Offshore Asset Protection BLOG - Bob Bauman

The Philippines as a Tax Haven?

As my previous blog entry (below) indicates, I do get interesting emails from readers and sometimes I learn a lot from them. Take the case of S.W., an expat Brit who generously sent me some valuable and potentially useful information about the Philippines, where he lives and works.

I doubt that most of we insular Americans even know where this 7,000 island Pacific archipelagos is located -- between the Philippine Sea and the South China Sea. And we know little about its nearly 100 million people. For comparison, that population makes it almost a third the size of the U.S. population.

The country was in the news recently because of the death of the former president, Corazon Aquino, (left) who in 1986 ended the 20-year rule of Ferdinand Marcos when a widespread popular rebellion forced him into exile and installed her as president.

Pleasantly Surprising Land

Admittedly, with a reputation for being chaotic and corrupt, the Philippines has an image problem. But most who make the journey there are pleasantly surprised by their beauty and by the friendliness of the people.

Most of the Philippines is laid back, stable and relatively safe. The locals are an exceptionally helpful bunch, transport is cheap, food is good, accommodations plentiful, and (for the mono-linguistic) English is widely spoken.

The Philippine Islands became a Spanish colony during the 16th century but became a de facto colony of the United States in 1898 following the Spanish-American War. Future U.S. president and Supreme Court chief justice William Howard Taft, (right)served as colonial governor general.

In 1935, the Philippines became a self-governing commonwealth under U.S control with a non-voting delegate in the U.S. House of Representatives. Manuel Quezon (below) was elected the first president and worked to prepare the country for independence after a planned 10-year transition.

Faithful American Allies

Soon after the December 7, 1941 Japanese attack on Pearl Harbor in Hawaii, in early 1942 the Philippines were attacked and occupied. There followed the horrific defense of Corregidor, the brutal Bataan Death March and U.S. General Douglas MacArthur's (below) memorable promise that: "I will return!"

U.S. forces and Filipinos successfully fought together during 1944-45 and on July 4, 1946, the Philippines attained independence from the U.S. In the ensuing years, presidents have been elected, impeached and defeated amidst constant government corruption, political turmoil, including street riots and attempted coups. All the while, the Philippine government, such as it has been, has faced threats from armed Communist insurgencies and from Muslim separatists in the south.

De Facto Offshore Financial Center

But that's history. What my email correspondent S.W. suggests is that the Philippines, while not a true tax haven, is in may respects, an ideal Asian offshore tax-free base with strong financial and banking privacy laws, easy international banking connections and a plentiful supply of English-speaking talent.

S.W. says that while not a "haven" it does have laws that are not well known "and people like myself take advantage of them."

With thanks to him, here's more of what S.W. wrote:

"I'm an IT (information technology) programer with clients in the UK and Europe mainly, and a small staff here. I'm currently on a tourist visa (visa on arrival that is renewed every two months up to two years) and whilst I cannot be employed, I can run my offshore business from here quite legally, and the low cost English literate staff are a big plus.

Tax Free Living

After 6 months you are classed as a resident, but resident foreigners do not pay local taxes on foreign source income, so I legitimately pay zero tax here and as a British Citizen who hasn't lived in the UK since 1967, I pay no taxes there either.

"My companies are in the BVI and Belize with a virtual office in Hong Kong for invoicing and mail delivery. (UK / EU clients are much more comfortable with a Hong Kong address than a BVI one).

Easing International Banking

"My banking is with a corporate multicurrency account with HSBC Hong Kong that comes with one of the most secure internet banking options available today. Locally I bank with HSBC in the Philippines which is not a local incorporated subsidiary, but rather an HSBC HK main branch operating in the Philippines as a foreign bank.

"Again, whilst UK / EU clients have no issue with transferring funds to Hong Kong, some do have issues with the Philippines or the Caribbean. HK has such a massive flow of mainstream funds, for import / export, investment in China, finance etc., transfers there do not seem to attract the focus of regulators in the manner that a transfer to Belize or BVI possibly might.

Strong Financial Privacy

S.W. also told me that one of the big pluses for foreigners doing business in the Philippines is that foreign currency bank accounts are given an extremely high level of secrecy under Republic Act 6426, (The Foreign Currency Deposit Act).

This law makes bank deposits absolutely confidential; they cannot be examined by any person or government official withiut written permission of the bank account holder. The law also exempts foreign currency deposits from attachment, garnishment, or any other order.

I should note that the Philippine government, (as Switzerland and other offshore centers), recently has agreed to allow limited tax information exchange under OECD Article 26, in an effort to get off the OECD "gray list."

