What constitutes a favorable offshore jurisdiction, you may ask? A desirable jurisdiction is one that's politically neutral, that follows a policy of free trade and that does not interfere with the commercial activities of corporations established there. A good offshore location provides legal assurances of personal and corporate privacy and is language-compatible. Other factors include telecommunications, time zones and the availability of pro-fessional infrastructure. Characteristics of popular jurisdictions include being democratic and also English-speaking, having a legal system derived from British Common Law, and greatly favoring corporations that are nonresident in nature. The beautiful island of Nevis, located in the eastern Caribbean, represents the idyllic view of a tropical island paradise. The climate is nearly perfect for both people and the lush, tropical vegetation that grows there.
There are other ways to trim your tax bill besides going offshore. Try reading "Extra Credit" to get clued in on a few tax tricks.
The British, who colonized Nevis in 1624, considered it to be "the jewel of the Caribbean." English is spoken there, and it's one of the 10 freest places in the world. The literacy rate is higher than in the United States, and, compared to the States, Nevis is essentially crime-free. The legal system is based on English common law, served by a high court of justice and court of appeals.
A Nevis offshore company is known as an International Business Corporation (IBC), and although formed in a British Commonwealth country, the corporate structure is based on the states of Delaware and Nevada. The Nevis IBC is widely reported as having the best asset-protection features of any corporate structure anywhere in the world. Nevis offshore companies are exempt from all taxes.
Nevis has excellent communication facilities, and Americans are able to direct-dial the area code and phone number exactly as if they are placing a call in the United States. The time zone is similar to Eastern Standard Time, and Nevis banks and trust companies are bound under Crown Privacy Statutes, meaning financial transactions are absolutely private.
Generally speaking, offshore banks have a much better safety record than domestic banks. One reason people know so little about offshore banks is that they are prohibited from advertising in the United States-unless they're willing to comply to all the same regulations U.S. banks have to follow. Which, of course, would destroy the whole point of going offshore and all of the advantages in doing so.
Anti-avoidance legislation has recently been enacted in the United States to reduce the use of tax-haven countries strictly for tax-avoidance purposes. However, the very existence of many safe-harbor jurisdictions came about as an effect of American, British and Canadian efforts to reduce aid to specific smaller developing nations. Instead of providing direct foreign aid to these countries, legislation was passed to grant tax incentives for multinational corporations to invest in target offshore locales. And, once entrepreneurs spotted these attractive options, the game was afoot.
If the only reason you have for going offshore is tax avoidance, you should seek the assistance of a qualified tax attorney and explore the myriad opportunities available for domestic tax deferral before deciding to move your money into an offshore account. The IRS has taken the position that if the primary reason an offshore option is invoked is taxation-based, this motivation is sufficient grounds to deny tax benefits. It's important, therefore, that anyone considering an offshore business opportunity do so for reasons other than tax issues alone, or risk the consequences.