It is said that the British tax office, HM Revenue & Customs, is tightening its regulations in order to find and catch tax evaders with offshore bank accounts.

Revenue & Customs has called for an exploratory meeting with the 170 largest banks in the UK, so see what can be done to prevent tax evasion and to tighten regulations on offshore money storage. The Revenue & Customs booked an earlier success when five of the banks most involved in offshore banking opened up some of the secret accounts held at these banks. Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB agreed with Revenue and Customs to provide more openness about their clients.

By gathering information from previously undisclosed bank accounts, the Revenue hopes to create enough grounds for obtaining legal rulings that would force banks to disclose customer information. In an investigation among banks, which includes the filling out of a questionnaire, the Revenue wants to explore the willingness of banks to cooperate. It is not certain whether the Revenue will be able to legislate stricter rules with regard to offshore bank accounts, though.

The European Union, of which the United Kingdom is a prominent member state, has a common approach towards taxation of its residents when they invest outside of their country of residence, an approach that also involves offshore bank accounts. This approach is legally laid out in the European Union Savings & Tax Directive. The European Union Savings & Tax Directive contains a withholding tax, imposed on residents from the European Union when they invest in EU member states other than their own.

The EU withholding tax also applies to most offshore banking centres. Most offshore jurisdictions cooperate with the EU withholding tax. The UK falls under this directive as well, which makes it questionable whether the UK Revenue & Customs can make rules of their own to disclose offshore bank accounts. In its handling of offshore bank accounts, the EU withholding tax is based on the cooperation with offshore banks and it can only obtain anonymous information from the cooperating banks.

This means that the bank secret, which makes offshore banking so attractive for many investors, is still largely intact, and not likely to become subject to British regulations. The European Union Tax Directive/ the European Union withholding tax came into force in 2005.

Read more on the Revenue & Customs action at www.ft.com

Read (rather dated) articles on offshore investing at www.investopedia.com

Popularity: 14% [?]

Although the Swiss Banking community has been concerned the past couple of years due to increased European tax regulations and the interest in the private banking sector showed by upcoming Dubai and Singapore, it turns out that, despite these developments, the Swiss do not have to worry at all.

Private banking as well offshore banking have become more popular than ever in Switzerland. The biggest private banks in Switzerland show a steady growth since 2006, and the offshore banking sector is showing a comeback. Expanding markets in Eastern Europe and Asia are the main reason for the high demand in traditional Swiss private and offshore banking.

The Swiss banks have trouble, however, finding enough qualified personnel, which makes the private and offshore banking sector increasingly competitive. As Dubai and Singapore are starting to engage in private and offshore baking, this competition for excellent private bankers will only become more fierce.

Much of the action that makes the Swiss banks grow comes from Asia, Russia and the Middle East, deriving from the fast growing economies and high oil prices in those regions. It is in these regions that the Swiss seek to expand their banks, with branches and representative offices opening up in new locations such as Dubai and Singapore.

Source of this article: Financial Times: “FT Report- Private Banking: Much to smile about in climate of growth” by Haig Simonian, Financial Times. Published: Jun 20, 2007

Popularity: 13% [?]

There must be many advantages to offshore banking, considering the size of the offshore banking industry. What exactly are those advantages of offshore banking?

The most important advantage of opening an offshore bank account is that it offers you strong financial privacy, although since 11 September 2001 authorities are working to decrease the secrecy policies of offshore banks.

Offshore banking provides the opportunity of depositing your money in a bank that is embedded in a politically and financially stable jurisdiction. This advantage is particularly interesting for individuals living in economically unstable countries.

Some offshore banks provide higher interest rates than domestic banks. This is mainly thanks to the lack of government intervention. In addition, offshore banks generally pay interest without tax deducted.

The booming offshore financial sector offers the remote locations, where most offshore banks are located, an additional incentive for their economies. Offshore financing and tourism are often the only inputs in the small economies of these locations. According to some optimists, offshore banking can help distribute world capital from the developed to the developing world. The validity of this argument is not recognized by all financial and economical experts.

Offshore banks generally offer financial services that are not provided by domestic banks. These services vary from guaranteed secrecy to the possibility of depositing in different currencies and to unique investment possibilities.

Offshore banks also often have ties with other financial structures such as offshore companies, foundations or trusts and hedgefunds that are not well-known by domestic banks and investors.

Advocates of offshore banking argue that offshore banks are an advantage to the global financial industry because they create tax and banking competition. Critics, however, argue that this competition is ruining the financial situations of developed economies because governmentsare pressured to deregulate their own financial system in order to prevent the outflow of capital.

Sources:

www.wikipedia.org
www.offshorecompany.com

Popularity: 9% [?]

An offshore bank is a bank that provides services to someone that is not a resident of the country where the bank is located. Any bank can be an offshore bank, but usually the term is referred to banks that operate in so-called tax havens, countries with very low or no taxation.

Although offshore banks have a very good reputation among their clients, offshore banks are always subject to general public suspicion and are not very popular with most governments of non-tax havens. They are said to encourage tax evasion, since usually the offshore banks in tax havens do not give out any information about their clients and their accounts, giving their clients the opportunity to “hide” their taxable income from their own (often heavily-taxing) country of residence.

Offshore banks are also often associated with money laundering and the underground economy because they do not provide information about their clients to any authority. Especially following 11 September 2001, suspicions of criminality have grown with regard to offshore banks, with several national (U.S.) authorities accusing them of providing financial services to terrorist groups.

However, the dark picture of offshore banks completely ignores the high quality service of the average offshore bank. Switzerland is traditionally the most popular country for offshore banking. Swiss banks have been building a reputation of trustworthy, secure and secretive banks since hundreds of years. Offshore banks in other popular banking locations also provide high quality to their wealthy clients. Offshore banking is an elite business with matching high quality service standards.

The popularity of the Swiss bank as an offshore bank finds its origin in the Swiss Banking Act of 1934. The Act guarantees absolute secrecy. The country has a long tradition of bank secrecy that dates back to the Middle Ages. In 1934, the Swiss bank secrecy was laid out in a law. It is mainly due to this guaranteed secrecy that Swiss banks are traditionally very popular as offshore banks. All Swiss banks are regulated by an independent branch of the Swiss government, the Federal Banking Commission.

Offshore banking can bring you many advantages such as high quality service and many other services that domestic banks do not provide. Read more about opening an offshore bank account, the advantages of offshore banking, popular offshore banks and offshore banking at OffshoreBank.net.

Popularity: 8% [?]