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get outta HERE

Entrepreneur, July, 2000 by Terry L. Neal

FOR TAX BREAKS AND INVESTMENT OPPORTUNITIES, SOMETIMES YOU JUST HAVE TO LEAVE THE COUNTRY.

TWENTY YEARS AGO, VERY FEW OFFSHORE FINANCIAL CENTERS EXISTED, AND THOSE THAT DID WERE SURROUNDED BY MYTHS OF DRUG MONEY AND ILLICIT ACTIVITIES. QUITE A BIT HAS CHANGED SINCE THEN: TODAY, THE OFFSHORE INDUSTRY HAS DEVELOPED INTO A MAJOR BUSINESS THAT SPANS THE GLOBE. IT EVEN INVOLVES, IN ONE WAY OR ANOTHER, HALF THE WORLD'S FINANCIAL TRANSACTIONS BY VALUE. IN FACT,

$2 TRILLION FLOWS THROUGH OFFSHORE CENTERS EVERY DAY.

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Fact is, going offshore could very well be a viable financial strategy for many entrepreneurs--assuming you understand the ins and Outs of the offshore world. You're not alone, however, if you're unsure about traversing the complicated waters to tax havens like the Cayman Islands, the Bahamas and Switzerland. The ride can get pretty murky out there, and the last thing you want to do is find yourself--not to mention your business--in a legal quagmire.

First things first: Don't take this journey solo. Enlist the help of a qualified professional, preferably an experienced consultant who understands the pertinent IRS codes and knows which traps to avoid. There are a number of qualified international tax attorneys skilled in the offshore arena. For a referral, call (604) 684-2622 (Canada), (503) 647-7730 (Oregon) or (869) 466-3794 (Caribbean). But in the end, finding the right help can reap substantial rewards--think guaranteed privacy, premiere asset protection, various tax-shelter options, and higher and safer investment returns--and certainly prove well worth the risk and effort it takes to get there.

THE BASICS

The professional name increasingly used to identify a legal tax haven is an International Financial Center (IFC). An IFC is a nation or independent legal jurisdiction that has passed important legislation to protect and attract international clients. To date, there are about 69 jurisdictions throughout the world that have taken steps to be known as IFCs.

Sophisticated global money managers consider the use of IFCs to be a safe and reasonable way to conduct business. And every single day, more Americans discover the benefits that come with taking at least portions of their assets offshore. In fact, according to Arnold Goldstein, a widely published expert in offshore matters and the president of Arnold S. Goldstein & Associates PA in Deerfield Beach, Florida, "about one in four Americans who earn over $100,000 a year now enjoy use of one or more safe-haven jurisdictions."

A recent issue of the American Institute of Certified Public Accountants (AICPA) newsletter unequivocally endorsed offshore planning. The publication printed a bulletin last year that stated the following: "To prepare for the 21st century, CPAs must be aware of the hottest, most important tax-savings and asset-protection devices. Once thought of as reserved for the very rich, offshore planning is available for virtually all clients and should be part of overall planning."

Aaron Young, an entrepreneurial consultant in Portland, Oregon, says, "Americans move money to offshore jurisdictions in order to better protect their assets, improve their privacy, increase rates of return, and reduce risks, taxes and costs." And he should know--he's personally worked with hundreds of business owners who've made the step offshore.

Clearly, offshore tax havens can legally net entrepreneurs substantial fiscal savings. Case in point: In the United States, the death tax can Consume as much as 55 percent of an estate. But enter offshore havens into the picture: "Today's fortunes are [often] made through family businesses, and the value is in the equity of these enterprises," says Quinn Sutton, a small-business consultant in Alpine, Utah. "But with confiscatory taxes, these generators of wealth are pried out of the hands of families and sold to big corporations in order to satisfy inheritance taxes. Such inequity has spawned the Kill the Death Tax Coalition and other groups that oppose inheritance taxes by lobbying for legislative reform. But until you really can fight city hall, there are alternatives to losing family-built enterprises to the taxman. And these alternatives often involve using offshore investment vehicles for privacy, asset protection and legal tax avoidance."

WHY GO OFFSHORE?

Asset protection is certainly one of the leading benefits offered by these kinds of tax havens, since assets held offshore are essentially immune from seizure and hostile litigation. A quick look at the growing predatory litigation phenomena, ever-present throughout the United States, pretty much tells the story of why business owners and professionals are worried about the need for asset protection: 5 percent or less of the world's population resides in the United States; about 20 percent of the world's economy is in the United States; 70 percent of the world's lawyers reside in the United States; and a staggering 94 percent of all the world's lawsuits are made in the United States. And lawsuits on a commission basis--referred to by the U.S. legal system as "contingency litigation"--are against the law in just about every other country in the world.

Business Services Industry

get outta HERE

Entrepreneur, July, 2000 by Terry L. Neal

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