10 great places to seek shelter from the taxman

Although the Internal Revenue Service refers to them as "offshore jurisdictions," what we used to call tax havens can be found all over the world. Even if you're not going to invest abroad, many of them are delightful to visit - a rewarding way to use your refund. We asked William Diamond, pre-eminent expert in international taxation, for his picks. He and his wife, Dorothy, have written 81 books, including the three-volume "bible" Tax Havens of the World. Taking time out from his forthcoming memoir - One of a Kind: Learning Secrets of World Leaders - he spoke with Anne Goodfriend for USA TODAY.

Anguilla

This British territory boasts "good (financial) services with. .. integrity." There's also a laid-back culture; locals hitchhike safely. Within sight of St. Martin, Anguilla boasts 33 beaches and 70 restaurants, drawing celebrity visitors such as Mariah Carey, Richard Gere, Susan Sarandon, Kevin Bacon and Sarah Jessica Parker. 800-553-4939; anguilla-vacation.com.

The Cayman Islands

Grand Cayman has "500 banks - every major one in the world." It's also a paradise for beach lovers, scuba divers and snorkelers, with pure-white sands; clear, shallow, 80-degree waters; reefs just offshore; and wrecks to explore. Little Cayman's 6,000-foot vertical wall makes it one of the world's three best dive sites in Jacques Cousteau's ranking. caymanislands.ky.

The Bahamas

"The government understands business, and servicing income is almost as big an industry as tourism." The Commonwealth of the Bahamas, about 75 miles east of Palm Beach, Fla., comprises 700 islands. The banking centers are on New Providence and Grand Bahama; tourists flock to their main cities of Nassau and Freeport, respectively. But the other islands are less Americanized and have more West Indian atmosphere. Balmy in all seasons, the archipelago averages 320 sunny days a year. 800-224-2627; bahamas.com.

Singapore

"The second largest" offshore-investment destination "after Cayman is outstanding - the entire country is a free-trade zone." Although most tourist activity is in the thoroughly Westernized, same-named city, the island's culture is one of great contrast between Indian and Chinese traditions and the British-colonial past. visitsingapore.com/main.

Nevis

This 36-square-mile island, a mere 2 miles from larger sister-isle St. Kitts, has "liberal policies on offshore investing." Especially tranquil for the popular Eastern Caribbean, it is known for its plantations, pristine beaches, and hospitable, "really honest" residents. 800-582-6208; www.interknowledge.com/StKitts-Nevis/knpnt03.htm.

Luxembourg

The Grand Duchy of Luxembourg is "my No. 1" offshore jurisdiction. Its 999 square miles range from the forested plateaus, rivers, lakes and feudal castles in the north (part of the Ardennes) to the quaint, wine-producing Moselle River region in the east. Irving Berlin had a home here and set some scenes of the 1950s musical Call Me Madam in the fictional "Lichtenburg." visitluxembourg.com.

Malta

This Mediterranean island country "is popular as a base for subsidiaries." The strongest influence on its native cuisine is Sicilian, although traditional grilled chops and other British specialties are popular, too. Peppered with Catholic churches and historic temples, palaces, and forts, Malta has a rocky coastline but good beaches and dive spots in the northwest. visitmalta.com.

Ireland

There are green hills and medieval castles, friendly storytellers in convivial pubs, a hip capital city and a thriving financial industry. "It's a good banking system, run by sophisticated British people." The climate resembles Seattle's, and Dublin, which became a thoroughly modern city during the economic boom of the 1990s, is a top destination for Europeans on vacation. 800-223-6470; www.tourismireland.com.

Estonia

The former Soviet state "is replacing Hungary as the best investment country in Eastern Europe." With neighbors Finland and Sweden across the Baltic Sea, this Nordic/Russian country encompasses more than 1,500 islands. This is the land of "white nights"; the longest summer day is 19 hours, and in winter, the shortest day has only six hours of light. visitestonia.com.

The Seychelles

The tropical setting of these 115 coral and granite islands in the Indian Ocean northeast of Madagascar offers "the best scuba diving in the world," as well as "no tax and very good investment-incentive laws." The country reflects African music and culture - the Creole cuisine features myriad varieties of exotically spiced fish and seafood, and rural residents practice gris-gris, the local voodoo. seychelles.com.

© Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

Carribbean and Central America vulnerable to Money Laundering

Guatemala, Apr 26 (Prensa Latina) Experts in financial topics stated Friday that the fragility of the economies of the countries of Central America and the Caribbean makes countries from these regions vulnerable to money laundering operations.

The statement came from a discussion session between participants in the 26th Meeting of the Caribbean Financial Action Task Force (CFATF) in progress in Guatemala since Monday.

Guatemalan Bank Superintendent Willy Zapata stated no one can deny that nations of the region are vulnerable, but defended them, saying that there is a commitment by governments to fighting money laundering.

Zapata, who is participating in the event together with experts from 31 Central American, European and Caribbean countries, said the vulnerability derives from "small countries with weak and open economies."

Panamanian Bank Superintendent Delia Cardenas stressed that it should be taken into account that globalization makes all countries potentially vulnerable.

"The financial system is so divided into regions, that we cannot talk about one single country in particular, but about regional threat," Cardenas, current CFATF President, pointed out.

CFATF was created in 1980, and follows the model of the International Financial Action Task Force (FATF), gathering the nations and territories in the Caribbean, who agreed to create measures to fight money laundering.

The meeting, which FATF Resident Director Jean Louis Ford and representatives from the United Nations (UN), the World Bank (WB) and the International Monetary Fund (IMF) are also attending, analyzes new trends to fight money laundering and other activities.

sus/tac/ucl/jwp Copyright © 2004 - All Rights Reserved. Prensa Latina

US bill targets Tax Haven CFCs

US Bill Introduced to Tax Tax-Haven CFCs by W William Woods on May 3, 2005 10:17AM (EDT) Senator Dorgan (D-N.D.) has introduced a bill (S. 779) to amend the Internal Revenue Code to treat controlled foreign corporations established in tax havens, or "tax-haven CFCs," as domestic corporations, and thus subject to U.S. income taxes. The tax havens listed in the bill include Bermuda, the British Virgin Islands, and the Cayman Islands.

The corporation must be a controlled foreign corporation for an uninterrupted period of 30 days or more during the taxable year in order to be treated as a tax-haven CFC. Generally, a foreign corporation is treated as a controlled foreign corporation if more than 50 percent of its vote or value is owned by US persons owning 10 percent or more of its voting stock.

Please click here to see the draft bill.

Many thanks to Deloitte & Touche for the "heads up".

http://bizoffshore.com/

109th CONGRESS lst Session

s.779

To amend the Internal Revenue Code of 1986 to treat controlled foreign corporations established in tax havens as domestic corporations

IN THE SENATE OF THE UNITED STATES

April 13,2005

Mr. DORGAN (for himself and Mr. LEVIN) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to treat controlled foreign corporations established in tax havens as domestic corporations.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION I. TAX TREATMENT OF CONTROLLED FOREIGN CORPORATIONS ESTABLISHED IN TAX HAVENS.

(a) In General. -- Subchapter C of chapter 80 of the Internal Revenue Code of 1986 (relating to provisions affecting more than one subtitle) is amended by adding at the end the following new section:

''SEC. 7875.CONTROLLED FOREIGN CORPORATIONS IN TAX HAVENS TREATED AS DOMESTIC CORPORATIONS.

"(a) General Rule. -- If a controlledforeign corporation is a tax-haven CFC, then, notwithstanding section 7701(a) @), such corporation shall be treated for purposesof this title as a domestic corporation.

"(b) Tax-Haven CFC. -- For purposesof this section --

"(1) IN GENERAL. --The term "tax-haven CFC" means, with respect to any taxable year, a foreign corporation which

"(A) was created or organized under the laws of a tax-haven country, and

"(B) is a controlled foreign corporation (determined without regard to this section) for an uninterrupted period of 30 days or more during the taxable year.

"(2) EXCEPTION. --The term "tax-haven CFC" does not include a foreign corporation for any taxable year if substantially all of its income for the taxable year is derived from the active conduct of trades or businesses within the country under the laws of which the corporation was created or organized.

