Offshore Asset Protection BLOG - Bob Bauman

Panama Superlatives: Boom and Boom

In spite of concerns about an over-extended real estate market, especially among Panama City condos, in recent months the Republic of Panama has topped several key Latin American regional rankings.

In addition to being named the "most globalized country" in Latin America by Latin Business Chronicle, Panama recently was ranked the "best country for exporting and importing containerized goods" in Latin America by the World Bank, the "fastest growing tourism market" in Latin America by the World Tourism Organization and last, but not least, the "fastest growing economy in Latin America" by the International Monetary Fund and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).  That comes in addition to being ranked third in Latin America (after Chile and Mexico) when it comes to competitiveness, according to the latest annual index from the World Economic Forum released this month.

Multinational companies are increasingly choosing Panama as a regional hub for their operations. And Panama can also boast of having Latin America's largest number of international bank offices, the world's largest shipping registry and the second-largest free trade zone in the world after Hong Kong.

Now, it may also become a major regional energy hub. Spain-based Tecnicas Reunidas and Singapore-based Jurong Consultants are planning to create a $40 billion oil refinery, petrochemical production facility and liquefied natural gas import terminal aimed at serving the U.S. and Asian markets, Reuters reported last week. That comes on top of U.S.-based oil giant Occiental’s plans to build a $8 billion refinery.

Skyscrapers and Banks

"Panama is amazing," says Antonio Arranz, vice president of operations at the Latin America division of DHL. The express delivery services giant just expanded its Panama hub, which already played a key role in its Latin American distribution thanks to the country's central location between Central and South America. "We are seeing double-digit growth."

Added to that is the continued strong growth in foreign investment in financial services and real estate. "You are seeing investments in the financial sector, a lot of investments in real estate [and] you can see a lot of skyscrapers being built every day," Arranz points out.

DHL isn't the only company using Panama as a regional hub.  Dell operates its Latin American financial, marketing and human resources administration out of Panama. That comes on top of having its largest contact center in the region based in Panama. And other companies are joining the club. Both Hewlett-Packard and Caterpillar have recently announced the opening of regional offices in Panama. "Panama is working hard at attracting new companies and new investment," says David Hunt, the executive director of the American Chamber of Commerce in Panama.

* Have you been thinking about building a second home or just strengthening your portfolio with Panamanian real estate? Click here to learn how you can make this happen.

European Tax Havens Boom

Two of Europe's leading offshore tax havens - Monaco and Andorra - are seeing a major influx of foreign funds into their banks, despite welfare state governments worldwide trying to stop their citizens from using tax havens. Both nations have strict banking secrecy guranteed by law, an increasingly rare luxury anywhere.

Financial professionals in Monaco say they are attracting cash from wealthy individuals who want privacy and to keep their assets away from the clutches of their governments. Most of the cash is coming from the Middle East and Europe. While the banks in both jurisdictions refuse to disclose the volume of money attracted recently, industry analysts estimate it could be as much as €20 billion (US$29.5 billion) over the last 18 months, with €70 billion (US$103.3 billion) in total managed assets overall. Since 2005 some big names in banking and finance have set up offices in Monaco, including Goldman Sachs. And Monaco hopes to double the amount in her banks in the coming years.

Andorra Too

Europe's other tax haven, the Republic of Andorra, high in the Pyrenees between France and Spain, has also seen new many accounts at their banks.

With these tax havens attracting high volumes of funds it makes them less likely to co-operate with the Organization for Economic and Community Development (OECD), the self-appointed leftist advocates of high taxes and no financial privacy. Both nations remain on OECD blacklists for their refusal to impose taxes and loosen financial privacy laws.

Local observers say the OECD is wrong to assume that deposits in Andorra and Monaco banks come from people wanting to hide their money offshore. They say it's due to high net worth individuals establishing residency in Monaco and Andorra, many of them escapees from the United Kingdom 50%+ income tax load.

