS is an entrant plan on a quota basis. It seeks highly skilled and talented individuals from Mainland China, but also from overseas who are new entrants that do not otherwise have the right to enter and remain in Hong Kong under other plans.

---

Grow Your Wealth in the World's Freest Economy

Long ago and far away, there was a place where capital gains escaped the greedy arms of government. Sounds like a fairytale, doesn't it?

Well, you'll be pleased to know that this land of plenty is located in the here and now of 2006. The Wall Street Journal, Cato Institute and Heritage Foundation have rated it the world's freest economy.

Here's why:

*Tax-free capital gains!
*Corporate tax rate of 17.5%
*Personal income tax rate of just 15.5%
*One of the world's shortest tax returns -- just two pages

All this and a political climate that will welcome you with open arms. To learn more about this 'Jewel of the Orient,' click here.

---

Most immigration policies in HK have focused on applicants finding employers first and obtaining visas through their jobs. These applicants cannot settle in HK unless they have lived there for at least seven years and apply for the right to establish residence. Qualified QMAS applicants that meet specified criteria are allowed to settle in Hong Kong, without the requirement of securing an offer of local employment in advance before entering Hong Kong.

QMAS applicants must: 1) be between 18 and 50 years old at the time they file a QMAS application; 2) demonstrate that he or she has financial resources to support himself/herself and his/her dependants, if any, without relying on public assistance during his/her stay in Hong Kong.; 3) be of good character; 4) be proficient in written and spoken Chinese (Putonghua or Cantonese) or English; 5) have a good educational background or good technical qualifications, proven professional abilities and/or experience and achievements supported by documentary evidence.

After meeting these requirements, applicants may choose to be considered either under a "General Points Test" or an "Achievement-based Points Test." Applications are ranked according to point scores. High scoring applications are listed for immediate further assessment and compete for quota allocation with other applicants. Successful applicants under QMAS may bring their spouse and unmarried dependent children under the age of 18 to Hong Kong.

Permanent Residence Status in Singapore

Lonely Planet travel tells us: "Singapore has traded in its rough-and-ready opium dens and pearl luggers for towers of concrete and glass, and its steamy rickshaw image for hi-tech wizardry, but you can still recapture the colonial era with a Singapore Sling under the languorous ceiling fans at Raffles Hotel. At first glance, Singapore appears shockingly modern and anonymous, but this is an undeniably Asian city with Chinese, Malay and Indian traditions from feng shui to ancestor worship creating part of the everyday landscape. It's these contrasts that bring the city to life."

Under the “Scheme for Entrepreneurs,” potential immigrants pledge to invest a minimum of S$1 million, (about US$600,000), half of which must be in approved industrial, commercial, or residential property, for a minimum period of five years. Foreign nationals with investment residence status are eligible to apply for naturalization after two years. There is no requirement that the entire time be spent in Singapore, but a home must be maintained.

Singapore does not recognize dual nationality. Foreign investors who want to invest in Singapore may apply for Permanent Residence status for themselves and their immediate family (spouse and unmarried children 21-year and below). Singapore has even gone so far as to designate a special waterfront area where luxury homes are being built for wealthy foreigners who move there.

Foreign investors can choose either of the following investment options scheme when applying for the Permanent Residence status: 1) invest at least S$1 million in a new business or expansion of an existing business operation or; 2) invest at least S$1.5 million on new business, or expansion of an existing operation, or approved locally incorporated venture capital fund or locally incorporated foundation or trust that focuses on economic development; or 3) invest at least S$2 million in a new business, or expansion of an existing operation, or approved locally incorporated venture capital fund or a locally incorporated foundation or trust that focuses on economic development.

Residential property can be purchased with not more than 50% of the investment amount. PS:  This October 12 - 25, you're invited to join Eric Roseman and Mike Burnick as they mine for these largely untapped investment possibilities in Thailand, Hong Kong and Singapore. While in Hong Kong, Sentosa, Bangkok and other incredible cities, we've invited the best local financial experts to tell you everything you need to know to set up your business in Asia, open a local bank account or invest in the hottest investment region on the planet. Interested? You'll want to hurry. We can only take a few privileged guests along with us on the tour. Also, this week is your last chance to save with your early bird discount. After Thursday, you'll pay hundreds more to join us on this unprecedented tour.