"(c) Tax-HavenCountry. For purposesof this section --

"(1) IN GENERAL. --The term "tax-haven country" means any of the following:

Andorra Anguilla Antigua and Barbuda Aruba Commonwealth of the Bahamas Bahrain Barbados Belize Bermuda British Virgin Islands Cayman Islands Cook Islands Cyprus Commonwealth of the Dominica Gibraltar Grenada Guernsey Isle of Man Jersey Liberia Principality of Liechtenstein Republic of the Maldives Malta Republic of the Marshall Islands Mauritius Principality of Monaco Montserrat Republic of Nauru Netherlands Antilles Niue Panama Samoa San Marino Federation of Saint Christopher and Nevis Saint Lucia Saint Vincent and the Grenadines Republic of the Seychelles Tonga Turks and Caicos Republic of Vanuatu

"(2) SECRETARIAL AUTHORITY. --The Secretary may remove or add a foreign jurisdiction from the list of tax-havencountries under paragraph (l) if the Secretary determines suchremoval or addition is consistent with the purposesof this section."

(b) Conforming Amendment. --The table of sections for subchapter C of chapter 80 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

"Sec. 7875. Controlled foreign corporations in tax havens treated as domestic corporations."

(c) Effective Date. --The amendments made by this section shall apply to taxable yearsbeginning after December 31,2007.

So many tax havens, so little time

BILL JAMIESON

FEELING jaded after the election? Looking to escape higher tax? And desperate to avoid the Holyrood election in just two years' time? Then join what may well be Scotland's fastest-growing club this morning: the Escape Club. There are no fees or dues. Membership simply comprises those looking for a quick exit and prepared to travel to the furthest corners of the world.

High on the escape list must be the South American republic of Paraguay, a haven, of sorts, for political refugees in the past.

The country, according to the CIA factbook, "has a market economy marked by a large informal sector". In fact, the economy is so informal it is hard to work out whether it is growing or slowing. It appears to be organised like a gigantic car-boot sale.

Paraguay does have taxes. But judging by the large number of people with guns, it seems these may be optional. Fraud and corruption are rife. And you never know who you might bump into. There is a risk the harmless old codger next door has a disconcerting line in Nazi memorabilia.

More alluring, surely, have to be the Cayman Islands, an English-speaking dependent territory of the UK with a population of 30,000, some of it intermarried.

There are no taxes in the Cayman Islands. Government revenue comes from customs duties and annual fees on corporations.

But opening a bank account can be tricky. Having filled in a detailed form at a bank in the capital, George Town, a few years back to open an account, I was asked to pay in a minimum deposit ... of $50,000.

Stamp duty is also a little steep, at 5 per cent. The problem here is that, as last year sadly proved, the islands can be vulnerable to hurricanes that could blow your biggest investment away.

Alternatively, there are the British Virgin Islands (population 22,000). There is no capital-gains tax, wealth tax or gift taxes. Income tax is being scrapped this year and replaced by a payroll tax of 14 per cent, of which 8 per cent is payable by employers. However, like the Cayman Islands, it has chosen to apply a withholding tax on savings paid to nationals of EU member states. Not so good.

The Seychelles (population 80,000) are a byword for tropical beauty. They comprise 115 islands near the Equator and outside the cyclone belt. There is no income tax to speak of, but social-security payments and tax on locally sourced businesses can range up to 40 per cent.

High on any tax refugee's list must be Vanuatu, a group of 80 mountainous tropical islands on the eastern seaboard of Australia. The capital is Port Vila, the population 210,000 and the time-zone is GMT plus 11 hours.

There is no crime of tax evasion on Vanuatu, since Vanuatu has no taxes. There is a stamp duty on property transactions, but this is capped at 1 per cent. There are no state social-security contributions.

Vanuatu is a free-market economy. But there are regrettably some snags. Economic growth is slow because of adverse climatic conditions, most goods are imported and import duties are high.

More worrying still is that some of the islands have active volcanoes. The otherwise helpful Low Tax internet website does not specify which ones. This may add an explosive degree of risk to the most gilt-edged portfolio.

