Breaking The Misconceptions Regarding Offshore Banking

Offshore banking is a strategy used by many individuals and corporations to protect their short term as well as long term financial assets. Offshore banking basically means opening bank accounts in a country other than ones home country. Offshore bank accounts are opened for a variety of reasons like asset protection, tax planning, wealth management, and more. It is a common enough practice in international business and has been around for many years. Yet, offshore banking has come under close scrutiny and criticism as being a trick to evade taxes. There are many such misconceptions and myths surrounding offshore banking that have contributed towards its negative reputation in public imagination. This article deals with some of those misconceptions and tries to dispel them to get at a more clear understanding of offshore banking.

The first misconception that needs to be cleared up has to do with the belief that offshore bank accounts are illegal. This is simply not true. Most countries have laws that require offshore bank account holders to report the existence of such accounts - by no means is this illegal activity.

Individuals do not open an offshore bank account solely to evade taxes. Rather, it is a well known strategy used to protect ones assets against political risks in ones home country. Efficient tax planning and wealth management are other benefits of offshore banking that many wish to take advantage of.

Many people believe that a substantial amount of money is required to be able to open offshore bank accounts. While it is true that many offshore banks require a minimum of one million dollars deposit to open accounts; there are lots of offshore banks that allow one to open an account with a mere 500 dollars. Offshore bank accounts are thus, no longer the sole preserve of the ultra rich.

Another misconception regarding the offshore bank account is the commonly held belief that these are mainly opened in small tropical countries like the Cayman Islands, British Virgin Islands, and so on. On the contrary, accounts can be opened in any of the advanced, developed nations like Hong Kong, Switzerland, Singapore, and more. It is this association with shadier and remote, small islands with offshore accounts that have given the process such a bad reputation as being used mainly for money laundering.

Another myth regarding offshore accounts is that these are completely exempt from taxes. Many offshore jurisdictions, in fact, do tax income earned from accounts held by foreign individuals while other countries actually tax worldwide income.

About the Author:
Peter Robertson is an author who writes useful articles on offshore company, offshore banking, asset protection, tax havens, offshore bank account and related topics for those who are interested in offshore company formation. For more information on offshore company, and international tax planning, you can also visit www.carloscevola.com.

Article Originally Published On: http://www.articlesnatch.com

Tags: international tax planning

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