Andorra has invested heavily in road improvements for her ski holiday industry and several new hotels in Andorra have opened in recent years. Earlier this year the Andorra government reached agreement with Spain to build a new airport fifteen minutes from the border, which will cut travelling time significantly as the nearest airport is currently Barcelona - ironically something which might entice tax exiles away from Monaco to lower priced Andorra.

Monaco meanwhile is building an island in the Mediterranean off Monte Carlo which will include new housing for an estimated 4000 new residents, and will include new Monaco hotels and a university.

* If you're looking for maximum privacy and legal tax avoidance, we can explain where these places are and how you can take advantage of them. Click here for some ideas on where to look.  http://www1.youreletters.com/t/1357788/2309209/831463/4533/

Russia Then and Now

"Juxtaposition" is defined as "an act or instance of placing close together or side by side, especially for purposes of comparison or contrast."

I experienced what might be called a case of historical juxtaposition a few days ago while reading The New York Times.

There, on the page of international news, was an intriguing story about the possible discovery of the remains of two of the children of the late Tzar Nicholas II, Prince Alexei and Princess Maria -- and nearby was a story about how two rallies in Moscow by an anti-Putin coalition protesting the unfairness of the upcoming parliamentary elections were broken up by club-wielding riot police. The former chess champion Garry Kasparov, a coalition leader and potential presidential candidate, was sentenced to five days in jail for organizing one of these demonstrations.

I studied two semesters of Russian history at the School of Foreign Service at Georgetown University long ago in the Cold War years. As a staunch anti-Communist I was interested in understanding what in the Russian national character and soul allowed the horrific brutality of Lenin, Stalin and the Bolsheviks -- the mass starvations of the kulaks, the slaughter of millions in order to gain and retain power, the messianic, bloodthirsty expansion of Communism beyond the borders of Mother Russia crushing whole nations and their peoples.

Nicholas II abdicated in 1917 as the Communist revolution swept Russia. Detained by the Bolsheviks, the next year, the tsar, his wife, Alexandra, and their four daughters and son were sent to Yekaterinburg in central Russia, where a firing squad executed them on July 17, 1918, in a basement room of a house where they were held. The royal family's remains were hidden and not unearthed until 1991. After genetic tests convinced forensics experts of their authenticity, with the approval of the new "democratic: government of Russia, the Romanovs were buried in 1998 in the royal crypt of the Cathedral in St. Petersburg. The Russian Orthodox Church canonized Nicholas and his family in 2000.

History Repeats

A study of the history of the Russian tsars, including the infamous Ivan the Terrible, shows the last tsar, Nicholas, to be a weak, clueless absolute ruler who neither understood democracy nor trusted individual rights.

So what really has changed in Russia from Nicholas Romanov to Vladimir Putin? 

In recent years the world has been told that the "new Russia" is a democracy, a great place to invest, suggesting Russia is like western nations that value individual human rights and liberties. In truth, Vladimir Putin, the current president, has returned with a vengeance to the ways of Russia's old dictatorships, whether under the tzars or the Communists. By his systematic silencing of a major political opponents and the opposition press, former KGB agent Putin has shown his true totalitarian core, relishing a calculated use of force at which the Tzars would smile. Putin has called into serious question the right to private property and the state of "democracy" in Russia.

Aa the International Herald Tribune in Paris said yesterday: "For a leader who has everything - control of the military, the government, the voting process and the media - President Vladimir Putin of Russia looks increasingly desperate and threatened ahead of parliamentary elections on Sunday. Polls suggest his United Russia party will win the balloting overwhelmingly, giving him leverage to continue wielding power in some form. But his greedy grab for victory while quashing credible political opposition demonstrates that this is no free and fair election and Russia is no democracy."

U.S. Senator John McCain says the U.S. is giving a free ride to Russia at a time when it is re-adopting Soviet-era tactics. "It's time to face unpleasant facts about Russia," he correctly warns.

Meanwhile, President Bush, who claims he wants to expand "democracy" everywhere in the world, remains silent about his alleged friend "Putty Poot Putin".

United Nations to the Rescue!

