Offshore investments have in the recent past become the in thing with many investors. Now, while it can be easy to get carried away by the move, it is great that you understand that doing research s paramount if you are to succeed in the venture. Sure, many may have succeeded and found their gold mine in the same, but this does not mean that it will work out the same for you. Knowledge is power and having it at your fingertips will work to your advantage. That aid, the following are some of the advantages and disadvantages of offshore investing to help you make an informed decision.
Many countries and especially the tiny ones provide foreign investors with tax rates that are more than favorable. This is in a bid to create a conducive environment for them to come in and set up shop. While you, the foreign investor will benefit, they will too. You can look at it as some form of mutualistic association.
To put it in a simple manner, to commence offshore investments, foreign investors form a corporation in the foreign country that will act as a shield for the offshore investor accounts from the high taxes that they would otherwise be subject to back in their home country. The fact that the corporation will not indulge itself in local operations will cause it to be subject to little or no taxes at all.
Many of the offshore jurisdictions will provide investors with the advantage of secrecy. The countries that encourage foreign investments have set up laws that enforce banking and corporate confidentiality. If the set laws are broken, there are strict and serious consequences to the party responsible.
There are some countries that have strict regulations against the investment opportunities of their citizens. As such, many of the investors feel that they are restricted and cannot truly develop a diverse investment portfolio.
Offshore accounts, on the other hand, are pretty flexible and give the foreign investors the unlimited access to the markets available internationally not to mention all exchanges.
The tax laws are by the day becoming tighter
Investors have over the years mastered the art of tax avoidance. However, in the recent times, governments have buckled down to seal all the loopholes that they might be exploiting. Sure there are still some left, but they are slowly but surely clamping down on them.
Now, it is expected that where the returns are high, the costs are also high. Setting up offshore accounts is not cheap. Insane legal fees, account and corporate registration fees are some of the costs that you will need to brace yourself for. Other countries even require that the investors own property before they can have an offshore account setup.
But when all is said and done, offshore investments can be pretty secure and profitable. You should, however, weigh the advantages over the disadvantages to see if it is a worthy venture for you.