The reasons to consider offshoring when tax planning
March 28, 2016
There is hardly a person, who enjoys tax planning. The process is tiresome, intricate, time-consuming, and easy to be confused with. Lately, the tax codes have grown extremely in many states due to the loopholes, tax breaks, and penalties, which are often added on after the fact. Can you imagine the US tax code already exceeds 2500 pages?
Nevertheless, lots of individuals and families still do not treat tax planning seriously. However, sound planning differs from the poor one, sometimes with a result of thousands, hundreds of thousands, or even millions of dollars in the overall annual take-home income. Smart planning can result in saving enormous profits amounts and shielding earnings from taxes.
Offshoring can, by right, be viewed as one of the most significant tax planning aspects, however, it’s often overlooked. In case you offshore a part of your wealth or all of it, you can protect your capital from domestic tax regulations. The amounts of cash saved can really be huge. Nowadays, opening an offshore company is already a powerful tool shielding wealth from high taxation rates.
Offshoring the assets means moving them to a low tax jurisdiction , often referred to as “tax haven”. Such reference already speaks for itself – taxes in these hubs are generally low, making such countries “havens” from high taxation rates. Even if local taxes are high, international holdings and income taxation is kept at a low level.
To get a proper understanding how that or this off shore hub can assist you in tax planning you should know the specific laws of your own country as well as the regulations of the offshore jurisdiction, you are parking your means.
If you reside in the USA, for instance, doing business in Mexico and bringing the revenue back to the United States, it will be taxed locally. However, parking your income in Belize or some other offshore hub, you’ll have an opportunity to significantly decrease, or even eliminate your income tax.
Additionally, you can also implement a variety of tools while tax planning. Bank accounts offshore are actually not the only means to hold corporate finance and assets in, find out some other ways to keep your money and wealth.
Foundations and trusts, for instance, provide benefits and can be used to keep and manage wealth. In certain offshore hubs, the means parked in a foundation may not be taxed at all according to the local laws. Otherwise, the profit paid out through a foundation may be subject to taxation at a low local level.
Tax codes are really complex and differ from country to country nowadays, making tax planning an exceptionally challenging task. Fortunately, a great number of professional wealth managers are ready to assist entrepreneurs in this. Accountants, legal representatives, investment managers, and other experts are ready to help you in tax codes understanding and provide assistance to reduce your tax burden.
You are unlikely to find professional providing services for free, however, the consultancy is worth it. Even after paying for the service, you are sure to end up saving means.