Nearby tax havens like the Cayman
Islands, Panama, Barbados, and the Bahamas have become
prominent financial centres rivalling the industrial cities such as
London, Tokyo and New York for business.
The pint sized Cayman Islands now
boast more commercial banks (530) in the commercial registrar than in
all California. The dollars on deposit in Cayman banks exceeds $390
billion, which is also more than all the commercial banks in California.
The Bahamas, just 50 miles off the
coast of Florida, was once the third largest financial centre in the
world next to New York and London. Today the Bahamas still ranks
in the top ten, just behind the Cayman Islands. There are more than 390
banks and trust companies registered in Nassau.
(1) The Bahamas,
(2) Cayman Islands, and (3) Bermuda have ...
... personal income taxes
... corporate income taxes
... capital gains taxes
... with holding taxes
... estate taxes
... gift or inheritance taxes
... sales taxes
... employment taxes
... death duties, and ..
... probate fees.
against future taxes
are provided by these governments for up to 50 years.
Exempt trusts can receive guarantees
up to 100 years.
Question: Do you
have contacts in the Bahamas who are trustworthy and what are the costs,
I will incur in setting up a company in the Bahamas?
My partners include a mid-size Law Firm
with an office in downtown Nassau
and a US. Tax Consultant.
The lawyers have over 40 years of
business experience here in the Bahamas.
The total costs of
forming an International Business Company (IBC)
in the Bahamas are as follows:
To form IBC (includes Government
& associated fees) - $1000
Registered Agent (accountant
& registered office) also 2 trustees for trusts - $500
Trust Instruments (2 deeds) - $300
Tom's advice for steering you in
the right direction, forming your company & opening up a company
bank account - $300
TOTAL COST (First
Year) = $
Currently reduced to $1,650 US
Registered office, trustees,
registered agent (paid annually), from the date that the company
documents are issued - $600 pa
Annual Government & Associate
Fees - $250 pa
Tom's advice to these entities on
an annul basis - $200 pa
TOTAL COST (2nd
Year) = $1050 pa US Dollars
Our law office will also be the
registered office & registered agent for the IBC.
(Their address/fax number & telephone numbers, will all be made
available to you). We use two trusts in the business plan with a non U.S.
person (IR code refer to them as non-resident aliens) to act as trustees.
Lawyers & Banks charge
substantially more to do the same thing. Lawyers will also charge
you extra for drafting the trust instrument. Some Law firms &
Banks charge upwards of $5,000 just for the trust indentures.
Administrative fees at the larger local banks can also make their costs
It is my opinion that a trust indenture
drawn by a Bahamian Lawyer or trust company is all but worthless to a U.S.
Taxpayer, they simply are not trained or knowledgeable in U.S. Tax Law.
Is it necessary to use a trust & holding company in a business plan?
(THR) We think so. It is our opinion that you should try to circumvent
the United States CFC provisions (IRC § 957(a)). If you are fortunate to
find a foreign partner who can own 50% of your offshore company that is
one recognised plan.
Eleven U.S. shareholders each owning 9%
of the offshore company is also a legal and approved structure for
avoiding the CFC status. For U.S. taxpayers who want to remain independent
(without partners), his plan probably should include a company & a
trust as outlined in the book.
Question : How long
does it take to form a company in the Bahamas?
(THR) If a client wants to form a company through the mail (five day
turn around by overnight carrier UPS) he/she should contact Tom by emailing
me and then arrange to send $
- $1,650 US via mail to an address to be advised.
free to contact Tom if you have any Questions
We will prepare all the documents,
forward the appropriate fees to the government registrar, etc.
A company can be registered without
the client even coming to Nassau.
It takes (1) one day for the
government to stamp & return the Memorandum & Articles of the
When you are ready to
incorporate use this form.
FAQ's from the Tax Haven Reporter
What extra forms must I file with the IRS after the company is formed.
(THR) The Bahamian IBC and Trusts will legally have no income tax
returns to file with the IRS . They will not be CFC's (Controlled Foreign
Corporations). Neither you nor the offshore managers have to file Forms
3520, 3520-A, 5471 or any other information regarding the IBC
to the IRS.
Who opens the bank & securities accounts for the IBC's?
(THR) Investors will be able to open a bank & security account for
their IBCs so they alone have signature authority over
the accounts, that's the way most clients want it. We have arrangements
with several of Nassau's Major Banks.
We can provide you with the bank's
application form, signature cards, bank brochures etc., so you can open
your account without physically flying into the Bahamas. You can
also obtain a VISA and/or debit card from the Bahamas largest bank,
too. But you will need a reference letter from your local U.S. banker,
these are easy to obtain.
The Bahamian banks that we deal with
have been in operation here, in Nassau for over 30 years. These banks have
subsidiaries in all the other tax havens, including the Caymans', Hong
Kong, Monaco, Zurich, Gibraltar, The British Virgin Islands and Jersey in
the Channel Islands.
