Offshore Locations Offering Best Privacy
Updated on Tuesday 07th August 2018
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An offshore location is a jurisdiction that offers a high degree of investor confidentiality, along with no territorial taxation. While these territories have had a negative connotation, most of the countries have entered into tax information exchange protocols that allow foreign countries to collect information about investors in case of suspected tax evasion.
In terms of privacy, some offshore territories are higher rated than others. The Foreign Account Tax Compliance Act (FATCA), a US federal law, has had a significant influence on the evolution of offshore locations and foreign financial institutions. While not all countries are currently cooperating with the United States on FACTA, a certain level of international implementation, albeit sometimes partial, is in place.
Our team of offshore company formation agents highlights the main provisions of this Act and talks about some of the offshore locations that do offer the highest level of investor privacy.
Offshore locations that offer a high degree of investor privacy
A number of countries and territories around the world are designated offshore financial centers. However, the local policies and regulations make some of these jurisdictions more suitable for those investors who are also looking for a high degree of privacy, not only low or no taxes. Below, our agents list some of the countries that are advantageous in terms of investor protection and privacy.
- Belize: there is no need to disclose or make accessible to the public the names of the directors and shareholders; what's more, the Belize IBC is a widely popular business form.
- Nevis: the Nevis LLC is popular for offshore investors because of its flexibility; this location also has a short statute of limitations for fraudulent transfers.
- Cayman Islands: the public disclosure of the directors and the shareholders is not applicable in the Cayman Islands.
- Seychelles: the Seychelles LLC is convenient for many foreign investors and this location is one of the most popular offshore centers; no public disclosure for beneficial owners is needed.
- BVI: The British Virgin Islands IBC is similar to the homonym business structure in Belize; this too is a jurisdiction that does not require the disclosure of the founders in a public registry.
Our team of offshore company set up agents can give you more detailed information about these jurisdictions and the use of nominee directors and shareholders, a manner in which investors can further increase their privacy.
General offshore location privacy features
Offshore companies are often used for the purpose of adequate asset protection. For most investors, apart from a beneficial taxation regime, it is equally important to benefit from a high degree of confidentiality when running their offshore company. Nominee director and nominee shareholder services are specifically designed to provide the highest possible level of investor privacy.
Most offshore businesses use these services and many of the countries of territories designated as international offshore centers will provide this option to foreign entrepreneurs. A nominee is essentially an intermediary appointed for the purpose of guaranteeing the privacy of the director, the shareholder or for both. The process of appointing a third party is legal and the main purpose for this is that the name of the beneficial owner and shareholders of the company is not included in the public record.
While some jurisdictions like Belize do not make it mandatory for director disclosure in public records, the nominee services are still used for the purpose of conducting the daily managerial activities for the offshore company. Thus, the true identity of the beneficial owner will never appear on any company-related documents or contracts. The nominee director and shareholders act on behalf of the owners through a power of attorney which will also establish their degree of involvement.
This is a preferred way of maintaining investor privacy and one of our offshore company formation agents can give you more details.
FATCA agreement status
The purpose of the FATCA was to eliminate non-compliance from U.S. taxpayers who were using foreign accounts. The Acts is based on the cooperation between foreign financial institutions (FFI) and the American Internal Revenue Service for reporting the relevant information about U.S. taxpayers who have financial accounts or who own a significant percentage in foreign entities. A set of FATCA Intergovernmental Agreements (IGA) is also in place. The jurisdictions that have signed an IGA but this is not yet in force include Anguilla, Armenia, Chile, Costa Rica, Dominican Republic, Greenland, Kazakhstan, Macao, Philippines, Taiwan, Thailand, Turkey, and Ukraine. One of our offshore company formation agents can give you more details about the model of the signed agreement.
According to the IRS, although some countries have signed an IGA, for some jurisdictions it is not mandatory to obtain a foreign taxpayer identification number for an account held by a resident. These countries are as follows:
- Australia: has signed a model 1 IGA which is in force and has a number of obligations to obtain and exchange information about reportable accounts;
- Bermuda: has signed a model 2 IGA that enables Bermuda financial institution to comply with the FFI agreements.
- British Virgin Islands: has signed a model 1 IGA for the purpose of tax compliance and the implementation of the FATCA.
- Cayman Islands: the same model 1 IGA which also includes a provision for a Non-Reporting Cayman Island Financial Institution.
These treaties also include provisions for a Non-Reporting Financial Institution in the jurisdiction. For example, in the case of Cayman Islands, this can take the form of an International Organization, Broad and Narrow Participation retirement Funds, Pension Fund of an International Organization, Exempt Collective Investment Vehicle, etc.
One of our agents who specialize in offshore incorporation can give you more details about the provisions of the FATCA.
Contact us for complete offshore company incorporation services that also include selected privacy options like nominee director or shareholder services.