Research source Forbes magazine estimates that the wealthy have accumulated at least US$21 trillion in secretive offshore accounts. The assertion is based on research recently published in UK-based newspaper The Guardian, which shows that at least £13 trillion [US$21 trillion] — perhaps up to £20 trillion [US$31 trillion] — have “leaked out of scores of countries into jurisdictions such as Switzerland and the Cayman Islands with the help of private banks” which vie to attract the assets of high-net worth individuals.
The analysis, based on data from many sources, including the Bank of International Settlements and the International Monetary Fund (IMF), indicates that “enough money has left some developing countries since the 1970s to pay off all their debts to the rest of the world”, Forbes quoted The Guardian as saying.
Some of these funds have flowed to Caribbean tax havens. Investopedia outlines that in Panama, offshore companies are allowed to conduct business operations within and outside of the offshore jurisdiction. Offshore Panamanian companies and their owners are not subject to income taxes, corporate taxes, or local taxes.
The Bahamas became widely popular as a tax haven in the 1990s after passing legislation that enabled the incorporation of offshore corporations and international business companies (IBCs). It remains one of the preferred tax havens for residents of the United States and European countries. The Bahamas provides offshore banking, registration of offshore companies, registration of ships, and offshore trust management.
The Bahamas was the first Caribbean nation to adopt strict banking secrecy laws. The Bahamas is described as a pure tax haven, with no tax liability at all for offshore companies or individual offshore bank account holders on income earned outside of the jurisdiction.
The British Virgin Islands (BVI) does not impose any taxes on offshore accounts, and it has no tax treaties with other nations, thus protecting the financial privacy of bank account holders. There are no taxes on offshore companies and BVI IBCs pay no taxes on profits or capital gains generated from outside of the BVI. There are no exchange controls. This makes it much easier to transfer funds from one place to another for trading and investment purposes while protecting financial privacy.
The Commonwealth of Dominica has initiated legislation that facilitates the creation of offshore corporations, trusts, and foundations, providing tax-friendly and privacy-protected offshore banking services.
Dominica is a pure tax haven that imposes no income taxes, no corporate taxes, and no capital gains tax on income earned abroad. There are also no withholding taxes and no estate taxes, including inheritance taxes or gift taxes. Offshore companies and trusts do not have to pay any stamp duty on transfers of assets. People of any nationality may form offshore corporations.
Nevis, together with St Kitts, forms the St Kitts and Nevis Federation. Nevis offers tax-friendly formation of offshore limited liability companies (LLCs), trusts, and foundations, along with excellent offshore banking and insurance services. Nevis provides financial privacy by not making public any information regarding owners and directors of offshore companies. Incorporation in Nevis only requires one director and one shareholder who can be the same person. A Nevis exempt trust is exempted from taxation on any income earned outside of Nevis, including dividends and interest. Nevis trusts do not have to pay.
Anguilla is a British overseas territory and it has become a respected tax haven. The offshore jurisdiction of Anguilla levies zero taxation on all income generated outside of the jurisdiction by offshore companies. Anguilla is described as a pure tax haven that does not impose income taxes, estate taxes, or capital gains taxes on individuals or corporations.
Belize offers offshore banking and the easy incorporation of offshore companies or the formation of trusts or foundations. Offshore businesses incorporated in Belize do not pay any taxes on income earned abroad. Belize-incorporated companies and trusts are exempt from paying stamp duty.
Offshore bank accounts are not taxed on earned interest or subject to repatriation or capital gains taxes. Banking legislation guarantees strict confidentiality for offshore banking. The names of account holders and any other financial information can only be disclosed by court order in relation to a criminal investigation.
Barbados offers an offshore financial sector providing offshore banking, incorporation of offshore corporations, and exempt insurance. Taxes on profits of offshore companies are generally in the range of 0 per cent to 5.5 per cent and the tax rate decreases as the profits earned increase. Offshore companies can import the necessary machinery or business equipment without paying any import duty.
There are no withholding taxes or capital gains taxes. However, Investopedia notes that, unlike most Caribbean tax havens, Barbados does have double taxation treaties with a number of other countries, including Canada and the US.