Nearer home, there's Estonia (population 1.3 million, capital Tallinn), land of the flat tax. The economy has grown by an astonishing 73 per cent in ten years. Yes, there is a flat tax - 26 per cent, and coming down to 20 per cent.

But national insurance payments average 33 per cent of income, giving an effective total tax rate of 44.4 per cent.

Oh, and there are six different political parties preparing for an election in just two years.

My personal favourite, both for its topographical similarity to Scotland and ease of entry (and exit, should things go wrong) is the American state of Wyoming (population 501,000, capital Cheyenne).

The landscape is in many parts similar to Scotland, but the state website instantly proclaims the difference. Wyoming does not levy a personal or corporate income tax, there are no taxes on bank accounts, stocks or shares. The state does not assess any tax on retired income earned or received from another state.

"Further," declares the website in a glorious sentence that the Treasury and Scottish Executive could usefully copy, "there is no legislative plan to implement any of these types of taxes."

A "Just the Facts" web page - one that Scottish Enterprise could learn from - shows that unemployment is just 3.9 per cent, the average university teacher salary is $62,000, there is 73 per cent home ownership and the average house price is $143,000.

So where's the catch? Those familiar with the wonderful stories of the writer Annie Proulx will know the feeling. When you start reading her description of the awesome beauty of Wyoming, you cannot help but wonder why so few people live there. But after describing what "bad dirt" life can really be like for its inhabitants, you end up puzzling why anyone lives in Wyoming at all.

Better surely, then, to stay put at home. But sadly, staying home in Scotland is not at all the same as staying put. For we are slowly drifting north-east towards Sweden. This is the cradle-to-grave welfare model our politicians crave.

But it comes at a price. Earned income in Sweden attracts a local income tax of between 26 and 35 per cent. Then there is the national income tax of between 20 and 25 per cent.

Income from savings is taxed at 30 per cent. The VAT rate is 25 per cent. Even books and newspapers (zero-rated here) have to pay VAT of 6 per cent.

There are 16 excise duties and swingeing taxes on alcohol and tobacco. The ratio of total taxes to GDP is just over 54 per cent.

Sweden really knows how to tax. In addition to income taxes, there are motor-vehicle tax, road-user charges, fertiliser tax, gift tax, waste tax, nuclear-power tax, lottery tax, advertising tax, taxes on most life assurance premiums, a real-estate tax and (here's the killer) a wealth tax - assuming you have any disposable income left after all the other taxes. Astonishingly, 300,000 Swedes were liable for this tax last year.

It is, of course, a wonderful health and welfare system. But despite this, or perhaps because of it, more Swedes phone in sick than in any other country in Europe.

And, yes, the political system is boringly stable, with the prime minister, Goran Persson, having been in power longer than Tony Blair. But give Sweden a big miss if you want a rest from politics. There are seven political parties, including Lefts, Greens and Centres. And an election is due next year.

So if you're feeling restless this morning and in need of a change, there's no lack of places to choose from. The good news is: the grass certainly looks greener on the other side. The bad news? Perhaps it really isn't.

Saudi businessman invests in Bahrain offshore finance center

Underscoring the strong investor confidence in the integrated financial project, the USD1.3 billion Bahrain Financial Harbour (BFH), today announced that Mr. Khalid Abdul Rahman Al Rajhi, a prominent and one of the leading businessmen from the Kingdom of Saudi Arabia, has bought the Harbour House, one of the three components of the Financial Centre, first phase of the project, at an investment of USD30 million.

At a special ceremony held at the Client Relations Centre (CRC) of BFH, the deal was signed between Esam Janahi, Chairman of the Bahrain Financial Harbour Holding Company B.S.C (c) and Mr. Khalid Al Rajhi, CEO of Abdulrahman Saleh Al Rajhi & Partners Co. Ltd, Saudi Arabia. Mr. Al Rajhi is also a member of the Board of Bank Al BiLad, member of the Board of Saudi Cement Company and is a founder of a number of companies in the GCC.

