Offshore Banking and Trading

I just started researching this tonight.. as I am bored and markets are closed tomorrow.. Here is where my mind has wondered to.. all of this is legal by the way.. US companies use this to avoid paying billions in taxes.

Being tax season.. and the ridiculous amount of capital gains tax I have to pay (I'm sure it's chump change to quite a few) I started thinking about opening an offshore account and using an international broker to trade US markets.

First step: Create Offshore Bank Account

I have selected Belize as the destination for my offshore account (so far) Belize is recognized as a great tax haven. There are NO capital gains taxes in Belize foreign or domestic. Many huge US corporations and wealthy US citizens use Offshore Belizean Banks to reduce US taxation. It is a controversial topic to some.. but I've always believed if you can't beat them, join them. Belize has also been a stable democratic country for some time and they use a fixed rate of 2 BZD = 1USD and the topic to adopt the USD as official currency has been brought to the table more than once (though in an Offshore Belizean Bank you will never convert your currency to BZD)

The process for setting up an Offshore Belizean Bank account is pretty straightforward and secure. The first step (it seems) is to setup the bank accounts in the name of an International Business Company (IBC) which  gives you absolute secrecy and protection (anonymity is paramount in offshore accounts) "A Belize IBC is exempt from all forms of taxation and assets are fully protected from confiscation orders or similar actions by foreign governments." There are no annual company returns to furnish and directors and shareholders remain anonymous (no financial reporting?) Setting up an IBC sounds intimidating but it isn't.. It mostly seems to be the first loop to jump through in the tax evad.. I mean tax reducing.. loopholes. Offshore Belizean Banks offer a one-day offshore incorporation service with their law firm in Belize with your IBC documents couriered right to your doorstep anywhere in the World. Most demand (checking) accounts require $1,000 - $5,000 minimum balance. Boom. Offshore account setup and funded. Right?

Next step: Use International Trading Platform to Trade US Markets

Not much research has been done here on my part.. currently still researching step one.. stopped mid-way to write this thread and get some thoughts down before they flew out of my coo coo nest.

But my understanding of how this process would work goes like this.

Setup an International trading account funded by the Offshore Belizean Bank account and IBC registered in Belize. Seems to easy.. where's all the red tape and loopholes?

Questions:

What are some reputable International Trading Platforms?

*I have been referred to Interactive Brokers. http://www.interactivebrokers.com/en/main.php They trade on all the exchanges I am looking for except OTCBB.

Are there any International Trading Platforms that trade OTCBB?

Can I open a mainland discount brokerage account with a major US broker in the name of the offshore IBC and still be tax exempt?

*As I understand it, it will be treated the same as any other foreign company trading on the US or any other mainland market with no capital gains tax to pay.

As mentioned in step two, where's all the red tape and loopholes?

Can funds be transferred from the Belizean account to a US account and still not be subject to taxation?

Any other information that can be provided will be greatly appreciated.. and like I said.. I just started researching today and will be updating as I find more information.

Found this funny..

On the 2008 campaign trail, Obama made his hostility toward offshore jurisdictions clear:

It made no difference that a similar building in Wilmington, Delaware, home to his vice president, Joe Biden, houses more than 50,000 corporations.

Also.. still haven't found anything explicitly saying this is illegal..(with an IBC).. there is most certainly a legal way to do this..

And some fun facts....

• $1.2 trillion dollars on deposit in Cayman Banks - up 10% in 2005 says Cayman Government.

• Sixty percent of these monies comes from US investors says Manhattan District Attorney Robert Morgenthau.

• Did you know there are two online stock broker firms located in a no tax haven (offshore) - and both are 100% owned by the Bank of New York? Hmmm so not only are the Market Makers not paying fees.... they also aren't paying taxes.. that's the American spirit ;)

• Did you know that non-resident aliens (including foreign companies) can trade "publicly traded stocks" (i.e., NYSE, NASDAQ, AMEX) under the tax code and not owe capital gains tax?

• "One of the most effective applications of offshore trusts is in an ownership combination with a limited company." - Richard Graham-Taylor, partner Ernst & Young, Grand Cayman (January 1990).

• 2005 revenues for Ernst & Young worldwide were $19 billion... What's 35% of $19 billion? Hahaha... because that is what they didn't pay!

 A decent Q & A from Belize.com...

What is Legal Offshore Banking?

It is simply banking in a jurisdiction other than the one in which you live or have citizenship or residency.

What are the benefits of Legal Offshore Banking?

Offshore Banking may have tax benefits. For example earned interest on offshore accounts and investments is paid without the deduction of tax. You may also be able to reduce your tax liability in your home country by transferring savings and investments to an offshore bank account. Added benefits include high levels of confidentiality, security and convenience, as well as global access.

Do I have to travel overseas to bank offshore?

No. You never actually have to visit your offshore bank. You can simply bank from wherever in the world you live, via a secure Internet connection, secure e-mail, post or telephone (either through a touch tone phone or by contacting your banking representative or registered agent). You can also use an ATM card provided by the offshore bank.

How do I get an offshore account?

