What is the use of offshore banks?
February 18, 2016
Offshore banks are the institutions very popular in business environment nowadays. Except of increased attention they attract significant amount of capitals. It doesn’t matter whether you possess a boundless wealth or just own a company engaged into international activity offshore bank account will come in useful. So what are the offshore banks and why to choose them?
Such banks are usually incorporated in areas called tax havens being subjects to essential tax exemption and legislative regulations promoting operational liberty. Within a given territory offshore banking industry is organized to accept deposits and money investments only from abroad businesses without providing such opportunity to residents. This regulation is not applied to the rest of domicile conventional financial organizations which eke have no option to avail of tax burden elimination.Conventional banks serve tax havens’ citizens and resident companies holding their activity within the jurisdiction like in any other country.
On the other hand offshore banks get numerous privileges provided by the country of incorporation. These privileges differ from place to place depending on jurisdiction’s agreements with international financial institutions and other countries. So what are these benefits?
- Operational Liberty
Unlike conventional banks offshore units are not strictly regulated by the state what means that they are free to conduct any exchange or investment operations and money transfers. Such organizations are able to suggest their clients uncontrolled money transactions in any amount.
- Tax exemption
Offshore banks pay nil-effective or low tax rate. Money on Bank accounts as well as money operations are also free of tax.
- Guaranteed secrecy
The highest level of bank privacy and operations’ confidentiality are always fulfilled by offshore bank institutions.
- Political and economic stability
Jurisdictions of such banks’ incorporation are characterized by wise economic policy and smart performance in the international political arena.
- Exclusive services
There are some special services which cannot be obtained in a conventional bank such as anonymous cards, numbered bank accounts, high-yield investment options, and so on. But it is possible to avail of them when opening an account in an offshore bank.
There is an opportunity to open offshore bank account in one of 2 types of banks: private and commercial.
Private offshore banks
Such institutions are oriented on high-income people suggesting them customized service of the perfect quality. Each client of a private bank has a personal adviser and has access to the most advanced and exclusive investment tools. Minimum cash deposit for opening an account sometimes amounts to 1 million of US dollars and never is set on the level below $100 000.
Commercial offshore banks
Such institutions are divided into 2 groups: commercial and retail banks. To open an account a client may deposit even $1 000 but some banks don’t require any minimum deposit. Such institutions facilitate international trading and suggest multi currency, multiple currency and savings accounts as well as some investment tools. Such banks provide a well-developed model of an Internet-banking so account operations may be conducted from any place of the world and at any time.
However, offshore banks’ activity is not unanimously accepted by the entire business world. Financial organizations as well as authorities treat such banks with suspicion relating their activity to money laundering and tax evading. That is why offshore banks incur meticulous attention and control by international financial institutions such as FATF.
Another distinctive feature is that deposit accounts in offshore banks are not protected by an insurance or government guarantee to recompense a certain sum of money in case of bank’s liquidation. Jurisdictions economic stability acts as a guarantor of bank’s solvency and stability.
Finally offshore banks charge higher fees for accounts maintenance comparing to onshore financial institutions. Usually clients have to pay fees for opening or closing their accounts as well as monthly maintenance fee. In some banks clients may be required to pay fees for depositing money or account balance replenishment.
In a word
One of the main tasks of the entrepreneur in the process of offshore conducting business is to minimize his or her presence in the country from which the funds received. It follows that any accounts in the customer location are unacceptable. It is obvious that in such a situation is necessary to open a current account in the bank of any offshore jurisdiction.
It goes without saying that offshore financial institutions bring many benefits to their clients facilitating international relationships, global trade and yield accumulation. Offshore-Express Company will assist you in opening an account in the most suitable offshore bank and in the shortest time.