Commenting on the sale of the Harbour House, Esam Janahi said: 'We look at this strategic development as a leap forward in the enthusiasm BFH has generated among investors. We welcome Mr. Khalid Al Rajhi as one of our partner-investors in BFH and we are confident that his investment will add more value to the integrated development.'

'Harbour House is one of the salient components of the US$270 million Financial Centre, and is being developed as a modern building with superior amenities and cutting-edge technology,' Janahi said.

'The deal unlocks the immense value of Harbour House and is a reflection of the robust investor demand in the key elements of BFH,' Janahi added.

Connected to the Financial Mall through a suspended bridge, the Harbour House will be located in the centre of the Harbour Row amidst seafront walkways, shopping boulevards, promenades, marina and water pathways with water taxis, coffee shops and dining facilities.

Construction of the 12-Storey stand-alone office building commenced in March 2004 and is expected to be completed by the end of 2006. Harbour House will have a total area of 12,240 square metres and is planned as a roughly circular structure having an approximate diameter of 28 metres for a typical office floor. The Harbour House will be constructed by Al Hamad Development and Construction Company, the contractors for the Financial Centre

Elaborating on his association with BFH, Mr. Khalid Al Rajhi, said: 'We are proud to be part of BFH, a project of significant scope and magnitude in the regional economy. Harbour House, being a central component of the BFH project, is a valuable investment for us'.

'Harbour House is placed in the middle of picturesque settings, being at the centre of BFH development, and is on the seafront, making it an attractive office base. This unique location is unparalleled in the region,' he added.

The first phase - the Financial Centre - will house investment and commercial banks, offshore banking units, legal and advisory services, takaful companies, fund managers, IT firms, professional institutes, leasing companies, financial consultants and international regulatory agencies. Construction for the Financial Centre commenced in March 2004 and is expected to complete by the end of 2006.

Qatar families urged to invest offshore

DOHA: The Pakistan Engineers Forum (PEF) organised a presentation on personal financial planning on Wednesday.

Dr Shaukat Chandna, Director of Future Financial Planning, personal finance division of Amwal, spoke on "The Value of a Comprehensive Protection Plan for a modern family".

Jim Quinn, Regional Sales Director of Forsyth Partners, an international financial services company, Amwal's partners in the region, gave a talk on "the importance and multiple benefits of creating an offshore investment account." Imran Yawar, charge d' affairs at the Pakistani mission, was present as chief guest.

Dr Chandna said that everyone needed a comprehensive protection plan that was flexible and met a family's ever-changing needs. Every household requires a comprehensive protection plan to meet its future financial obligations. Financial planning is necessary to take care of unforeseen emergencies. "The realisation that you did nothing to minimise the negative impact of that vacuum is criminal," asserted Dr Chandna, who has also served in Pakistan Army as a captain before moving into the corporate world. He said God has given intelligence to everyone to plan and think and to cater to the needs of those whom we leave behind.

Quinn, who specially flew in from the UAE to attend the event, briefed the audience about his company's investment and saving programmes and invited them to take benefit from the Forsyth Partners' expertise in the field of financial planning. Forsyth Partners is authorised and regulated in the conduct of investment business by the Financial Business Authority in the UK

Yawar presented mementoes to Dr Chandna and Quinn on behalf of the PEF. Earlier, PEF president Badar Sohail Khan, welcomed the gathering.

Indian tax haven laws

The long-awaited Special Economic Zone (SEZ) legislation will provide a far-reaching fiscal package including 15-years tax holiday.

The bill, to be introduced in the Parliament on Monday, will also create single window clearance mechanism for the units in the zone.

The umbrella legislation, which was cleared by Union Cabinet last week, provides for fiscal regime for both developers and units in the zones besides a legislative framework for setting up offshore banking units.

The 56-page SEZ Bill seeks to establish special course and single enforcement agency to ensure speedy trial and investigation of notified offences committed in such zones.

As per the provisions of the Bill, SEZ units will be eligible for 100 per cent tax exemption for five years, 50 per cent for the next five and 50 per cent of the ploughed back export profits for the next five years.

The developers of the zones will continue to get 100 per cent income tax exemption for 10 years in a block period of 15 years.