Pacific Choices

So there you have it -- another possible Asian offshore base for your operations to add to established offshore centers such as Hong Kong and Singapore.

To find out a lot more about the Philippines and how you might establish a base there, you can pre-order my latest (7th) edition of The Passport Book. It has a full chapter on the Philippines with contact information.

Offshore Bank Accounts a Necessity

With all the negative attacks on so-called "tax havens" by high tax, big spending politicians, such as U.S. president Barack Obama and U.K. prime minister Gordon Brown, it's no wonder that the average American or Brit may question whether having an offshore bank account is a wise move.

Of course, these calculated attacks, by politicians whose sotto voce motto is "Tax and Spend," are designed to sow just such doubt in the minds of citizens. Tax collectors in both countries want people to keep their money and assets where the Internal Revenue "Service" or Her Majesty's Revenue & Customs can get to them with minimal effort.

Big Brother’s Big Lie

Underlying this war on tax havens is the belief on the part of Big Brother government that anyone who does business offshore, rather than in their home country, must be engaged in tax evasion or some other illegal activity.

Indeed, U.S. politicians such as Michigan's far left U.S. Senator, Carl Levin, (above) repeat this lie ad nauseam. I've heard U.S. government officials from the Department of Justice state it as one of their basic assumptions. And now President Obama has added his strident voice to this bogus chorus.

Big Business

Offshore banking is big business worldwide. Some estimates calculate that more then US$6 trillion is stashed in nearly 40 offshore banking havens that impose no taxes, have less onerous regulations, guarantee privacy and cater to foreigners. One-third of the entire world’s private offshore wealth is held in Switzerland alone.

And I suggest, offshore banking could be very good for you.

Avoidance Vs. Evasion

While legal tax avoidance, (as opposed to illegal tax evasion), does figure among the reasons some people bank offshore, it is certainly not the main one. Indeed for U.S. persons, offshore tax savings are minimal, because U.S. persons are taxed on all their worldwide income, no matter where it is earned.

So here are some good reasons you should consider for opening your offshore bank or investment account:

1) Investing for Greater Profits:

An offshore account is an excellent platform from which to diversify investment, with instant access to the world’s best investment opportunities, including currencies, precious metals, and real estate and without being limited by your home nation’s anti-investment restrictions. Foreign stock, bond and mutual fund trading are not covered by SEC rules.

You also can purchase attractive, tax deferred insurance and annuity products unavailable in the U.S.. Unlike most U.S. banks, offshore banks offer "multi-currency functionality", the ability to invest and transact business in your choice of currencies. And offshore assets can be moved more freely, without some U.S. reporting requirements applying.

2) Solid Asset Protection:

The United States leads all other nations in lawsuits. The odds that a U.S. person will be sued during their lifetime are high. But lawsuits seek cash and assets. If your assets are located in the U.S., they're at the mercy of any state or federal court.

If they're hard to get, located offshore, a plantiff’s attorney usually wont take the case. They know they're not likely to collect a judgment. (At times it makes good financial sense to discourage a potential litigant by letting him know just how difficult it will be to reach your offshore assets).

Because of defendant-friendly local laws in asset protection and tax haven nations, foreign judgment holders have a difficult time enforcing it. To reach your assets, a successful creditor must start all over, using the foreign judicial process to press a claim. That means the expense of hiring foreign lawyers and paying for travel and witness transportation.

Besides promoting compromise of pennies on a dollar, the delay in such a strung out legal process allows time for a defendant to fight the action. Many offshore havens have one- or two-year statutes of limitations that run from the date an initial claim arises. Since a U.S. lawsuit takes years to get through the courts, this means an American court judgment could be void under the foreign nation’s cutoff date.

3) Flexible Planning:

Having some of your assets offshore allows more flexible tax planning and inheritance tax advantages, such as the establishment of an asset protection trust (APT), private family foundation or a limited liability company (LLC) for business purposes, each of which may have their own bank accounts.

4) Better Privacy:

Offshore accounts offer wealthy individuals a way of legally concealing their wealth from prying eyes, (other than government reports that are required). In addition to avoiding becoming a target for extortion and kidnapping campaigns in countries where such occurrences are common, persons of wealth may well want to avoid news media attention or relatives or others looking for hand-outs.

In spite of the false impression you may have gained from all those rabid anti-tax haven attacks, far greater financial privacy is still available in many nations, such as Panama, Switzerland, Liechtenstein, Singapore, Hong Kong, Andorra, or Belize.