Since it founding after World War II in 1945 the United Nations rightfully has attained a reputation as a costly, cumbersome debating society unable to solve conflicts and unwilling to discipline its staff and internal operations.

Foremost in the United Nations' failures was one of its original projects, the Israeli-Palestinian conflict. Since 1947, this conflict raged on and off and defied solution. A more recent failure has been genocide. The UN failed to take quick action in Rwanda and the delay cost tens of thousands of lives. The horrendous situation of death and destruction in Sudan and Darfur has world drawn attention, and all the United Nations has done is to send fact-finding teams. Then there are the proven cases of millons in graft and bribery involving UN staff in the failed Iraq "Food For Oil" program under the late Sadaam Hussein.

But undaunted, the UN marches on -- addressing the really important issues of the day.

A recent example is a new report by a special UN committee for "gender equality" demanding that the parliament of the Principality of Liechtenstein do what the UN thinks is the politically correct thing; grant female children of the ruling house of Liechtenstein the right to the hereditary throne now occupied by Prince Hans-Adam II. The only absolute monarchy remaining in Europe, the ruling Prince of Liechtenstein has sweepingly broad powers; Hans-Adam's revision of the constitution to expand his powers was adopted in a national referendum in 2006.

Men Only

Since 1606 Liechtenstein law has required the line of succession to the throne to be inherited by the first-born male of the family line, to the exclusion of females. In 2004 Prince Hans-Adam II formally turned the power of making day-to-day governmental decisions over to his son Prince Alois, as a way of transitioning to a new generation. Formally, Hans-Adam remains Head of State.

The country’s constitution stipulates that the succession to the throne is an internal matter of the House of Liechtenstein. And the head of state, Prince Hans-Adam II, says that ancient family law that regulates the men-only rule is older even than the actual state of Liechtenstein, that it is a family tradition that does not affect the citizens. The prince also points out that the monarchies of the United Kingdom, Monaco, Denmark and Spain all follow male-preference primogeniture. (Primogeniture is the legal right of the first born son to inherit the entire estate, to the exclusion of younger siblings).

In spite of the UN's busybody interference in Liechtenstein internal affairs, there is no local debate over the universal rule that the firstborn inherits the throne, which makes the whole struggle for equality possibly meaningful only to future generations. For the last century all the firstborns of the house have been male, as are the current prince’s son and grandson.

Major Tax Haven

Why should you care about this tiny nation sandwiched in between Switzerland and Austria?

Simply because this tiny absolute monarchy that has graced the map of Europe since 1719, in the last half of the 20th century, skillfully promoted itself into world class tax haven status. Liechtenstein was one of the first nations in the world to adopt specific offshore asset protection laws, as far back as 1926. Today, Liechtenstein offers some of the world’s strongest banking secrecy and financial privacy laws, unique asset protection entities, plus financial and investment direct access to its powerhouse neighbor, Switzerland with which it has a currency and customs union.

Liechtenstein's unique role in international financial circles is not so much as a banking center, but as a pure tax haven.

The principality’s 16 locally owned banks, 60 lawyers and 250 trust companies employ 16% of the total work force. Its licensed fiduciary companies and lawyers serve as nominees for, or manage, more than 75,000 legal entities, most owned and controlled by nonresident foreigners. The nation acts as a base of operations for foreign holding companies, private and family foundations and a unique entity called the Anstalt (i.e., establishment), more about which in a moment. The banks and a host of specialized trust companies also provide management services for thousands of such entities.

I have no doubt that Liechtenstein will ignore this latest UN meddling, but you can discover the many uses for asset protection and investments available there in my special report on the principality.

Click here for comprehensive information about Liechtenstein. LINK:  http://web-purchases.com/190SLIEC/W190H719/

The Incomparable Family Foundation

Many Americans have never heard about a unique, secretive legal entity called a “family foundation.”  It’s used by informed wealthy people for simple, yet strong asset protection, wealth distribution and estate planning.

A family foundation is an independent fund that you can be set up specifically for your family.

