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Which offshore jurisdictions will be popular in upcoming year 2013?

11.04.2013

A short time ago, Cyprus was the most popular and attractive offshore economy, while all settlements were made through Baltic banks. Favorable terms, easy registration and service in Russian attracted a lot of clients from Russia and the CIS countries.

However, everything changes, and offshore jurisdictions either. Requirements related to transparency, control, anti-money laundering and counter financing of terrorism, extension of the tax information exchange practice, and other initiatives, which are implemented primarily by the OECD countries, make offshore jurisdictions closer to low-tax ones, and low-tax jurisdictions — to full-tax ones. A lot of established patterns do not bring any tangible benefits any more, or even become jeopardy for business.

In the next year there will be new favorites among offshore jurisdictions. Now, those are usually not traditional offshore economies such as Belize or Seychelles, but low-tax jurisdictions with high reliability and good reputation, i.e. European and Asian ones.

Kazakh businessmen have found a new partner, a major Asian financial center Singapore, with reliable banks having excellent reputation, transactions with which are not subject to withholding tax making offshore patterns unprofitable. Ukrainian businessmen have chosen Panama, Hong-Kong and Ireland as countries prospective for business. Russian businessmen are aiming at such jurisdictions as Hungary, Ireland, Denmark, Singapore, though they do not exclude the previous targets — Cyprus, Netherlands, Switzerland and BVI.

Now new patterns are emerging, so called ‘sandwich’ patterns involving Irish, Danish, Hungarian firms, as previous ‘sandwich’ patterns like UK—BVI, Cyprus— Seychelles are becoming not very reliable. Speaking of trading patterns, the best economies for doing business for the CIS countries will be Singapore, Estonia, Hungary in partnership with the Netherlands and Denmark.

Trying to avoid high taxes and tax information exchange, business is seeking new offshore or low-tax jurisdictions, beneficial offshore patterns and new banks to replace the Baltic and Cyprus banks. In the next year the offshore business will see high competition struggling for new patterns, where the winner will be the one, who will manage to create the most beneficial, reliable and legally perfect pattern.

In this tough competition, the advantage will be enjoyed by those, who keep a watchful eye on the changes in the laws, assess the potential of new countries providing favorable conditions for operations of offshore companies, create new patterns and seek advice of experts and consultants. Flexibility and inventiveness are the catchwords of the offshore business in the year to come.

 


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