I confess I do utilize sensationalist titles at times. (Hey, at least I’m honest about it.) I could have gone with “Nine lesser-known offshore jurisdictions”, but that doesn’t pack quite the same punch.
In this blog post, I will be quickly going through nine more or less low-profile offshore jurisdictions out there.
- Samoa
- Niue
- Nauru
- Labuan
- Estonia
- Uruguay
- Comoros
- Bahrain
- Maldives
Samoa
Samoa first appeared as an offshore jurisdiction in the late 1980s, with the 1987 International Companies Act.
The legislation is written in a way that makes it especially useful for asset protection stemming from Section 228 (“No confiscation”), particularly 228 (B), of the International Companies Act, which states how the company’s assets may be distributed in the case of a Specified Event. This can be anything, such as a foreign court order or confiscation.
See also Jurisdiction Spotlight: The Independent State of Samoa.
Niue
An island perhaps most famous for its .nu top level domain, Niue is another pearl in the South Pacific. Its offshore legislation was founded in 1994, same year as the Seychelles.
The legislation — The International Business Companies Act of 1994 — is very similar to other IBC jurisdictions. It has, however, been repealed.
The jurisdiction’s sole tax agreement is a TIEA with New Zealand, with which Niue is an associated state. New Zealand acts on Niue’s behalf on foreign affairs and national defence.
Nauru
Tread carefully. Not only do you risk cutting your feet on the razor sharp rocks surrounding the island, Nauru was once the home to extremely lax offshore banking legislation, which in the early 2000s got every single bank in the country blacklisted. This was a deliberate effort by the government to boost the economy, which is otherwise purely dependent on natural resources.
Because of the country’s rather complex foreign policy, it has not signed a single tax agreement (TIEA or DTA).
The country’s dark history will make it difficult to open bank accounts, but nothing is impossible. Nauru has improved significantly
Further reading:
http://www.nytimes.com/2000/12/10/magazine/the-billion-dollar-shack.html?pagewanted=all&src=pm
http://www.businesspundit.com/10-most-notorious-money-laundering-cases-of-the-20th-century/
http://www.treasury.gov/press-center/press-releases/Pages/js194.aspx
Labuan
An autonomous province of Malaysia, Labuan is home to one of few remaining legislation specifically about holding companies. While Luxembourg’s 1929 Holding Company Regime came to an end in 2011, Labuan’s non-trading offshore company legislation remains strong.
Labuan is excellent for holding companies, especially if there are any DTAs you can utilize. Note that some of Malaysia’s tax treaties explicitly exclude Labuan.
An in-depth article about Labua is planned for the middle of 2014.
Estonia
The most advanced of all former Soviet states, Estonia is a liberal, progressive masterpiece in many regards. It is interesting as an offshore jurisdiction because of its unique corporate tax. While other jurisdictions tax a company on profits or even turnover, Estonia only taxes on distribution of profits. This makes it a stellar holding company jurisdiction. It is an EU jurisdiction with public records of company details, which makes bank account opening a breeze. And why not bank in Estonia?
Uruguay
Urugay offers a unique mix of low taxation — applying territorial taxation, whereby profits from outside of Uruguay are tax exempt — and high reputability. Names of shareholders and directors are nowhere on public records, but a company’s finances are. This puts Uruguay in a one-of-a-kind niche, where companies can be anonymous but its finances can be inspected by anyone. This makes opening a bank account much easier in many cases, while still preserving your privacy.
Banking secrecy is quite strong in Uruguay.
Comoros
If you thought Nauru sounded shady, welcome to an island nation which licenses casinos and banks without any real controls. The island of Anjouan was at one point handing out banking licenses to anyone who could show they had a few thousand dollars in capital reserves. These banks went away when the Comoros together with the African Union invaded and seized the island of Anjouan, which today enjoys a mostly peaceful status as an autonomous province in the Comoros.
Zero taxation for International Business Companies (IBC), zero controls, zero tax agreements, limited powers by the authorities – the Comoros have it all.
Bahrain
A semi-totalitarian kingdom off the coast of Saudi Arabia, Bahrain is one of the wealthiest nations in the world and combine low taxation with strict banking secrecy.
There is no corporate tax, no income tax, no capital gains tax, no exchange controls, no limitations on repatriation of funds — nothing. As long as you don’t criticize the government or go against Islam, Bahrain is as liberal as it gets.
Maldives
Spread out between the Arabian Sea and Indian Ocean, the poor nation of the Maldives occupies some of the most beautiful islands on the planet. It is a quasi-totalitarian state, which depends largely on tourism. There is no corporate tax here and as of writing, only a single tax treaty (with India) has been written. It took five years for the treaty to enter into force and it does not live up to OECD standards.
Banking secrecy is strict, but banking options are limited. While the country has no corporate tax, there are discussions about imposing one to boost the economy. It is unclear whether this taxation would also apply for non-resident companies.
Streber. I am writing a fictional novel in which a group of people have accomplished a heist and are in need of hiding their new assets. May I use these nine jurisdictions in my book as places to hide money? If so, how should I acknowledge you? What disclaimer would you like placed in the book? Thanks.
