Yesterday's offshore services:
Safeguarding financial privacy has been made difficult, but some have reasons to pretend it's still business as usual. Learn what they tell you, why you might buy it, and what you might not know.
Answer one of the many ads offering to lower your tax burden, increase your assets and protect your financial privacy and you are likely to get a format reply.
The format reply will detail a format solution -- and it will be based around a simple combination of an offshore company with an offshore bank account.
It might not look a simple combination to you. It might come with more options
than you care for:
But however large the menu of options, the underlying strategy has been the same for years: offshore company, offshore bank account.
The same strategy, the same jurisdictions. The same as last year, the same as the year before that, the same as five years ago.
The offshore world is changing? No problem. Offshore company, offshore bank account. Offshore is offshore.
You have individual needs, priorities, concerns? Of course you have. All clients have. No problem! Offshore company, offshore bank account. One size fits all.
This kind of attitude has served the needs of a profitable paper-shuffling offshore industry for years. Even today, it is business as usual for most offshore incorporators as they continue delivering nothing but piles of expensive paper and easy administrative services.
Unwilling to change their traditional business model, most chose to ignore the dramatic changes in the sector and are failing to provide what today's offshore climate demands most: honest, unbiased, relevant and up-to-date advice.
This kind of attitude does not serve well the interests of today's privacy seeker.
What they tell you
At its most basic, you will be offered an International Business Company (IBC) or a similar corporate entity, often from a shelf list of corporations in those jurisdictions where your incorporator has a cosy relationship. Bulk discounts and profit margins often dictate what is "best" for you. You should note that the actual cost of registering an offshore company can be as little as $75 locally even though you will pay much more as the end user.
In addition to the offshore company formation, your offshore provider will sell you registered office services (usually a legal requirement) for your new company, as well as an offshore bank introduction (bank account opening).
The choice of offshore banks on offer will be based around the same cosy relationships, and not necessarily in response to your privacy-related or other concerns. In addition, being "introduced" will not get you an easier ride when it comes to the account opening as you might think -- in this case, introduction means no more than being given the bank's name, account opening forms and possibly a few tips on how to complete them.
You may also end up paying for various notarisation / certification charges, corporate seals, useless "de luxe" corporate kits, shipping and other "essentials". The total bill, depending on which end of the market you choose, will range from around $1,000 through to $5,000 and upwards.
Why you might buy it
Most clients will be sold on the flexible nature of the offshore company, the associated tax benefits and perhaps the deceptively simple processes of re-invoicing and other business mechanisms available through the offshore jurisdiction.
Additionally, you might be told, a range of further benefits will be enjoyed by moving offshore: complete financial privacy, shelter from confiscatory lawsuits and inspection by revenue authorities.
But this is all yesterday's news.