In such countries it is a crime to release financial information unless ordered by a court, and that includes foreign government requests as well. Although most tax havens now are moving to exchange of tax information, that exchange procedure applies only to individual cases in which probable cause of tax evasion or other crimes are shown.

One fact we know -- under the harsh terms of the PATRIOT Act, privacy is dead in America. And, to be honest, who knows what currency or other offshore controls may lie in the political future. The time to act is now.

Sovereign Society Members Banking Services

One of the major benefits of membership in the Sovereign Society is our extensive offshore banking advisory service and our banking connections in diverse jurisdictions. At a time when the IRS has frightened away some offshore banks from taking American clients, we can recommend Swiss and other European, Asian, Latin American banks that welcome our members.

Join us and enjoy the freedom of offshore wealth.

How to Gage the Coming Failure of the London G-20 Meeting

James Kirkup has a very astute observation inThree Line Whip blog published by The London Daily Telegraph about how to gauge the success of the G-20 summit that is to convene in London next week on April 2nd.

Kirkup writes: "The more you hear Mr Brown, Mr Obama and the rest talk about tax havens, the more they have failed to agree on more important things. No one likes tax havens. They're the low-hanging fruit of the G-20 process; saying rude things about the Swiss and the rest is pretty easy and uncontroversial. But it's also missing the point. This crisis didn't begin in Guernsey or the Caymans, it began in New York and London."

Orchestrated Anti-Tax Haven Blather

For weeks now the liberal world media dutifully has been repeating dire threats against so-called "tax havens" from the big spending, high taxing, anti-tax competition  likes of Germany's Merkel and France's Sarkosy. Even President Obama allowed his less than impressive Secretary of the Treasury to make some noise against tax havens.

The orchestrated battle of words hurled at offshore financial centers got so heated that British PM Gordon Brown felt obliged to drastic demand for "the end of tax havens." 

This belated anti-tax haven baloney comes from Her Majesty's first minister whose government is in charge (and has been for a decade) of the United Kingdom's many tax havens in its overseas territories (Bermuda, the Cayman Islands, British Virgin Islands, the Turks & Caicos) and its Crown Dependencies (the Channel Islands of Jersey and Guernsey and the Isle of Man), plus Gibraltar.

Does the Rt. Hon. Gordon believe that the City of London really can absorb all the dispossessed refugee bankers and trust officer that will flood in from these British world-class financial centers if he and the G-20 high tax goons shut them down? (Some unprincipled candidates, desperate for re-election, will do just about anything for votes!)

Spend vs. Regulate

The proponents claimed the G-20 meeting was not only going to solve the international economic crisis, (either by more Obama stimulus spending, or forced global regulation), but for desert, the G-20 would serve the collective severed heads of all tax havens displayed on a platter.

This entire hypocritical anti-tax haven campaign, as I have oft noted, is but an extension of the phony blacklists that have streamed for years from the tax-exempt minions at the Paris headquarters of the Organization for Economic Cooperation and Development (OECD), a taxpayer financed, pro-tax mouthpiece for the G-20 major nations who pay their salaries.

The OECD invented the blacklist and has used it skillfully as a public relations ploy to smear tax havens.

But in a classic case of removing the wind from the sails, the OECD blacklist ploy deflated when Switzerland, Austria, Luxembourg, Belgium, Hong Kong, Singapore, Liechtenstein, Andorra and Monaco, among others, all announced their agreement to broader but limited tax information exchange.

Even German foreign minister Steinbrueck, one of the most caustic anti-tax haven critic, has said he does not think G-20 leaders now would come up with a blacklist of tax havens. "As far as I see, there will be no such list at the London meeting," he said.

Despicable Communiqué

When I asked one the leading American tax experts, Dan Mitchell (left) of the Cato Institute, what he thought the G-20 outcome might be he said: "To be honest, I'm not sure what to expect from the G-20 meeting, other than a despicable communiqué attacking tax competition. My guess is that the real enemy is still the OECD, and the G-20 is just engaging in public relations warfare."

As The Telegraph's James Kirkup writes: "The transatlantic disagreement over stimulus vs. regulation isn't a full-blown row yet, but it's not far off, and the still-skeletal Obama administration has enough worries at home without looking for more abroad. Better for the president to play safe and sign something anodyne in London."

List Grows Long

The Swiss daily Tages Anzeiger reported that in a letter dated March 5 to British Chancellor Alistair Darling, OECD chief Angel Gurria provided an anti-tax haven blacklist including Switzerland and Singapore, as well as territories such as the Cayman Islands, Andorra and Montserrat.