Unlike other legal entities, a foundation has no shareholders, owners, or members, just beneficiaries who are family members related by blood or marriage. Foundation assets and beneficiaries' interest cannot be assigned, sold, or attached by personal creditors. Only foundation assets are liable for its debts.

The family foundation originated years ago in Liechtenstein where wealth protection is a national tradition. Its success caused it to be copied in the laws of Austria and Panama and more recently by The Bahamas and St. Kitts Nevis. No other nations offer this incomparable entity.

Because of U.S. tax laws, Americans associate a “foundation” with a non profit, tax exempt organization that engages in charitable purposes. But the unusual family foundation is an independent, self-governing fund made up of assets and cash endowed by the foundation founder, usually the senior family member, for the specific purpose of family support and assistance. If properly created, its assets are immune from attack by creditors of either the founder or the family member beneficiaries.

This tax-free family foundation can be used for investment, tax sheltering, commercial business share ownership, and private activity, with the founder retaining lifetime control of the foundation and its assets.

More Control

One big selling point: a family foundation is easier to use than a trust, since it isn’t hampered by many restrictive trust rules that prevent control and management by the trust creator. The founder is able to have considerable influence over the managing board of directors.

Creation of a family foundation in one of the few nations where it is recognized in law is relatively simple. Generally foundation activities must promote non commercial purposes, such as support of the family, but it can invest in, own, but not directly manage commercial businesses.

Foundations may be created by a deed, under the terms of a will, or by a common agreement among family members. Depending on the nature of the family foundation activities, for tax purposes the U.S. IRS may treat it as a trust, with similar IRS reporting requirements.

The founder's name does not need to be public and the foundation is managed by an appointed board of directors whose names may be kept private. At least one individual must be a board member, but additional directors of any nationality or residence are allowed and they can either be individuals or corporate or trust entities. The great majority of foundations formally are set up by local, in-country attorneys who specialize in foundation and trust law.

Ownership Protection

No question that the assets and property held within a foundation is exempt from almost all outside attack, save the foundation’s own debts. But does a foundation protect property placed in its name if that property is located in the United States or some other nation? Should you place title to your Florida family homestead, a Mercedes SUV or a yacht in a far off family foundation?

The simple American rule is that any property that remains physically within the jurisdiction of a state court or U.S. federal court is fair game for the government or for private lawsuits. It makes no difference how that property is titled. But if that title is in a Panama or Liechtenstein foundation, it will take a major legal effort on the part of claimants to untangle ownership.

Watch Out for Taxes

A family foundation is not subject to any form of local income tax, capital tax, transfer taxes or inheritance taxes in the offshore nations where they may be located. American taxes are a different matter.

Depending on the nature of the family foundation activities, the U.S. Internal Revenue Service may treat a foundation as a foreign trust, with similar IRS trust reporting requirements. When a foreign trust owns shares in a foreign corporation, the U.S. person who provides the funds to the trust or to the foundation is deemed to be the owner of the corporation for U.S. tax purposes. A U.S. person who has authority to direct the use of funds in a foreign financial account must file the U.S. Treasury Form TDF 90-22.1 annually describing the account activity.

Worth Considering

If you're interested in exploring the creation of a foundation for your family, you need top quality tax and legal advice, both in your home country and in the offshore nation where you may decide to locate your family foundation.

The family foundation -- definitely worth considering for strong asset protection.

* Are you fed up with how the U.S. penalizes you for working hard and making a larger income? Ready to seek your fortunes elsewhere? Click here for some more accommodating locations offshore.

Dirty Money Hypocrisy

Located on the northeastern cusp of South America, bordering the Atlantic Ocean, between Suriname and Venezuela, the tiny nation of Guyana has only about 770,000 people, many of them impoverished. Mining and agriculture are their mainstays.

Originally a Dutch colony in the 17th century, in 1815 Guyana became a British possession, achieving independence from the UK in 1966. Since then it has been ruled mostly by socialist-oriented governments. The current president, Bharrat Jagdeo, was elected in 2001 and again in 2006.