Click here to learn more LINK: http://www.sovereignsociety.com/offshore2227.html

The U.S. Constitution - Is It Meaningless?

When I was 15 years old as a young page boy in the House of Representatives I swore my first oath to support and defend the United States Constitution. Later, as a Member of the Congress (and as a Republican and a conservative), I took that same oath to which every currently sitting congressman and senator has supposedly has sworn their allegiance.

How then can we explain the U.S. Congress being stampeded by President Bush into passing a new law that virtually repeals the guarantees against unreasonable search and seizure contained in the Fourth Amendment of the Bill of Rights?

My answer -- cowardly fear -- but not fear of the bogeyman of "terrorism" -- but fear of not getting re-elected!

Politics rules, to Hell with principle! Most of the minority Republicans in Congress, sheep that they are, went along with Bush's demand for even greater police power over all of us, but the real hypocrites were the Democrats that now control both Houses. I am always nervous when I find myself in agreement with The New York Times but they said it right: "It was appalling to watch over the last few days as Congress — now led by Democrats — caved in to yet another unnecessary and dangerous expansion of President Bush’s powers, this time to spy on Americans in violation of basic constitutional rights. Many of the 16 Democrats in the Senate and 41 in the House who voted for the bill said that they had acted in the name of national security, but the only security at play was their job security."

These are the same Democrats that have been loudly attacking, (as he should be attacked), the befuddled U.S. Attorney General Gonzales for violating civil rights using the PATRIOT Act. And they also attacked President Bush for his secret wiretapping when it was revealed late last year. As The Times noted the law "...would allow the government to intercept, without a warrant, every communication into or out of any country, including the United States. Instead of explaining all this to American voters — the minimal benefits and the enormous risks — the Democrats have allowed Mr. Bush and his fear mongering to dominate all discussions on terrorism and national security."

According to neutral observers the new law gives the U.S. government virtually unchecked  power to secretly wiretap all our phone calls and spy on and read our emails, faxes or other electronic communications without any court order and no due process of law. This is a radical, subversive departure from American legal traditions, as pointed out by my colleague, Mark Nestmann.

As an an attorney I say this new wiretap surveillance law is yet another abdication of the rule of law and a violation of due process in America. Gone is the requirement that laws must relate to legitimate government interests and may not result in unfair or arbitrary treatment of an individual. Now impartial judges are replaced by faceless bureaucrats and anti-terror police who will decide our fate.

In 1757, Edmund Burke wrote: "No passion so effectively robs the mind of all its powers of acting and reasoning as fear." Fear as a decisive factor in political and national life is nothing new in history. But Mr. Bush has made fear his trademark. He constantly uses the fear factor to get his way, describing threats that are amorphous, shadowy, unclear, yet perceived as very real, the threat of terrorism.

Politicians too often have employed fear as a controlling and guiding principle to achieve their dubious ends. Offering themselves as protectors, national leaders have touted their nostrums against alleged foreign invasions, barbaric tribes, hated minorities, Communists, drugs and a host of other manufactured threats. Now the fear of the hour is terrorism. Yes, the threat is real and it must be guarded against, but not by surrendering our freedom.

Last year President Bush was able to rush the dubious Military Commission Act through the Congress. Now he has been able ram through this latest radical surveillance measure. This is the raw politics of anti-terrorism in all its tawdry operation. If a member of Congress does not support whatever the proposal may be, he or she is accused of being 'soft' on terrorism. Nearly six years after 9/11, and with the miserable track record of Attorney General Gonzales, a majority in Congress rolls over and proclaims: "I am against the terrorists too" -- as they vote in favor of trashing the Bill of Rights.

If you believe in liberty you ought to be outraged by this dangerous political climate. And don't think for a moment that Big Brother's police will limit this unchecked surveillance law to anti-terrorism alone. Just as they have done with the PATRIOT Act, this vast power will be used to spy on anyone they wish, whether alleged IRS tax evaders or SEC violators. No one is safe from trumped up charges based on spying on our phone calls, emails and other communications.

When we at the Sovereign Society recommend offshore financial havens for placement of bank accounts or asset protection trusts, or suggest countries for a possible foreign residence, the existence of the rule of law always is a major factor in our choice. Yet, dear reader, we both know that in the United States anti-terror laws have seriously compromised what we used to know as the rule of law.