That sounds like a lot of fun! Very glad you found my website helpful for your writing.
If you are just going to use these jurisdictions as locations in your work of fiction and not use any of my text, you are under no obligation to credit me. I’d appreciate being mentioned as a source of information, but that’s entirely optional.
If you are going to use my text or very clear derivatives of my text, I ask that you state somewhere that the information was obtained from this website. Please include the URL (www.streber.org) and the name STREBER Weekly.
One thing, of the nine listed (eight excluding Niue, which has discontinued its ax haven practices), Estonia is the one least likely/suitable to be used for hiding money. It’s more of a clean, reputable jurisdiction that just happens to have a very attractive tax regime for companies.
Best of luck with your book!
One thing I have been wondering about is: languages. What do I mean by this? Well, when you are in a country that doesn’t speak English, how do you go about trying to open a bank account?
I keep hearing people say how everywhere you go there will be someone that speaks English but I don’t find that on my travels. Just a week ago I was in France and was battling to communicate with the bus driver as he didn’t speak a word of English. Yes, I could learn a few French words (and I should) but opening a bank account is a bit more involved (language wise) than trying to communicate with a bus driver!
Just curious on your thoughts and how you deal with this.
Banking is an industry which almost always attracts at least some people with an international mindset. Non-English speaking offshore jurisdictions are effectively required to speak English in order to attract foreign investors. (San Marino is the only immediate example of the contrary that I can think of, where we had to use an Italian translator.)
Countries like France and Italy are unique in that they for a long time actively rejected English. Even countries with a strong anti-American sentiment may speak English quite well, owing to other English-speaking influence or just because it’s a good language to know.
Save for a handful of stubborn countries, you can find someone who speaks English in a bank almost anywhere. In the last year or so, I have been travelling quite a bit in former Soviet countries. While it has been helpful to have someone who spoke the language or at least Russian, I was surprised at how well English worked when it came to banking and related matters.
You will have issues getting what you want at a restaurant in Yerevan, get the right bus ticket in Paris, or getting directions in Kiev if you only speak English, but opening a bank account will almost always work.
One thing to keep in mind that many banks do not issue translations of their terms and conditions. Where I deem it cheaper to pay for a translation than to end up in a legal dispute with a foreign bank in a foreign country in a foreign language, I get the documentation translated before even travelling to the country.
I should be thanking you for the great site!
Theres many jurisdictions to choose from, I think we are spoilt for choice.
I haven’t (yet) found a bank I would open an account at in Central/South America and the Carribean so I am very interested to hear what you have to say about that part of the world.
I always find weird/unique/odd/unconventional locations fascinating to read about!
If Labuan just “piggy backs” off Singapore then I would rather deal with Singapore directly and just give Labuan a miss.
We spoke about Andorra a few weeks ago and I was curious, do you trust Andorras banks considering how shakey the EU is? Some goes for Luxembourg…
Uruguay and Panama stand out when it comes to banking in that part of the world. Unfortuantely, it can be quite a challenge to open bank account in either jurisdiction; especially if you don’t have a local legal entity or trade in the country.
In my opinion, Caribbean banks can be good if you want something quickly and don’t plan to hold any significant sums of money. Many of them have poor internet banking and security (just username and password and slow if any roll-out of new card security features such as EMV and 3D Secure). You often have to deal with intermediary banks. The fact that some of those islands are nearly impossible to reach is another downer. Lack of deposit insurance is another drawback of Caribbean banks.
I’m in no position to tell you what is and what isn’t a safe jurisdiction to place money. However, I do not worry about the money I have placed in Andorra. The banks have limited exposure to its shaky neighbours and generally take a very cautious and conservative approach to lending and investing.
Whilst on the subject, I came across bank fees for Andorran banks on the Institut Nacional Andorrà de Finances website a few days ago. http://www.inaf.ad/index.php?option=com_content&view=article&id=95&Itemid=177&lang=en
Immediately following the turmoil in Cyprus, Luxembourg together with Malta were pointed out as the next EU countries to fail. So far, both jurisdiction remain strong. I am not solicitous about money in either jurisdictions, although it is always wise to keep both eyes and ears open.
Interesting list!
I spent some time in Malaysia and while I was there I tried to open a bank account there (at Hong Leong)…unsuccessfully. I was told I had to be a permanent resident to open a bank account there. So I started to look at Labuan. Unfortunately I didn’t have the time to go there. Will you be doing an article on Labuan and the banking options there?
Some more ideas: Cayman Islands and Canada.
Another thought…offshore credit cards.
Keep up the awesome work…I thoroughly enjoy your website.
Thanks for the feedback! It’s very much appreciated.
When it comes to Labuan, I am told that most offshore companies licensed there in fact bank in Singapore and Hong Kong. I cannot yet write an in-depth article about Labuan, but I will hopefully have reason to visit and dig into the jurisdiction later this year and maybe gather enough information to write a Jurisdiction Spotlight about Labuan.
I have considered writing about the Cayman Islands. At some point, I will have to write about all the classical and most popular offshore jurisdictions.