The OECD branded 46 countries and territories for "insufficient progress" in meeting standards on tax cooperation and banking secrecy. (To the OECD that means an end to all financial privacy and automatic exchange of tax information among nations, as well as uniform higher taxes in all jurisdictions).

The OECD list also included Costa Rica, Chile, Grenada, Guatemala, Hong Kong, Liberia, Panama, the Philippines, San Marino and Uruguay, as well as Gibraltar, Guernsey and Jersey and a host of Pacific and Caribbean islands.

How Many Legions?

But as the brutal Soviet dictator, Josef Stalin was reportedly to have said about the influence of his enemy, His Holiness, the Pope: "How many legions does the Pope have?"

The Pope was said to have responded through Stalin's Foreign Minister, Molotov: "Tell your master he will meet my legions in Eternity."

Well, the OECD is loud and demanding, but it has neither any enforcement legions and certainly not any heavenly allies.

The Tax Haven Test

So remember that on April 2nd, if tax havens and offshore finance are anything more than a minor part of the "global new deal" struck in London, then the G-20 global economic meeting will have failed.

And no matter what the G-20 does, tax havens will still be with us, fortunately.

* To learn more about the economic benefits of tax havens, click here:
* To learn more about the moral case for tax havens, click here:
* To see why anti-tax haven demagoguery is misguided, click here:

Blacklist Fades to Gray, Then Disappears

 

Like that illusive Cheshire Cat in Lewis Carroll's Alice in Wonderland that appears and disappears at will, the threatened G-20 "blacklist" of  allegedly disreputable tax havens seems suddenly to have evaporated into the murky international fog.

You will recall that at a scheduled April 2nd "G-20" London meeting of major nations, dominated by high tax welfare states, it was expected the group would issue a new anti-tax haven blacklist, with Germany and France in the lead pushing for condemnation of even Switzerland, the cleanest and most respected of all offshore financial centers.

What Tax Bullies Really Want

In truth, financial cleanliness has never been the true objective of the high tax nations that make a habit of bullying low tax jurisdictions.

As Veronique de Rugy notes in the current issue of Reason magazine: In the part of high tax nations, "bank secrecy laws have long been seen as an obstacle to tax enforcement." As she says, supposedly by setting up "safe havens" for dollars, pounds, and euros, bank secrecy laws get in the way of these governments "forcing their high income tax rates down its taxpayers' throats."

The only way to fix this problem, the high tax welfare states argue, is for all nations to implement an automatic and unlimited exchange of information about nonresident investment. So-called tax havens, goes this line of thinking, should collect private financial data on foreigners and turn that information over to the appropriate governments.

Decade of Offshore Improvements

Most offshore financial centers, (as they now prefer to be called), have been shaken by the sudden intensification of pressure, especially after they have worked hard adapting to international demands for more transparency during the past decade.

The latest crackdown has been fueled by alleged tax evasion scandals in Liechtenstein and Switzerland in last year, the election of an avowed enemy of tax havens as U.S. president and the near collapse of the global banking system -- which the more radical anti-tax haven critics brazenly blamed on tax havens.
Jean-Claude Juncker (left), Luxembourg's Finance Minister responded on that point by saying: "Imagine for a moment that Switzerland, Austria and Luxembourg did not have banking secrecy six months or a year ago. Do you really think that the financial crisis would be any less serious? There is no link between banking secrecy and the global economic crisis."

American Hypocrisy

The U.K. Channel Islands (Jersey, Guernsey) ten years ago adopted legislation making foreign tax evasion a crime; other U.K. offshore centers (Cayman Islands, Bermuda, British Virgin Islands) followed suit shortly thereafter.

 

  
Large countries like the United States have yet to take similar steps, no doubt because the substantial tax free deposits from foreigners in U.S. banks provide essential funding for America's trillion dollar budget deficits.

Expert observers, including the International Monetary Fund, have regularly acknowledged U.K. offshore territories' transparency and supervision as amongst the toughest in the global finance industry.

The reputation of the offshore centers like Switzerland and the U.K. Crown Dependencies (Isle of Man, Channel Islands) and U.K. overseas territories, such as Bermuda and Cayman for probity, professional skills and financial sophistication enables them to attract capital from around the world. Such offshore capital is injected into U.K., Europe and the U.S. banking and securities markets, creating crucial connections with such centers.