Last week, reports the BBC, president Jagdeo appealed to Western nations to do more to combat money laundering -- and to clean up their own houses. In so doing he underscored, as we often have, the double standard the U.S. and U.K. practice when it comes to demands for others to combat money laundering.

Jagdeo rightly said the major nations have failed to sufficiently address the problem in their own jurisdictions, while pressing nations in the Caribbean and elsewhere to enact complicated and costly laws and regulations.

He flatly said Guyana won't continue to enact laws that make the financial services sector of the Caribbean unattractive. He told an annual meeting of the Association of Caribbean Indigenous Banks that, of course, Caribbean states should make sure that they don't allow movement of illegal money across their jurisdictions.

Financial Suicide

But he warned against these countries legislating themselves out of competitiveness and out of business. The Guyanese leader also said Caribbean nations should not put the kinds of burdens on their banking systems that other countries don't impose on themselves.

"The instruments we fashion must not create undue burden for different sectors of our economy, just to satisfy some notion of probity that even the countries that recommend the probity don't practice themselves," Jagdeo said.

He accused countries like the United States, the U.K. and Luxembourg of having what he called "tremendous double standards". "We saw it with the OECD harmful taxation issue where jurisdictions like Luxembourg and others in Europe were still practicing imprudent lending, but they were not on the OECD blacklist. But many Caribbean jurisdictions were placed there" he told the Caribbean bankers.

Bharrat Jagdeo also accurately described the U.S. as a major center for money laundering due to the demand for illegal drugs there. And he said a lot of "hot money" was circulating in London from tax evasion originating in Britain.

Reasonable Defiance

Guyana thus joins other nations, including Panama, Monaco, Andorra, and Belize, that have refused to go along with hypocritical demands by the U.S. This theme of reasonable defiance simply tells the major nations to clean up their own acts and create a "level playing field" where nations big and small are all treated equally.

But don't hold your breath that will happen any time soon.

* Find out more about offshore tax havens, anti-money laundering, real financial privacy in places where you're the foreigner - and you may be able to reap the foreigner's tax benefits. Click here for some ideas on where to look. 

Pay Or Stay

On the subject of the right of persons to travel freely, the United Nations Universal Declaration of Human Rights states: "Article 13 – Everyone has the right to freedom of movement and residence within the borders of each state. Everyone has the right to leave any country, including his own, and to return to his country."

It goes without saying that these so-called “rights” of free movement, travel and residence have been, and are, systematically violated by almost every nation, including both dictatorships and democracies.  The United States and the United Kingdom are among the worst violators when it suits the political convenience of the government in power at the moment.

Now comes a new instance of outrageous government action blocking freedom of international travel, this time from "down under" in the supposedly free nation of New Zealand.

Chris Kalin, the executive director of Henley & Partners AG in Zurich, (http://www.henleyglobal.com) calls to my attention an official New Zealand government web site of the Ministry of Justice (http://www.payorstay.govt.nz/) that proclaims: "UNPAID FINES COULD STOP YOU TRAVELLING OVERSEAS!"

"NZ Justice" goes on to warn Kiwis that: "If you have an unpaid fine or owe reparation, you may be stopped and even arrested on arrival or departure at any New Zealand international airport. So pay what you owe immediately and then you can travel just like everyone else."

Under New Zealand law an unpaid fine could be as insignificant as a parking ticket and "reparations" are defined broadly as any court judgment against you or your assets. Apparently in this wonderful computerized age all four million plus New Zealanders, their traffic citations and court orders have been cross indexed to the passport system -- and they'll get you coming or going.

U.S. Restrictions

Not to be outdone, the United States government restricts foreign travel for so-called "dead beat" parents who have not paid up on their court ordered child support.

Section 51.70 (a) (8) of Title 22 of the Code of Federal Regulations states, in part, that if you are certified to U.S. State Department Passport Services by the U.S. Department of Health and Human Services (HHS) to be in arrears of child support payments in excess of $2,500, you are ineligible to receive a U.S. passport . If this applies to you, Passport Services strongly recommends that you contact the appropriate State child support enforcement agency to make payment arrangements before applying for a passport. If you already have a passport, it will be suspended for non-payment.

