With so many countries that you can open an offshore bank account in, where should you begin? Since an offshore bank account is simply defined as a bank account one opens in a territory that is outside of your origin country, offshore bank accounts can technically be set up in any country in the world.
However, not all countries are suitable or business-friendly for anyone to open an offshore bank account due to certain unfavourable conditions in countries such as Venezuela (due to hyperinflation), Syria (due to civil war), or Ukraine (due to political instability).
On the other end of the spectrum, there are countries with favourable tax laws and political situations that are widely popular among organisations and individuals.
In the following, we will share six of the best countries to open an offshore bank account. These countries are selected based on their political and economic stability, security, and reputation:
- Cayman Islands
You may have heard of numerous celebrities and politicians who have offshore assets held in Panama, such as actress Emma Watson, former UK Prime Minister David Cameron, and television personality Simon Cowell. What makes Panama, a little known country in Central America such an attractive location for offshore banking?
The law also protects the privacy of Panama firms so you can be assured that your business dealings and financial statements will be kept private and confidential in Panama. These laws ensure the safety of your financial holdings in Panamanian entities.
Panama is politically stable and with its local currency the USD, Panama is one of the best countries to open an offshore bank account.
For more information on offshore banking in Panama, please watch the video below:
2. Cayman Islands
The Cayman Islands’ government does not impose direct taxes such as personal income or corporate taxes so individuals and firms will not be taxed for overseas income transferred in from an offshore bank account.
For small firms that do not hold substantial liquid assets, the good news is that banks in the Cayman Islands do not require firms to deposit a minimum amount of capital and banks in the Cayman Islands do not require disclosures of major shareholders, further upholding the privacy of their clients.
As a British territory, the Cayman Islands are politically stable with an AAA sovereign rating. The Cayman Islands have also committed to upholding international taxation standards according to OECD requirements.
In 2020, the Cayman Islands topped the list of the Financial Secrecy Index, an accreditation of the level of privacy that the Cayman Islands provides. As a politically stable tax haven with recognition from the OECD, it is therefore no surprise that the Cayman Islands are one of the most popular jurisdictions to open offshore bank accounts.
Please watch the video below for more information on the Cayman Islands:
The Republic of Seychelles is a small country with a population that does not exceed 100,000.
As the government does not tax individuals and firms who are non-residents of Seychelles, Seychelles has become one of the most popular destinations for businesses to set up offshore bank accounts as offshore banks located in Seychelles are also backed by the Central Bank of Seychelles.
For firms that prioritise privacy and corporate secrecy, offshore banks in Seychelles will not divulge information about shareholders and directors by law. You may also be pleased to know that Seychelles is not economically or politically affiliated with American or European authorities. Therefore, firms that need a high degree of secrecy will find Seychelles a fantastic country to open offshore bank accounts.
However, investors will still need to be aware of some of the countries that Seychelles has signed bilateral agreements on the exchange of tax information. Some of which includes Iceland, Norway, Finland, and Sweden.
Nevertheless, Seychelles remains one of the best places for offshore banking given its lack of controls over capital flow and foreign exchange regulations.
Switzerland has been long been recognised by the European Union (EU) as a cooperative jurisdiction for taxation matters. Given the high standards that EU holds on international taxation, Switzerland is considered one of the safest countries for private firms and individuals to conduct offshore banking activities.
Although Switzerland has tightened its regulations over offshore accounts in response to higher international standards, Switzerland’s tax rates are still one of the most lenient in the world. Switzerland may not be tax-free, but it imposes a fixed sum in corporate taxes. Regardless of how much income is generated and deposited into an offshore account in Switzerland, the private firm or individual still contributes the same amount in taxes.
As one of the top five countries with the most foreign exchange reserves, the Swiss government is well-equipped to combat a financial crisis with its vast reserves.
Despite protocols and tax agreements that the Swiss government has signed with the United States to exchange information for taxation purposes, Switzerland continues to rank third on the Financial Secrecy Index in 2020.
The US$2.1 trillion in assets held in Switzerland demonstrates that Switzerland is one of the best countries to set up offshore bank accounts.
In 2020, the Heritage Foundation named Singapore as the world’s freest economy for the second year in a row. With a single-tiered corporate tax, an offshore business will be taxed a flat rate of 8.5% for the first SG$300,000 and 17% for anything above that.
On top of a business-friendly corporate tax rate, the Singaporean government does not levy taxes on capital gains or dividends distributed to shareholders. As a country that prides itself on free capital flows, income repatriated into offshore bank accounts in Singapore is not taxable as well.
Without needing representatives to make the trip to Singapore to set up a Singaporean offshore bank account, it is convenient for private firms and individuals to get started with one.
Given Singapore’s reputation as a reputable financial centre, Singapore is a popular country for offshore banking.
With an average interest rate of 3.59% in the past ten years from 2010 to 2020, Belize offshore bank account interest rates are relatively higher than anywhere else in the world.
The Belize Dollar being pegged to the USD ensures that its currency will not lose its value overnight. Therefore, funds deposited in offshore bank accounts in Belize will not see its value plummet even if Belize has to endure a financial downturn.
By law, offshore banks in Belize must have a liquidity rate of at least 24%. In contrast, the US Fed has an overnight repo rate that has hovered around 2% for the past ten years. Liquidity rates refer to the ratio between cash the bank has in its vault, and the loans handed out by banks. Given the high liquidity rates ensured by the government, offshore bank accounts in Belize is one of the safest in the world to hold huge sums of money.
Offshore banking may have its detractors, but it is nevertheless an advantageous and legal practice for private firms and individuals alike. Whether it is to spread risks, protect your privacy, or to get the best interest rates for your company, offshore banking will provide a viable alternative to achieve them. However, not every business may benefit from having an offshore account and hence, it is best to engage established business consultancy experts like Desfran. Spearheaded by one of the world’s leading management teams, our team of seasoned experts have years of experience in providing wealth management advice. We continuously stay on top of trends and movements in the financial markets to help your business grow by providing comprehensive customised solutions.
Contact Desfran today.