Ten Years of Phony Blacklists

For more than a decade high tax nations have condemned as aiding and abetting massive tax evasion, any offshore jurisdiction that has low taxes, respects financial privacy and guarantees bank secrecy.

These anti-tax haven, anti-financial privacy campaigns have been spearheaded by the Organization for Economic Cooperation and Development (OECD), a paid, pro-tax mouthpiece for the major nations. The OECD invented the blacklist and has  used it skillfully as a public relations ploy to smear tax havens.

Capitulation

Indeed, the OECD had at the ready its latest blacklist for the G-20 London meeting when an unexpected thing happened. Many of the countries that were destined to be smeared in the list agreed in the future to apply OECD standards allowing exchange of tax information among all nations.

Now the pursuit of specific tax evaders by foreign countries supposedly will be made easier by greater co-operation from Switzerland, Austria, Luxembourg, Belgium, Hong Kong, Singapore, Liechtenstein, Andorra and Monaco, among others. All announced last week their agreement to broader but limited tax information exchange.

Never Enough
But don't count on the tax collectors to stop now. German Finance Minister Peer Steinbrueck (left) has told Der Spiegel that he wants countries like Switzerland to reveal  the names of all their account holders "even when there's no concrete suspicion of tax evasion."

 

Nevertheless, Steinbrueck, one of the most caustic anti-tax haven critic, said on Friday he did not think G-20 leaders meeting in London next month now would come up with a blacklist of tax havens. "As far as I see, there will be no such list at the London meeting."

German Chancellor Angela Merkel said she could not imagine any country that accepted OECD standards for exchanging tax information would be on a blacklist, but she gloated that the mere talk of this "virtual list" had already had "positive" effects.

International Blackmail

So "positive" that the much herald G-20 "blacklist" suddenly has faded into momentary obscurity, no doubt to be kept in reserve for a re-appearance in the next high tax onslaught against low tax jurisdictions which, in my opinion, is just a matter of time.

But I suggest that we call all these phony campaigns what they really are -- not a blacklist, but blackmail.

The Sovereign Society is a recognized voice in the complex offshore world.  Join the Sovereign Society and keep informed.

"U.S. Senators Clash On Bills To Shut Down Offshore Tax Scams"

That was the Dow Jones headline today (Wednesday) that confirms a Capitol Hill rumor we revealed to you last week.

The word is that powerful U.S. Senate Finance Committee chairman, Senator Max Baucus (D-Mont), (left) has all but rejected the radical anti-tax haven legislation introduced last week by far-left Senator Carl Levin (D-Mich), a perennial, publicity seeking demagogue when it comes to all matters offshore.

15 Page Draft

Finance committee staff is circulating draft legislation on behalf of Sen. Baucus that focuses on increased reporting requirements to help the U.S. Internal Revenue Service discover illegal tax avoidance schemes, domestic or offshore, and strengthens some IRS enforcement tools.

Baucus' move means he is staking out a dramatically different approach on legislation on alleged offshore tax avoidance, compared to that of Senator Levin. And Baucus definitely has the senatorial upper hand as Finance chairman, the committee that has jurisdiction over the Levin bill and all tax issues. Levin is not a Finance Committee member.

The Baucus staff draft would require U.S. banks transferring more than $10,000 to offshore accounts, to report the amount and destination to the IRS. Current law already requires such reports to the U.S. Treasury. The bill would increase penalties on certain infractions related to offshore accounts, including failure to file a return for a foreign trust and the draft would lengthen the IRS statute of limitations for certain international tax returns from three to six years.

The Finance Committee plans a March 17 hearing on the Baucus draft legislation.

Radical Meat Ax Approach

Sen. Levin's bill, S. 506, the "Stop Tax Haven Abuse Act", is an expanded (and worse) version of previous legislation he co-sponsored in 2007 with then Senator Obama. A companion House bill, H.R.1265, was also introduced by Rep. Lloyd Doggett (D-TX) and 56 other Democrats. (Bill texts available here)

As I have explained before, among other enormities, the Levin bill creates an unprecedented "blacklist" that attacks 34 offshore jurisdictions (Switzerland included) that would be tarred as "tax evasion" sites.

This unwarranted label is based mainly on the fact that these jurisdictions have high degrees of financial privacy and banking secrecy guaranteed by law. The bill also creates a unique legal precedent that Americans who engage in business in offshore tax havens, by that fact alone, are presumed guilty of tax evasion.

Levin's legislation also gives the U.S. Treasury secretary, that dynamic tax scofflaw, Tim Geithner, (left) free reign "to take special measures against foreign jurisdictions and financial institutions that impede U.S. tax enforcement" -- whatever that may mean. Geithner has endorsed Levin's bill and says President Obama backs it.