It encourages state governments to liberalise state laws and delegate their powers to the development commissioners of the SEZs to facilitate single window clearance.

India already has 11 functioning SEZs. Of these, seven have been set up by central government, and four by the private, joint or state sector.

The 11 SEZs are functioning in Kandla, Surat, Cochin, Santa Cruz, Falta, Chennai, Vishakhapatnam, Noida, Indore, Salt Lake (Kolkata) and Jaipur. Two more at Jodhpur and Moradabad are ready for operation. (PTI)

Insider trader's offshore bank accounts frozen

TORONTO -- Ontario's stock market watchdog considered investigating three other people in the investment industry for allegedly giving tips to a close friend of Andrew Rankin, a former investment banker who is on trial accused of illegal insider trading.

But Ontario Securities Commission investigator Yvonne Lo said yesterday that the regulator could not develop sufficient proof that the tips the three other men allegedly provided to Daniel Duic involved undisclosed confidential information.

Ms. Lo was testifying at the trial of Mr. Rankin, who has pleaded not guilty to 10 counts of illegal insider trading. He has entered the same plea on 10 counts of leaking secret information to Mr. Duic about corporate deals involving clients of his former employer, RBC Dominion Securities Inc.

Mr. Rankin, now 40, is at the centre of what is considered the largest illegal insider trading case so far in Canada. The scandal, which involved trading in offshore accounts, shook the reputation of the country's largest investment bank and its parent, Royal Bank of Canada.

Mr. Duic reached a settlement with the OSC last year over allegations that he made illegal trades over a 16-month period beginning in October, 1999. He agreed to pay back $1.9-million in illicit gains in connection with trades of stock in Canadian Pacific Ltd. and Moffat Communications Inc., and become a key witness in the prosecution of Mr. Rankin.

Ontario Superior Court was told earlier this week that Mr. Duic, in private testimony to the OSC, said he made a profit of about $7-million from tips he got from Mr. Rankin, and three other individuals in the investment industry. That amount included more than $6-million made from 55 tips that he allegedly got from Mr. Rankin.

Ms. Lo said that her team froze Mr. Duic's three offshore accounts in Switzerland, Luxembourg and the Bahamas that contained a total of $3.1-million. That amount was used to pay his settlement with the regulator, while the balance went to Canada Revenue and to benefit Ontario investors, she acknowledged.

"Mr. Duic did not get any of the money," she said.

Under questioning by OSC lawyer Michael Code, Ms. Lo said the regulator could not find any "unusual trading" among some 125 people or "insiders" who knew of the major restructuring at Canadian Pacific before it was announced to the public.

An examination of telephone records also found "no connection" between those people and Mr. Duic, Ms. Lo added.

Ms. Lo said the shares of Canadian Pacific, Donohue Inc. and Alliance Forest Products Inc. -- among the 10 companies at the heart of the OSC probe -- saw runups in their stock prices ahead of major announcements.

The price jumps also coincided with rumours of takeovers and speculation in the media about pending takeover deals or restructurings, she said.

Ms. Lo told the court that Mr. Rankin was generally a conservative investor in his own portfolio at RBC, but acknowledged there was an instance where he did flip a stock for a substantial gain.

Mr. Rankin bought 6,000 shares in Chicago Title Corp. for $339,000 on Aug. 3, 1999, and sold it two days later for a $100,000 profit. The money he plowed into this one stock was half of the market value of $685,000 in his account at the end of the month. The trial resumes next week.

A witness to the transformation of Bahrain

BAHRAIN was a very different place when Clive Jacques stepped off a plane from London nearly 27 years ago.

Donkey-carts still plied the roads, there was sea where tower blocks stand today and women still washed their laundry in the spring water of Adhari.

"Being driven across the Muharraq Causeway shortly before 7am, on a brilliantly sunny June morning, was a welcome relief from cool and cloudy London," said Mr Jacques, who left with his wife Nena this week, after retiring as general manager of the Al Hilal Publishing and Marketing Group.

Mr Jacques started life in Bahrain with the now defunct weekly Gulf Mirror, but within a few years joined the Gulf Daily News, rising to editor-in-chief before moving over to Al Hilal as general manager, in January 1996.

