9 Offshore Jurisdictions You Probably Haven’t Heard About
(Editor's note: Some of the information in this article is based on Streber's personal experiences and has not been independently verified. As always, do your own due diligence.)
In this article, I will give a brief overview of nine relatively lesser-known offshore jurisdictions.
- Samoa
- Niue
- Nauru
- Labuan
- Estonia
- Uruguay
- The Comoros
- Bahrain
- Maldives
1. Samoa
Samoa is an independent group of islands in the South Pacific Ocean, about half way between Hawaii and New Zealand.
Samoa first appeared as an offshore jurisdiction in the late 1980s, with the 1987 International Companies Act.
The legislation is written in a way that makes it especially useful for asset protection stemming from Section 228 (“No confiscation”), particularly 228 (B), of the International Companies Act, which states how the company's assets may be distributed in the case of a Specified Event. This can be anything, including a foreign court order or confiscation.
2. Niue
Niue is a small, self-governing state in free association with New Zealand.
An island perhaps most famous for its '.nu' Internet top-level domain, Niue is another pearl in the South Pacific. Its offshore legislation was founded in 1994, same year as the Seychelles.
The legislation—The International Business Companies Act of 1994—is very similar to other IBC (international business company) jurisdictions.
The jurisdiction's sole tax agreement is a TIEA with New Zealand. New Zealand acts on Niue's behalf on foreign affairs and national defense.
3. Nauru
Tread carefully. Not only do you risk cutting your feet on the razor sharp rocks surrounding the island, Nauru was once home to extremely lax offshore banking legislation, which in the early 2000s got every single bank in the country blacklisted. This was a deliberate effort by the government to boost the economy, which is otherwise purely dependent on natural resources.
Because of the country's rather complex foreign policy, it has not signed a single tax agreement (TIEA or DTA).
The country's history will make it difficult to open bank accounts, but nothing is impossible. Nauru has improved significantly in recent years.
Further reading on Nauru:
http://www.nytimes.com/2000/12/10/magazine/the-billion-dollar-shack.html?pagewanted=all&src=pm
http://www.businesspundit.com/10-most-notorious-money-laundering-cases-of-the-20th-century
http://www.treasury.gov/press-center/press-releases/Pages/js194.aspx
4. Labuan
An autonomous province of Malaysia, Labuan is home to one of the few remaining jurisdictions with legislation specifically about holding companies. While Luxembourg's 1929 Holding Company regime came to an end in 2011, Labuan's non-trading offshore company legislation remains strong.
Labuan is excellent for holding companies, especially if there are any DTAs (double taxation agreements) you can utilize. Note that some of Malaysia's tax treaties explicitly exclude Labuan.
5. Estonia
The most advanced of all the former Soviet states, Estonia is liberal and progressive in many regards. It is interesting as an offshore jurisdiction because of its unique corporate tax. While other jurisdictions tax a company on its profits or even turnover, Estonia only taxes on distribution of profits. This makes it a stellar holding company jurisdiction. It is an EU country with public records of company details, which makes bank account opening a breeze.
6. Uruguay
Uruguay offers a unique mix of low taxation—applying territorial taxation, whereby profits from outside of Uruguay are tax exempt—and high reputability. Names of shareholders and directors are nowhere on public records, but a company's finances are. This puts Uruguay in a one-of-a-kind niche, where companies can be anonymous but its finances can be inspected by anyone. This makes opening a bank account much easier in many cases, while still preserving your privacy.
Banking secrecy is quite strong in Uruguay.
7. The Comoros
If you thought Nauru sounded shady, welcome to an island nation which licenses casinos and banks without any real controls. The island of Anjouan was at one point handing out banking licenses to anyone who could show they had a few thousand dollars in capital reserves. These banks went away when the Comoros, together with the African Union, invaded and seized the island of Anjouan, which today enjoys a mostly peaceful status as an autonomous province in the Comoros.
With an offshore, non-resident, international business company created in the Comoros, there is zero taxation, zero controls, zero tax agreements, and limited powers by the authorities—the Comoros has it all.
8. Bahrain
A semi-totalitarian island kingdom off the coast of Saudi Arabia, Bahrain is one of the wealthiest nations in the world (on a per capita basis) and one that combines low taxation with strict banking secrecy.
There is no corporate tax, no income tax, no capital gains tax, no exchange controls, and no limitations on repatriation of funds— nothing. As long as you don't do anything to offend the government, you should be fine.
9. Maldives
Spread out between the Arabian Sea and Indian Ocean, the poor nation of the Maldives occupies some of the most beautiful islands on the planet. It depends largely on tourism. There is no corporate tax here and, as of writing, only a single tax treaty (with India) has been written. It took five years for the treaty to enter into force, and it does not live up to OECD standards.
Banking secrecy is strict, but banking options are limited. While the country has no corporate tax, there are discussions about imposing one. It is unclear at this point whether this taxation would also apply for non-resident companies.
Streber works as a consultant and director for a wide range of companies and has broad experience in offshore banking, offshore incorporation (formation and maintenance of offshore companies), taxation, privacy, ecommerce, merchant accounts, online payments, and all other things the privacy-minded entrepreneur might find interesting. You can read Streber's blog on offshore incorporation and offshore banking.
Tags: offshore banking, offshore company, comoros, estonia, labuan, maldives, nauru, niue, samoa, uruguay,