Praise for Baucus

"The big focus of this [Baucus] draft seems to be a desire for greater transparency, from taxpayers and from banks as well," says Joseph Calianno, a partner in the national tax office of accounting firm Grant Thornton. "It seems like it is really fleshing out more reporting and enforcement measures. The Stop Tax Haven Abuse Act is more expansive, actually trying to extend the reach of the U.S. taxing jurisdiction," Calianno said, referring to Levin's legislation.

But any tax changes affecting offshore transactions will have to come through the Senate Finance Committee, which Baucus chairs.

"I haven't had a chance to talk to Sen. Baucus. I do hope we can come together on a strong bill," Levin said. "The important thing to me is that it would have some real teeth in it, like the bill I've introduced."

Few Co-sponsors

Toothy or not, in spite of three years of promotion and several circus-like anti-tax haven hearings, Levin was only able to get four co-sponsors on his bill, none of them Senate heavy weights. [McCaskill (Mo), Nelson (Fl), Whitehouse (RI.), Shaheen (NH)].

As I have said, the Baucus approach is consistent with more reasonable past IRS practice in which individual, named taxpayers are audited or investigated and proceeded against on a case by case basis.

Reasonable Approach

Levin's ham handed bill unjustly would condemn all Americans who have business in offshore financial centers and smear friendly nations such as Switzerland, Panama and Singapore, among many others.

It appears that some offshore legislation may well be enacted by Congress this year. But it also appears that the veteran Senator from Montana is injecting some much needed common sense into the final product.

* While you can, there still are many legal ways to enjoy privacy, banking and save taxes offshore; Bob Bauman tells you Where To Stash Your Cash. If you're interested in living offshore, The Passport Book is just what you need.

Singapore: Switzerland of Asia

Singapore may face more political pressure from the United States and other tax hungry welfare countries over its role as an offshore financial center catering to wealthy foreigners, the country's prime minister admitted last week.

Prime Minister Lee Hsien Loong told journalists that U.S. pressure on some European countries to loosen banking secrecy laws and open their banks to greater scrutiny may lead to still more European money flowing into Singapore in the short term. "But I expect Singapore to come under pressure too," he said in response to a question on whether pressure on countries such as Switzerland and Liechtenstein will help Singapore.

Singapore's government has previously denied suggestions that the country is or wishes to be known as a tax haven. But it offers tax breaks to foreigners and has adopted strict bank secrecy laws patterned after Switzerland. It has been promoting itself as a rival financial center to Hong Kong to attract banks such as UBS, Credit Suisse, Julius Baer, and Citigroup to manage money for rich local and foreign clients.

Cash Flows to Singapore

"In the past 10 years, a lot of money from outside of Asia has moved to Singapore from Europe, Latin America, the Middle East, Russia and Central Asia," said Edmund Leow, a principal at the law firm of Baker & McKenzie, Wong & Leow in Singapore.

Many of the worlds wealthy have moved from traditional tax havens of the Caribbean, Switzerland and the Channel Islands to Singapore. One of the prime reasons for this movement is pressure in those places from Organization for Economic Co-operation and Development (OECD) member countries, most notably the United States. Local Singapore bankers expect this pressure probably will grow once president-elect Obama takes office in January.

Escape from the EU

In Europe money is being moved out of Switzerland to avoid paying withholding tax on interest income as required by the European Union, even as the EU is calling for more and expanded taxes. In Asia, even in the face of the global recession, huge wealth has been amassed with funds from the region, particularly China, Indonesia and India, and those funds dominate the bulk of Singapore's private banking business.

Singapore's private banking assets under management have grown over the past few years by an average of 20% each year and now are estimated at US$200 billion, according to the Monetary Authority of Singapore (MAS). Private banks have fueled the growth by expanding their wealth management services, most notably in the setting up of trust companies.

Trusts Use Growing

"Unlike the Europeans, Asian clients previously did not have full knowledge of what trusts can do such as the complicated tax structures," said Mr. Leow. "As the trust industry develops, it will not only grow in terms of the number of trusts or customers or assets under management, but also in terms of sophistication." With business from wealthy clients still growing in this English common law jurisdiction, Mr. Leow said Singapore's greatest task would be to manage its clean and well regulated image both at home and abroad.

Join Us

Our executive director, Erika Nolan, myself and several Sovereign Society editors have visited Singapore. We've made strong banking, legal, trust and other professional contacts that can be useful to our members with Asian business and financial interests.