So who is winning -- freedom or terrorism? This raises the question; just how far are Americans willing to go in surrendering their liberty and their privacy? How much are we willing to pay for this promised, illusory defense? Are we willing to become Fortress America with Big Brother watching and listening to all that we so?

Americans had better put aside these politically inspired fears, and start asking and answering that question -- before we enjoy neither safety nor liberty.

Tax Havens: Myth Versus Reality

We are indebted to the Center for Freedom and Prosperity for the following excellent statement concerning offshore tax havens:

So-called tax havens are routinely vilified, largely because they are perceived as a threat by politicians, leftist organizations, and other advocates of bigger government and high tax rates. In almost all cases, however, attacks on these low-tax jurisdictions are either baseless or distorted.

Surprisingly, anti-tax haven demagogues generally are unable to even correctly identify characteristics that make a jurisdiction a "tax haven." Is it low taxes? Zero taxes? Financial privacy laws? Incorporation laws that do not require ownership information? The existence of bearer shares? And even the critics that use a more carefully tailored definition – i.e., a jurisdiction that exercises its sovereign right to not enforce the tax laws of another nation – often engage in discrimination when listing the world's tax havens.

The United States, for instance, is a tax haven. Foreigners can – and do – put money in the U.S. and earn interest and capital gains without any obligation to pay tax to the IRS and without being reported to their governments. Many states allow foreigners to set up corporations without disclosing ownership information. Some even allow bearer shares. These policies have helped attract trillions of dollars to the U.S. economy, yet critics of tax havens fail – perhaps deliberately – to note how any campaign against tax havens unambiguously can boomerang against America's self interest.

Critics also ignore how tax havens provide confidentiality to ethnic, religious, racial, sexual, and political minorities, a critical role since the majority of the world's population lives in nations have less than stellar attitudes toward human rights. Likewise, tax havens also are a refuge for people in nations suffering from crime, extortion, and corruption. Tax haven opponents routinely rely on shoddy numbers, ignore academic evidence, and engage in smear campaigns.

Public policy, however, should not be based in mistruths and stereotypes fostered in novels and movies. And public policy certainly should not be based on politicians in high-tax nations persecuting nations trying to prop up their inefficient welfare states by engaging in anti-globalization policies.

For eleven major tax haven myths go to:
LINK: http://www.freedomandprosperity.org/Papers/th-myths/th-myths.shtml

GDP Growth: Panama Best

I am just back from four days in Panama and I can attest to the fact that Panama's economic boom is still going strong.

Panama's economy will have the best performance of any country in Latin America in 2007 and in 2008, according to a Latin Business Chronicle analysis of new forecasts from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). ECLAC predicts Panama's GDP should grow by 8.5 percent this year and another 7.5 percent next year. That's better than any other country in Latin America.

The ECLAC numbers confirms earlier forecasts from the International Monetary Fund (IMF) predicting Panama as Latin America's star economy in 2007 and 2008. Panama also will post low inflation this year, only 2.4 percent, the IMF forecasts. That's the second lowest rate in Latin America.

These forecasts come as Panama has awarded its first contracts for the $5.2 billion expansion of the Panama Canal. Last month, the Panama Canal Authority (ACP) awarded its first construction project contract for the expansion. That follows contracts awarded to financial and legal advisors during the past six months.

Panama is also getting help from such sectors as real estate and tourism. Panama is the fastest-growing tourism market in Latin America, measured by arrival growth, according to a Latin Business Chronicle analysis based on World Tourism Organisation data. Panama posted the strongest growth in tourist arrivals in 2006, 20.1 percent.

Panama is expected to tourist boost arrivals further thanks to a new agreement with tourist cruise line Royal Caribbean International, which will open a hub in Colon for Caribbean cruises starting in December.  "Colon is a spectacular Central American city and sailing from Panama not only offers our guests an exciting itinerary, but also allows more travelers more convenient opportunities to enjoy a Royal Caribbean cruise," Adam Goldstein, president of Royal Caribbean International said at a press conference in Panama.

For more about the Panama economic miracle and how you can profit from it, see my latest edition of Panama Money Secrets -- just click here:

LINK: http://www.web-purchases.com/190SPMON/E190H753/

Catch Mike Burnick on CNBC

“U.S. and European Investment banks are saddled with nearly $500 billion in leveraged loans that they can’t peddle to investors…”

To watch Our Global Markets Analyst, Mike Burnick chat up the subject with Maria Bartiromo, click here.