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Offshore banking can be referred to as doing banking in a country where one does not reside. When this type of banking is done in a tax haven this can then be called tax haven banking. A tax haven is a country which attracts investors by offering zero taxation or low taxes. There are many tax havens located around the world some of which offer offshore services which include offshore banking, incorporation of companies, the formation of offshore trusts and foundations among other services.
Tax haven banks are some of the most prestigious banking institutions available today. They provide bank clients with modern services which are above the rest. Some of the services offered by tax haven banks include online banking, banking via telephone and fax, debit and credit card services, bank accounts in multiple currencies among others. Banks which offer offshore banking services can be found in the following tax havens: Nevis, Dominica, British Virgin Islands, Seychelles, Hong Kong, Singapore, Mauritius, Gibraltar and Cyprus among others.
Banking in tax havens has many benefits. Most offshore bank clients are fascinated by the fact that banking can be enjoyed in a tax free environment. Offshore banking in most tax havens is tax free therefore the interest gained by offshore bank accounts in such institutions pay no taxes. Some well known tax havens with no taxes levied on offshore bank accounts are Cayman Islands, Anguilla, Dominica, Belize Republic of Panama, and Belize. Offshore banks tend to offer higher returns than normal onshore banks.
The cornerstone of tax haven banking lies in the ability of the offshore tax haven to provide banking privacy and secrecy for its clients. Banking secrecy is part of the offshore banking legislation of many jurisdictions which offer offshore banking. Banking Secrecy Laws was first passed in Switzerland in the early 1930’s. The laws of banking secrecy were put in place simply to protect the holders of offshore bank account in the respective tax banking havens. Banking Secrecy laws forbids bank employees, agents and other persons directly related to offshore banks and accounts from divulging information in offshore bank accounts since this information is private and can only be given out if written permission is given out by the offshore account holder. Failure to comply with this in most tax havens is considered an offense. This can result in incarceration and monetary fines.
Tax haven bank accounts are relatively easy to establish. In accordance with international banking regulations the bank carries out due diligence investigations called Know Your Client (KYC) on each client before they can be accepted into the bank. There is no reason to visit a tax haven to set up a bank account there. The legislation governing offshore banking in the various tax havens are very strict but also progressive.
Tax haven banking can be done by both individuals and corporations. Offshore banking is a legal means of investing capital. Offshore bank accounts are very easy to maintain. Banking offshore provides added security which is not given at onshore banks.