That’s another good reason why you should protect yourself and your wealth by joining this unique organization that, for more than a decade, has shown the way for sound offshore banking, prudent investing and real financial peace of mind -- the Sovereign Society.

Offshore: True Safe Haven in Time of Trouble

"When was the last time you invested in something that you knew wouldn't make money?" That seemingly odd question was posed in a New York Times article last Tuesday.

But investing with no hope of any return was exactly what thousands of otherwise sane but scared investors were doing this week.

In the market equivalent of what The Times called "shoveling cash under the mattress," hordes of bond buyers were eager to park their money in what they apparently consider to be one of the world's safest investments -- United States government debt! Indeed they were so eager for a perceived safe haven that they agreed to accept a zero percent rate of return.

"The last time this happened was the Great Depression, when people were willing to accept no return on their money, or possibly even a negative return," said Edward Yardeni, an independent analyst. "If people are just protecting the cash they have, it's not a good sign."

Sign of Very Hard Times

The experts say this is a sobering signal that in these troubled economic times, when many have lost huge amounts on stocks, bonds and real estate, making an investment that offers supposed security, but no gain, is seen as somehow coming out ahead. They claim that this extremely cautious approach reflects concerns that a global recession could deepen in 2009 and continue to jeopardize all types of investments for the foreseeable future.

Perhaps so, but my question is this: How can these supposedly "cautious" investors possibly think that the bankrupt United States government is a safe place to invest?

Granted, this week's bond sales involved $30 billion worth of short-term securities that mature in just four weeks. Being optimistic, one probably can assume that the U.S. government will not suffer a financial collapse within the next month. But who knows when that inevitable day of reckoning will arrive?

Learn from History

Doesn't anyone remember 1923 and the hyperinflation of Germany's Weimar Republic? Or the decade-long collapse of the Japanese economy in the 1990s? Read history. The first recorded major bear market took place before the United States was born. It started in 1720 with the crash of the London stock market, better known as the "South Seas Bubble" and its effects lasted for decades.

But ignoring history, this week the demand for U.S. Treasuries was so great, even with no promise of a return, that the government could have sold four times $30 billion based on requests.

What was it that P.T. Barnum said about the steady birthrate of suckers?

Sucking Sound

Borrowing by the U.S. Treasury already has ballooned since the Congress approved the $700 billion financial rescue plan, and the federal budget deficit is expected to swell further, possibly to $1 trillion both this year and next, as auto makers, plus everybody and his brother, demands still more bailouts. "That sucking sound is all the world's capital going into the U.S. Treasury market," Mr. Yardeni said.

But, trying to apply a little logic, can't we reasonably predict that, at some point, American and other investors will no longer see as "safe" bonds issued by a bankrupt government with a faltering currency, an enormous budget deficit and national debt and a policy of irrationally throwing billions, even trillions, in paper money at every problem?

Real Safety Offshore

Let me suggest that, before the run on the U.S. government starts, if you really are concerned about the protection of your cash and assets, you'll do far better to:

1) immediately open an offshore bank account in a sound financial institution unsullied by the U.S. sub prime mess (say in Switzerland, Liechtenstein, Panama or Singapore);

2) use your offshore account to covert faltering dollars into stronger currencies, such as the Swiss franc;

3) use your account to invest in precious metals and other hard assets located outside the United States.

A Safe Banking Guide for You

The Sovereign Society always has made it our policy to provide an international banking guide exclusively for our members.

Drawing on years of experience, we have contacts with selected banks in jurisdictions where friendly governments support the needs of foreign investors, banking institutions that provide services investors require. You can be sure that each of these banks are financially stable, offer modern faculties and services and possess the understanding to serve an international clientele effectively. These banks are safe and with liquidity ratings well above the international minimums set by the Bank for International Settlements in Basel, Switzerland.

Yes, there is an economic crisis that makes some people act irrationally, buying bonds that pay no interest.

But if your concern is for true safety of your cash and assets, you should protect yourself by joining the unique organization that, for more than a decade, has shown the way for sound offshore banking, prudent investing and real financial peace of mind -- and that is the Sovereign Society.

Time to Move Offshore - Literally!

The media reports that the American financial crisis, a weak U.S. economy and increased domestic competition for jobs are sending an untold number of banking, financial and other professionals running for the border -- literally.

Executive recruiters say more professionals, especially those in finance, have been inquiring about opportunities abroad in the past few months. Some undergraduate finance and MBA students are refocusing their job searches away from Wall Street to offshore venues. In a number of cases, people with families say they would pull up roots for the sake of job stability.

