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Offshore Banking Misconceptions

Apr 10, 2008
There are a plethora of horror stories on the internet about criminals utilizing offshore banking and companies to cover up their illegal activities and make it hard for the authorities to catch them. It seems you only hear about offshore banking when it makes the news for the wrong reasons. This article will attempt to shed light on the offshore banking industry and show you it's not necessarily full of criminals only.

Probably the biggest misconception is that setting up an offshore company is difficult. This simply is not totally the case. While it is true that opening an offshore company, or establishing an offshore banking account can be difficult depending on type of company or account you are opening, for the most part the process is not that difficult and some can even be accomplished within a matter of hours. Companies that are more complex in their operating will of course take a bit longer to establish and set up.

Myth #2 is that all offshore jurisdictions were created equal and it doesn't matter which one you use. Nothing could be further from the truth. It takes diligent research to find an offshore banking destination that meets all of your requirements. Typically a person will want rock solid banking secrecy, favorable tax laws on foreign income as well as political stability. Not every country can offer these sought after benefits. For this author's money Panama or Switzerland are the preferred choice but every person needs to make the decision for themselves.

Many people think that setting up an offshore bank account or company is an illegal act where they are involved in tax evasion. This belief is false so long as the person setting up the offshore banking pays the appropriate taxes on this money prior to sending it offshore. The advantage of going offshore is you will not pay a capital gains tax on any money you earn once you get the money to the offshore destination. This does not excuse you from paying local taxes but does give you the ability to invest and earn tax free using offshore banking.

People that perpetuate the myth that offshore banking is for criminals only are people who only know what they read in the mainstream media. The mainstream media only reports on offshore banking when a crime is committed. Nobody reports that "John saved a bundle on his stock investing by moving some money to his offshore account in Panama where there is no capital gains tax or tax on foreign derived income".

Of course, believing that offshore incorporating and banking is illegal for United States citizens and a crime, leads to the common misconception that those that use offshore jurisdictions for business or banking are criminals. While it is true that there are some criminals that will place their business and money offshore, it is also true that these criminals will place their money onshore as well! The majority of the people that will place their money and business offshore are simply people looking to benefit from tax relief and protect their assets.
About the Author
To have a professional Panama law firm open an using offshore bank accounts account or learn more about using offshore bank accounts please go to OffshoreLegal.org.
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