One is a giant British bank with more
than 2,000 offices worldwide. One of the banks has no offices in the
United States. You can choose which ever bank you want. With either of
these banks, clients can open brokers accounts anywhere in the world and
trade under the guise of the Bank's name.
The clients IBC does not appear
on the stock certificates, & his anonymity is totally preserved.
Masking a clients stock market
trades is a traditional way of doing business here in the Bahamas and in
the other tax havens . It's done by most all the major bank & trust
- Banks in the Bahamas DO NOT
have to file tax returns with the IRS .
PROTECTION TAX HAVEN
reason people bank in the Bahamas & the other tax havens is for asset
protection. The IRS cannot seize, lien on or investigate bank records
here. The government of the Bahamas has a bank secrecy code. All the
largest banks in the world have offices here & in Cayman.
judgments have to go through the local courts.
Tom has never
witnessed an IRS court proceeding of any type in this country -
ridiculous. U.S. lawyers have a problem too, only citizens of the the
Bahamas can practice law here.
need to hire a Bahamian law firm to pursue judgments, etc. Generally
speaking, foreign generated judgments are frowned upon by the authorities.
Question : What can
I invest in offshore ?
There are few restrictions as to what an IBC can
invest in. U.S. stocks, bonds and mutual funds are frequently bought
through offshore companies because they are not liable to U.S. capital
Treasury bonds, bank CD's, options,
futures and commodities are also purchased through offshore companies. No
US. withholding taxes are payable on such incomes as long as the IBC
does not open an office or carry on other business in the United States.
Using these Bahamian Banks you will be
able to trade on any stock exchange in the world at a cost equivalent to
those incurred using a discount broker such as Charles Schwab.
You can of course, call your own shots
on what stocks & bonds or mutual funds the IBC
purchases. You will pay only the brokers commission (= 3c, per share),
plus a nominal fee for having the stock certificates put in the Bahamian
Banks name instead of the IBC's.
live in the Bahamas. Who are some of the big names using that haven as a
(THR) Business people from around the globe use the Bahamas as a tax
haven. There are currently over $190 billion dollars on deposit in
the Chicago Bulls purchased the Bahamian Island known as Crab Cay for
$3.9 Million. Business people from around the globe use the Bahamas as
a tax haven.
Former U.S. citizen Sir John
Templeton - knighted by Queen Elizabeth II of England,
lives in Nassau. Templeton managed over $20,000,000,000 for clients
worldwide, he gave up his U.S. citizenship years ago, probably to
escape the USA's 55% estate tax on estates over $2.6 million dollars.
U.S. treasury secretary Nicholas
F. Brady (P.O. Box N-7776) has a home in Lyford Cay.
Remember, it's his branch of the federal government that was
responsible for writing the Treasury Regulations under IRC §951 thru
§958 for CFCs back in 1962!
There are forty or fifty Bacardi's
(the rum distillers) living in Nassau, billionaire fashion designer Peter
Nygard, Mike Dingman, Sean Connery
the list goes on and on.
few months ago, Michael Jackson reportedly invested
$70,000,000 in the new Atlantis Hotel & Casino here in the Bahamas.
The opening of the complex was celebrated with a $2 million dollar bash.
Celebrities from all over the world attended. If Mr. Jackson used a
foreign Bahamian company to own his partnership interest in Atlantis, he
wouldn't have a U.S. tax liability.
and other business activities performed in the tax haven itself are not
considered sub-part F income under the Internal Revenue Code. M. Jackson
would not have to pay taxes on these profits, unless the offshore company
distributed a dividend to him. Furthermore, U.S. law suites & court
ordered judgments against the company or Mr. Jackson are not enforceable
in Bahamian courts.
Incidentally, the Lyford Cay
area is a millionaire's row here in Nassau.
How can investors learn more about these tax havens?
(THR) The [8th edition] of TAX HAVENS OF THE WORLD - Book ($90),
and the Newsletter ($400 US pa for 12 issues)
would be most useful in helping you to develop your offshore plan.
As an Internet
customers that place an order a years
subscription to the
Tax Haven Reporter Newsletter will
receive a "FREE copy" of ...
Havens Of The World" Book
Tax evasion is not illegal in
the Bahamas, since we do not have income capital gains or
inheritance taxes. Tax evasion is not considered suitable grounds for
ordering access to information about an account - from Welcome Bahamas
- pg .71 Our #2 Industry Banking.
While a Bahamian Company may offer tax
advantages to non Bahamian beneficial owners under certain circumstances,
it is essential that the laws of there own country be carefully considered
before action is taken.
Unless adequate planning is undertaken,
the tax advantages may ultimately be lost to the owner, consideration must
be given to the ultimate disposition of accumulated funds "Touche
Ross International" (Bahamas).
Don't forget, when
you are ready to incorporate use this order form