A Major Exodus

The fact that Americans are fleeing this country is hardly news to Sovereign Society members and readers. It's a hot topic I've commented on more than once.

For the decade since our founding, we at The Sovereign Society have noted sadly that each year hundreds of thousands of U.S. citizens and resident aliens have been leaving America to make a new home in other nations. Some estimate that upwards of 3 million leave the U.S. annually.

The August 5, 2008 issue of U.S. News and World Report noted that many younger people are leaving the United States. These young emigrants are taking their young families and seeking their fortune or an easier life in foreign lands.

If data collected from 2005 and 2007 is correct, it's possible that three million U.S. citizens are going abroad to live each year. Assuming that number is accurate, that's a huge increase over recent years -- and the current economic downturn may increase that exodus.

Better Jobs Offshore

Recent surveys from executive search firm Korn/Ferry International found that 53% of 438 respondents believe the best job opportunities are in developing economies like Brazil, Russia, India and China. Another showed that 20% of 718 respondents said they are more likely to accept an overseas work assignment now, in an economic downturn, than in a stable economy.

Although foreign markets are suffering as a result of the spreading credit crisis, the financial job market abroad hasn't been damaged as severely as it has been in New York and other U.S. financial hubs. U.S. employers cut 159,000 jobs in September, and that figure doesn't take into account the newest wave of job losses on Wall Street. Recruiters say job opportunities for finance professionals in Asia, the Middle East and Central and Eastern Europe still abound.

"There has been a gold rush to places like Dubai," says Alex Alcott, partner and head of U.S. investment banking at Heidrick & Struggles, an executive search firm. He cites Beijing, Shanghai and Moscow as areas of opportunity for finance professionals.

Asian Hot Spots

I've often written about financial job opportunities in Asia, especially in Hong Kong and Singapore where I visited as few years ago.

Over the last decade, the city-state of Singapore has built up an impressively financial services industry that challenges their rival, Hong Kong and is attracting lots of mutual fund and hedge fund business, including prime brokers and big international banks. Singapore is now Asia's third largest financial center, after Japan and Hong Kong, and it's quickly gaining market share.

Private banking has emerged as a leading source of revenue for Singapore. In fact, over the last five years, Singapore has matured as a leading private banking destination for international investors, drawing deposits away from kingpin Switzerland.

Unlike Switzerland, where an estimated one third of all private banking deposits are held, Singapore is not under constant political pressure from the European Union's (EU) Financial Action Task Force, which is constantly attempting to strip away Switzerland's tax advantages and privacy. And that's lured many European and international investors to Singapore.

Indeed, just as the current banking crisis has driven safety-seeking billions in deposits out of European and American banks, the European Union tax directive had a similar impact when it took effect in the 28 EU nations, plus Switzerland, in 2005. After all, money is a fungible commodity and it seeks both profits and safety.

Roadblocks to Freedom

One major worry I have about this free global movement of cash, investments -- and even individuals seeking foreign residence -- is what the next U.S. president and U.S. Congress may do to impede the freedom of international movement we now enjoy.

Candidate Barack Obama has made attacking offshore financial freedoms a constant theme in his campaign, He is a co-sponsor of radical anti-tax haven legislation that would disrupt Americans' rights to bank and invest freely where they wish.

It's well to recall that 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.

Article 15 – Everyone has the right to a nationality. No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

However these "rights" of free movement, travel and residence have been, and are, systematically violated by many nations, including both dictatorships and democracies. The United States and the United Kingdom have been among the worst violators when it suits the political convenience of the government in power at the moment.

All of which suggests that you, like those worried financial professionals, might want to consider relocating your money or yourself, while you still can.

Looking for Your Own Road Map Abroad? We Can Help

If offshore interests you, we can help you. The Sovereign Society exists to give advice and direction for those interested in "going offshore" in many different ways.

We can offer you a road map to offshore freedom, including legal ways to protect your assets, lower your taxes, expand profitable investments and how (and where) to move your residence and/or citizenship offshore.

If you're contemplating expatriation, I have the information to help you on such a global course in two of my books. I can tell you how to secure a second passport, and how to plan your finances abroad. Both books explain in detail how to live well offshore under what we call "the ultimate estate plan" - expatriation. And it's all legal.

As the late cartoonist Charles M. Schulz had one of his Peanuts say: "Don't worry about the world coming to an end today. It's already tomorrow in Australia."

And in Singapore, Hong Kong and many other places offshore.