The State agency must certify to the US HHS that acceptable payment arrangements have been made. Then, HHS must notify Passport Services by the removal of your name from the electronic list HHS gives to Passport Services. (Passport Services cannot issue a passport until your name has been deleted by HHS.)

So much for freedom of movement.

*  To find out all about the possibilities of foreign residence, second passports, duel citizenship and travel, click here:
http://web-purchases.com/190SGOPS/W190H721/

Panama: Investment Grade in 2009?

I was in Panama two weeks ago and I can attest to the phenomenal growth the country is experiencing in many sectors, not just the real estate boom in Panama City. 

After too many years of a precarious national economy, reckless government spending and debt and with a stark disparity between the wealthy and the poor, the economy of the Republic of Panama is finally moving toward what could be general prosperity for all the 3.2 million people in this famous crossroads of the world.

Citigroup, which has long had a financial presence in Panama, has just issued a very positive current assessment of the nation's economy.

The Citigroup experts expect the country to attain an "investment grade" rating in the second half of 2009. Investment grade is the credit rating given a bond judged by ratings services such as Moodys and Standard and Poors likely to meet payment obligations so that banks are allowed to invest in them.

This will be a first for Panama and it comes at a time when major construction projects are underway, not just for the $6 billion expansion of the Panama Canal, but also for the building of major development projects, whole new cities and badly needed infrastructure improvements

Citigroup's optimistic outlook is based on the turnaround under President Martin Torrijos in the Panama government's fiscal accounts and on the country’s unique growth story. The Panama Canal expansion and fast capital accumulation should deliver the highest growth rates in the country’s recent history.

The prediction is for a 9.2% growth rate in 2007 and at least 9% in 2008. These impressive growth rates are likely to be the main driver behind the sharp decline in debt-to-GDP ratios that make investment bankers happy to lend. Citigroup also likes the credit for long-term investments. They expect the entire Panamanian society to experience meaningful economic, social, and political changes during this stage of high growth.

Immigration Boom

Not only are Americans, Canadians and Europeans flocking to Panama for retirement and/or second homes, wealthy Venezuelans now are emigrating to Panama in increasing numbers, buying luxury homes as they fear the far leftist President/would be dictator, Hugo Chavez, will hold onto power for life and wreck the country in the image of Castro's dismal failures in Communist Cuba.

With a shining new skyline, Panama rivals Miami as a refuge for Venezuelan and other Latin American expatriates, who are attracted by the Central American country's booming economy and a lively Latin-Caribbean culture like their own. And with all the onerous post 9-11 immigration restrictions imposed by the United States, foreigners are avoiding coming to America. The Venezuelan exodus is compounded by the irrationally anti-American Chavez pushing radical constitutional changes that would scrap presidential term limits and limit press and other freedoms.

Like Switzerland in Europe, Panama has long been a refuge for exiles from many nations, driven out by despotic governments or revolutions. This round of immigrants from Venezuela are just the latest of many groups finding a hospitable home in Panama.

* P.S. Have you been thinking about building a second home or just strengthening your portfolio with Panamanian real estate? Click here to learn how you can make this happen. http://web-purchases.com/190SPMON/W190H720/

Americans Are Buying Offshore

A few weeks back I noted that a  large number of American citizens are leaving the good old U.S.A. for new homes abroad.

A 1999 U.S. State Department survey says 4.1 million Americans lived overseas then. In past years the estimate has been that each year about 250,000 U.S. citizens and resident aliens leave America to make a new home in some other nation. In 2005, the U.S. Bureau of the Census upped this estimate to over 350,000 U.S. citizens and resident aliens leaving the United States permanently each year.

Now comes the U.S. National Association of Realtors (NAR) with an extensive study of official U.S. data sources with the express goal of finding out about Americans who not only live offshore, but are buying new or second homes in foreign countries such as Panama, Mexico and even Switzerland.

