(855) 4-ESSAYS

Type a new keyword(s) and press Enter to search

Offshore Banking


            
             Faced with loss of financial privacy, oppressive taxes, frivolous lawsuits, and miles of bureaucratic red tape, Americans are moving hundreds of millions of dollars into offshore banks. An American citizen can consider any location outside the United States to be an offshore jurisdiction. Some locations, however, do not have the following characteristics necessary to make them effective offshore banking centers: favorable tax legislation, few exchange controls, political stability, economic stability, strict privacy laws, and a variety of banking and investment options. Luxembourg and Bermuda are two distinguished international financial centers; the legislation and stability of both countries permits a variety of offshore banking activities.
             Americans often choose to invest in offshore locations where they can escape high U.S. tax rates. Luxembourg is a high tax country where income tax rates can reach forty-six percent (lowtax.net). There are also several other taxes imposed on the residents of Luxembourg. However, foreigners who only bank and invest in Luxembourg are not subject to any income, capital gains, or holding taxes.
             Bermuda is a crown colony, but it is fully independent from the United Kingdom. The United Kingdom receives not tax money from Bermuda because high British taxes do not apply to Bermuda (Goldstein 225). The government of Bermuda does impose import duties, but there are no taxes on income or capital gains. Just as in Luxembourg, foreigners do not pay any taxes in Bermuda (lowtax.net). The absence of all forms of taxation qualifies Bermuda as a pure tax haven.
             International tax treaties, sometimes called double-taxation treaties, are agreements between countries in which the citizens of each country must pay taxes on money invested in both countries. Luxembourg has a double-taxation treaty with the United States, so Americans who invest in Luxembourg must pay U.S. taxes on the money held in Luxembourg; the opposite is true for the citizens of Luxembourg.


Essays Related to Offshore Banking


Got a writing question? Ask our professional writer!
Submit My Question