There are several companies that specialize in setting up offshore bank accounts. We suggest the British Caribbean Bank located in Belize and the Turk and Caicos Islands. You may also consider law firms and Belize lawyers that act as Registered Agents for offshore banks. We strongly recommend due diligence by personally visiting the bank or law firm and making your own assessment as to the pros and cons of a service provider. In Belize we can suggest the following lawyers: Rodwell Williams or Emil Arquelles. Kindly mention Belize.com if you decide to contact these attorneys.

Is it legal for me to get an offshore account?

Yes, absolutely legal. Offshore banking has been routinely and legally used for many years by individuals, companies big and small and organizations worldwide. Once the purview of high net worth individuals, offshore banking has come of age and is accessible to most anyone. Because many countries encourage international trade and enterprise, there are usually only limited restrictions on residents doing business or having bank accounts in other countries. However, reporting requirements on these accounts differ from country to country.

What about income tax on income I've earned offshore?

Some countries require residents to declare their income on a worldwide basis and tax is payable on all your income. In certain circumstances the income of an entity which you control may also be taxable. For this reason, most countries have no restrictions on where your business interests, investments or bank accounts may be located. It is your responsibility to report income to your appropriate tax authority. Belize has no such requirement and best of all no Capital Gains Tax. U.S. News and World Reports says Belize is one of the Top Ten Retirement Destinations In The World.

If I have to pay taxes why should I bank offshore?

There are many other reasons to bank offshore apart from minimizing your tax liability. Other reasons include asset protection, estate planning, confidentiality, better returns and the ability to advance active business interests overseas from a zero tax jurisdiction with near hermetic confidentiality.

I would like to keep my personal affairs confidential for reasons other than tax minimization. Are confidentiality and privacy ensured?

Offshore jurisdictions offer extraordinary levels of confidentiality but they cannot offer absolute secrecy. All financial institutions have a legal obligation to report suspicions of serious criminal conduct. Foreign authorities can seek information through the legal system, where there are well-founded suspicions of serious crime. A serious crime is defined as anything which is a crime in the offshore jurisdictions and would warrant a prison sentence of at least twelve months. Near absolute anonymity and confidentiality are achievable via a combination of various offshore vehicles, including International Business Companies (IBCs) and Offshore Trusts. Otherwise, all personal data is subject to modern data protection legislation, and there are severe civil and criminal penalties for breach of confidentiality and unauthorized disclosure of client information.

Wanted to get this down.. will edit later.. will also look up and post all forms and laws mentioned..

Talks more about US residents and IBC's towards the end..

Under the U.S. Tax Code, only when a foreign company, foreign trust or nonresident alien individual takes up permanent residence within the United States will he be subject to U.S. capital gains taxes in the same way as domestic taxpayers. For a corporation permanent residence would be a U.S. office or warehouse. Capital gains realized by foreign corporations and other nonresidents "not engaged in a trade or business within the United States" are exempted from tax under IRC Section 871 and IRC Section 881 & IRC Section 897(c)(3). Moreover, U.S. Treasury Regulations Section 864-2(C)(1) & (2) provides an exception for what embodies being "engaged in a trade or business within the United States". Under U.S. regulations, a nonresident's Stock Market transactions carried-out through a U.S. stock broker, independent agent, or an employee are not considered to cause the nonresident to be "engaging in a trade or business within the United States".

Publicly traded stock market gains (from NYSE, NASDAQ or AMEX listed stocks and bonds) accruing to an offshore company are free of US capital gains taxes by the Internal Revenue Tax Code's statutes, but "US Shareholders" can have a tax liability (indirectly) if the offshore company is a "Controlled Foreign Corporation (CFC) (i.e., "more than 50% of voting and non-voting stock is owned by US SHAREHOLDERS). See sections 951 thru 958 of the IRC. See especially Code-Section 951(b) for the definition of US SHAREHOLDERS.

American taxpayers that use tax havens are taking more risks (generally) than a foreign non-resident alien (not a US citizen). Whether an American citizen taxpayer will have a tax liability on the offshorecompany profits depends on a lot of things - including what kind of income is produced by thecompany (i.e., Subpart F or non-Subpart F) and how many shares in the company you own, and whether the offshore company is a CFC - as defined in the Internal Revenue Code in Sections 957 and section 958.

Disclaimer: Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice in this communication, including any attachments or enclosures, was not intended or written to be used, and it cannot be used, by any person or entity for the purpose of avoiding penalties imposed under the Internal Revenue Code.


Tom Azzara
New Providence Estate Planners, Ltd.
(Lawyers and Consultants)
54 Sandyport Drive
P.O. Box CB 11552
Nassau, Bahamas
Fax/phone: (242) 327-7359
email: taxman@batelnet.bs

Quote:

Originally Posted by Jamluneek 

If you need an offshore account you can rent it or just buy it. I have its in this zones: British Virgin Islands Cyprus Singapore Panama All accounts have internet-banking system with online access, also some account have issued debit card. I accept payment by Paypal, my account is verified Business paypal account. For prices contact with me jamluneek@yahoo.com

see.. this is what you have to watch out  for when looking into this or actually doing it... scammers.. like this boner here... he joined today and this is his first post.. people just trolling looking to scam you out of money.. of course they should never get your money... unless you are an idiot.. 

gonna leave this up for now for people to see.. but it will come down eventually.. and Jamluneek.. GTFO