To begin to answer the question – what is the level of foreign home buying activity by U.S. citizens and permanent residents – NAR commissioned a study of measurements of those Americans moving, working and/or living abroad and whether or not they purchased a residential property in foreign countries.

The NAR examined several possible indicators of trends including U.S. State Department data on the numbers of Americans living abroad, Social Security Administration data on the number of American retirees collecting Social Security benefits abroad, (yes, those checks keep on coming abroad), and Internal Revenue Service statistics on the number of tax returns claiming the foreign earned income income exclusion, ($72,400 tax exempt for qualifying Americans working offshore).

Hundreds of Thousands Abroad

The NAR data showed some interesting factoids: 
* The analyzed data suggests that there are possibly as many as 500,000 to 600,000 foreign properties owned by Americans living abroad.
* Analysis of retired American workers living abroad suggests their ownership rate is likely to be in the range of 54,000 to 63,000 properties.
* U.S. workers working abroad and filing IRS Form 2555 (foreign earned income exclusion), suggests that their foreign home ownership rates are probably in the range of 80,000 to 100,000.

Comparison of the estimates from the retirees (based on Social Security data) and those working abroad covered in the State Department base, suggests that American demand for offshore vacation and short-stay foreign properties may be in the range of 370,000 to 440,000 units. Overall, this suggests approximately 150,000 foreign properties owned by retirees and Americans working in a foreign country.

Non-Reportable

Direct ownership of real property in a foreign country, including a time share arrangement, is not a reportable foreign account as defined in U.S. Treasury Form TD F 90-22.1. However, real estate holdings are generally a matter of public record in the country in which they are located and cannot be liquidated easily. If you own the real estate through a holding company or trust, that entity probably will be required to file its own U.S. disclosure and tax forms.

If you wish to purchase and hold real estate in a foreign country without disclosing your ownership, you can do that by placing title in an international business corporation (IBC), trust or family foundation located in a nation, such as Panama, where beneficial ownership does not have to be disclosed. And your IBC or trust does not have to be registered in the same nation where the real estate is located.

One segment that was not analyzed by the NAR was the number of Americans still residing in the U.S. who own properties in North American, Caribbean or Central American countries. This is likely a substantial number, given the easy access to countries in these regions through air transport or even automobile. These figures could substantially add to the overall totals.

Conclusions

The NAR study shows that Americans abroad tend to be located close to America. Both Canada and Mexico are familiar and close to home. The Caribbean islands have become popular vacation areas for Americans as well as the home of many offshore corporations. The Dominican Republic, with 82,000 Americans abroad, exceeded all of the individual countries in Central and South America.

Brazil, Colombia, Argentina, Costa Rica and Panama have property ownership potential for many Americans, with Panama being the only one of these having in place an official program of tax breaks and discounts to attract foreign residents.

* To find out all about the possibilities of your owning offshore real estate, for a new home, second home or retirement, click here:
http://web-purchases.com/190SGOPS/W190H721/

Is It Better in The Bahamas?

A few years ago The Bahamas conducted an effective international tourism promotional campaign using the suggestive slogan: "It's Better in The Bahamas."

What "it" was left to the eye (and imagination) of the beholder, although accompanying photos showed white sandy beaches adorned with beautiful young ladies in skimpy swim suits.

As far as tourism, The Bahamas is indeed a wonderful, friendly place in which to relax and vacation. I've been there many times, including six days last week at the Sovereign Society Offshore Advantage Academy on Paradise Island. I always enjoy my stay and the people I meet. And The Bahamas has the virtue of being only minutes from the U.S. mainland by air, and only hours by boat -- perhaps too close for comfort, as I explain below.

The Bahamas was once upon a time known as one of the primary offshore tax havens, a place with strict financial and banking secrecy. It still imposes little or no taxes on foreign investors and bank account holders -- but other things have changed.

The 51st State?

Five years ago next month I caused quite a stir in the Bahamian news media with an article in this space entitled: "The Bahamas: 51st State?" We were flattered that Bahamians active in the offshore financial community cared enough about the opinion of the Sovereign Society to take note of what we said.

