Nearby tax havens like the Cayman Islands, Panama, Barbados, the Bahamas, Nassau & ANGUILLA 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 (599) in the commercial registrar than in all California. The dollars on deposit in Cayman banks exceeds $500 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 400 banks and trust companies registered in Nassau.

We like Anguilla because it has good, protective legislation, and companies can be formed there in a single day. Bahamian IBC’s take 4 working days. Cayman governmental exempt companies costs are almost twice as Anguilla.

Anguilla, The Bahamas, the Cayman Islands and Bermuda have:

Guarantees

• against future taxes are provided by these governments for periods up to 50 years.

• exempt trusts can receive guarantees up to 100 years.

Question: Do you have contacts in the Bahamas who are trustworthy & what are the costs I will incur in setting up a company in the Bahamas?

Answer: : My partners include a mid-size Law Firm with an office here in downtown Nassau and a U.S. Tax Consultant. The lawyers have over 40 years of business experience here in the Bahamas.

The total costs of forming an IBC (International Business Company)
are as follows:

• To form IBC (include Government & associated fees) - $1000
• Registered agent (accountant & registered office, 2 trustees for trusts) - $500 pa.
• Trust instruments (2 deeds) - $200

• Tom's advice for steering you in the right direction, forming your company & opening up a company bank account $400

TOTAL COST (First Year) = $2100 U.S.

NOTE: Anguilla companies (IBCs) take only two working days to form and are returned to client via overnight carrier. Anguilla IBC's are set up for a cost of $1600 US & do not require nominee directors, and offer more "confidentiality" than Bahamian IBC’s.

Cost for a Bahamian IBC is $2,100, as you now need to use "nominee directors" or allow the name & addresses of all officers to be a matter of public record at the Bahamas Registrar's office. Anguilla has no such disclosure requirement, but passport ID (or driver licence) + one bank reference letter (which can be faxed to us) are required.

ANNUAL MAINTENANCE

• Offshore Registered office, (i.e., the legal address for the company), trustee fee, registered agent fee) paid annually, from the date that the company documents are issued (i.e., 12 months after original incorporation) by Anguilla government - $700 pa
• Annual Government & Associate Fees - $250 pa

• Our advice to these entities on an annual basis (includes FREE monthly newsletter, director and shareholder meetings offshore, other) - $200 pa

TOTAL COST (2nd Year) = $1,150 pa US (Anguilla IBC)

Our law office will also be the registered office and registered agent for the IBC. (A physical address, fax number, telephone number, will all be made available to end user). We use two trusts in the business plan with a non-US person(s) (the IR code refer to them as non-resident aliens) to act as the trustees.

Lawyers & Banks charge substantially more to do the same thing. Lawyers also charge 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 banks can also make their costs skyrocket.

Tom's opinion is 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 Laws.

Question: Is it necessary to use a trust & holding company in a business plan?

Answer: (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 recognized plan.

Eleven US shareholders (see IRC 951(d) for IRS definition) each owning 9% of the offshore company is also a legal and approved structure for avoiding the CFC status. For the US taxpayer who wants to remain independent (without partners), his plan probably should include a company and a trust as outlined in my book.

Question : How long does it take to form a company ?

Answer: (THR) If a client wants to form a company through the mail he/she should then overnight express us a bank cashiers check or MOs .... Anguilla [$1600 US ] or [$2100 US for the Bahamas] via UPS overnight carrier.

Tom Azzara
New Providence Estate Planners, Ltd.
Nassau, Bahamas

(Please feel free to contact me with Questions or for the full address)

Note: Bahamian IBC's cost several hundred dollars more, because you really need to have "nominee directors" - which are not even recognized by the IRS. Two directors are required for a Bahamian IBCs. We will provide 2 directors for $250, but we recommend using Anguilla - where directors are not a matter of public record.

1. We will prepare all the documents, forward the appropriate fees to the government registrar, etc.
2. A company can be registered without the client even coming to Nassau.

3. It takes (1) one day for the government to stamp & return the Memorandum & Articles of the Company .

When you are ready to incorporate - email me for further details.

More FAQ's from the Tax Haven Reporter - Newsletter.

Question: What extra forms must I file with the IRS after the company is formed.

Answer: (THR) The Bahamian IBC & Trusts will legally have no income tax returns to file with the IRS,  so long as they do not have an office inside the United States or are "doing business within the United States". They will not be CFC's (Controlled Foreign Corporations). Neither you nor the offshore managers should have to file Forms 3520, 3520-A, 5471 or any other information regarding the IBC to the IRS.

Foreign clients (called non-resident aliens by the IRS) are not required to file any of the above information returns. Nor are they required to file Form TD-90.22-1 (US citizens with signature authority or Financial interest in a foreign bank or securities account)

Question : Who opens the bank & securities accounts for the IBC's?

Answer: (THR) Investors will be able to open a bank and security account for their IBC's so they alone have signature authority over the accounts - and that's the way most clients want it.

We have arrangements with several major banks in different jurisdictions. 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 will need a reference letter from your local US banker +
passport or driver’s license ID, but these are easy to obtain.

The banks 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. All of these banks have no offices in the United States.

You can choose whichever bank you want. With any of these banks, clients can open brokers accounts anywhere in the world and trade. The clients IBC does not appear on the stock certificates, and his anonymity is totally preserved.

If a client needs help filing a W-8BEN,
we can assist here too, at no extra costs.

Masking a clients stock market trades has always been a traditional way of doing business here in the Bahamas and in the other tax havens. But, recent attacks by the OECD out of Paris have caused some ripples in this behavior. But, even still, banking offshore is much safer.

Bank confidentiality seems to play an important role offshore. It remains good in the Bahamas, and in the other tax havens. The IRS and other revenue agents cannot seize, lien on, freeze or investigate bank accounts in the Bahamas, Caymans and in other tax havens.

Banks in the Bahamas do not have to file tax returns with the IRS.

The Anguilla Confidentiality Ordinance of 1981 Bank forbids any bank executive or advisor from giving information to any outside tax collector, attorney or foreign court. Fines and sentences can be imposed by their courts for unauthorized disclosure.

Note: Drug money laundering is not tolerated in any tax haven.

ASSET PROTECTION TAX HAVENS

The government of the Bahamas has a bank secrecy code, all the largest banks in the world have offices here & in Cayman. US. judgments have to go through the local courts.

Tom's never witnessed an IRS court proceeding of any type in this country - ridiculous.

U.S. lawyers have problems too, only citizens of the the Bahamas can practice law here. US. lawyers 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 ?

Answer: (THR) There are few restrictions as to what an IBC can invest in. US. stocks, bonds and mutual funds are frequently bought through offshore companies because they are not liable to US. capital gains taxes.

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 and 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.

Question: Who are some of the big names using that haven as a tax shelter?

Answer: (THR) Business people from around the globe use the Bahamas as a tax haven. There are currently over $400 billion dollars on deposit in Bahamian Banks.

• Former U.S. citizen Sir John Templeton (on right), 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.

• US 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.

• Incidentally, the Lyford Cay area is a millionaire's row here in Nassau.

Question: How can investors learn more about these tax havens?

Answer: (THR) Through my 'Tax Havens Of The World' (book) 8th edition ($90.00 US), and the Newsletter ($200 pa for 12 issues) would be most useful in helping you develop your offshore plan.

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 Don't forget when you are ready to incorporate - email me

• 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.

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Tom Azzara
New Providence Estate Planners, Ltd.
Lawyers & Consultants - Nassau, Bahamas