What caused the interest was my observation that in December, 2003 the Bahamas parliament had approved a Tax  Information Exchange Agreement (TIEA) with the United States, a treaty this relaxed island nation had resisted for many decades. The TIEA applies to all criminal and civil tax matters and allows the exchange of tax information about Americans with Bahamian accounts. I went on to say that the TIEA was another nail in the coffin of The Bahamas as an offshore financial center for Americans.

During the 20th century these islands off the southeast coast of America blossomed into a major tax and asset protection haven, especially for citizens of the nearby U.S. It offered tax exemption for foreigners and a series of well-crafted laws allowing international business corporations (IBCs), trusts, offshore banks and insurance -- all wrapped in maximum financial privacy strictly protected by law. 

Then in December 2000, in just one month, the subsequently ousted Free National Movement (FNM) government, (currently back in power since May 2007 elections), passed what some locals called the "11 bills of Christmas." Many of these laws were written with the advice of U.S. government "advisors" from the U.S. Treasury and the IRS sent to pressure the Nassau government. Together the new laws seriously weakened offshore financial and banking laws, especially in all aspects of privacy.

Economic Damage

As a measure of the economic damage this caused, in 2000 of the 120,000-strong Bahamian work force, about 5,000 worked in offshore banking, accounting for an estimated 20% of the GDP. Largely due to increased offshore financial activity, the economy had grown by 40% from $3.2 billion in 1992 to $4.5 billion in 2000. (In 2006 the GDP was estimated to be $6.159 billion with slow annual growth of only 4%).

In 2007 financial services constitute only the second-most important sector of the Bahamian economy, accounting for about 15% of GDP, a drop of 25% in income and jobs in that sector. Since December 2000, when the government enacted new regulations on the financial sector, many international businesses have left The Bahamas. Since 2000, 200 of 223 private banks in the Bahamas have closed and 30,000 international business companies have been stricken from the official register. Local news media and the official CIA web site attribute these departures to stricter money laundering laws and a weakening of banking and financial secrecy.

The excuse for suddenly abandoning decades of pro-offshore financial laws was that the Organization for Economic and Community Development (OECD) blacklisting of The Bahamas for allegedly being lax on money laundering and for not taxing foreign investors ("unfair tax competition" the OECD spuriously calls low taxes).

In May 2002, the Progressive Liberal Party (PLP) opposition won control of parliament and a new Prime Minister, Perry Christie, took office. The PLP charged the 2000 anti-offshore laws had damaged the offshore financial community and although they promised to review and revise many of these laws, they failed to make any changes at all. Indeed, the PLP went ahead with the U.S. tax treaty (TIEA) initiated by the defeated Ingraham FNM government. Ironically, in the May 2007 election campaign, the winning FNM opposition attacked the PLP government for not having repealed or softened the laws the FNM had adopted. (Don't expect them to make any changes either).

The bottom line: Bahamian politicians of both parties seem to be mortally fearful of the U.S. government. Many in the islands think the local pols have sold out the offshore financial sector.

Roll Over

Our obligation is to our Sovereign Society members and our readers. In years past we recommended The Bahamas as a leading tax and asset protection haven when financial privacy was ironclad. For foreigners the taxes are still zero, the protection is still there in theory, but financial privacy is dead. And yes, it offers all sorts of legal entities good for asset protection and investing, and it has commendable anti-money laundering laws relatively well enforced.

All offshore financial centers across the world have been under tremendous pressure from high tax welfare states, the U.S. included, to end low tax competition and kill financial privacy. Some nations, such as Panama, Monaco, Andorra, Singapore and Hong Kong have refused to be bullied.

The Bahamas, perhaps much too close to the U.S. geographically and now in other ways as well, rolled over.

But it is a great place to visit. You should see my tan!

If you're looking for maximum privacy and legal tax avoidance, we can explain where these places are and how you can take advantage of them. Click here for some ideas on where to look.