His first impressions of Bahrain were a far cry from the bustling, modern country of today.

"Initially booked into the Delmon Hotel for three nights - a leading hotel at that time - my boss suggested I wash and brush up before reporting for work at the Gulf Mirror offices, 'just a short walk away past the post office, a petrol station and across from the law courts in Government Road'," he recalled.

"On the 11th floor of the National Bank of Bahrain tower block - then Bahrain's tallest building - the offices provided a bird's eye view of Mina Manama from where dhows daily transported anything and almost everything, including passengers to Saudi Arabia in pre-causeway days.

"The tower also looked down on a vast wasteland, where the Regency InterContinental Hotel now stands."

Mobile phones, satellite TV and colour newspapers were still years away, said the veteran expatriate, whose journalistic career had earlier taken him from England to Saudi Arabia and Lebanon.

"At this time offshore finance was a fledgling but fast developing source of income for Bahrain," he said.

"Banking salaries ranging upwards of BD1,000 a month made my mere sterling-based BD400 salary look little more than a simple petty cash claim.

"Some of the top bankers enjoyed numerous benefits, ranging from boats and free family medical care to Mercedes cars and swank villas.

"One banker in those early 'pioneering' days even managing to get his London head office to pay for a barbecue set, boxer shorts and salt tablets, personally viewed essentials in his 'hardship posting'.

"For me home was a BD350 a month, company-paid furnished, two-bedroom apartment in the Astor Block (still standing but now in part a dry cleaners) in Palace Avenue.

"Almost opposite Ashrafs - which then sold groceries - the apartment was on an unsurfaced street, where goats scavenged from waste bins.

"But it was conveniently located for a nearby cold store, car mechanic and an all-important ice and water plant.

"At that time expatriates were advised to boil the brakish tap water before drinking and many additionally mixed in vinegar when washing their hair or taking a shower."

Many expatriates at that time organised Friday dhow trips from Muharraq with boat and crew available for BD70, he recalled.

Others headed to the south of the island in four-wheel drive vehicles - invariably open-top Suzuki jeeps - for barbecues at a time when there were no real military restrictions and it was possible to reach the tip of the island.

Some chose to explore, with Friday drives taking in local sight-seeing including the fish trap and dhow makers near where Pearl Roundabout is now, Adhari Park, where women still washed clothes in the nearby stream and the Amiri stables in Riffa.

"White donkeys pulling carts trotting alongside large American cars were a fairly frequent site on uncrowded roads," said Mr Jacques.

Friday lunch at the Airport Restaurant, which overlooked the airport runway, was a popular treat.

In the evening, with few forms of outside entertainment - the cinemas were mainly supported by Asians - many Western expatriates tuned into Aramco.

"It was the most popular television station at that time, though it only screened programmes from around 6pm until 10pm," said Mr Jacques.

There were few supermarkets, so the suq was also an essential, part of shopping, attracting expatriates and locals alike.

"The numerous fruit and vegetables traders in the Central Market invariably used torch batteries on their scales to weigh hand-selected purchases, with an extra apple, pear or banana, as additional thanks," he said.

"The non air-conditioned meat and fish markets were for the bravest, with the stench at times off-putting."

There was not a parking meter - or a ticket-bearing traffic policemen - ever in sight, he recalled.

"A quaint yet parochial feel to day business life led to some expatriates being known by their name and profession, such as Brian the New Zealand butcher and Pete the Irish power-man," said Mr Jacques.

'Many of today's Bahraini decision-makers were fresh from universities abroad, driving modest Japanese cars - often wearing Western style suits - and little more than juniors in their father's businesses."

There were few places to go at night, so when the video boom swept Bahrain, shops sprung up on almost on every street corner, hiring pirated tapes of varying quality, before the copyright laws cames in.

"Initially video machines were priced around BD700 and were brought in duty free from Dubai but later, as with so many new attractions, prices fell," said Mr Jacques.

The couple flew out of Bahrain last Saturday, with months of travel planned before they decide where to settle.

India moves closer to offshore finance center status

Sandeep Banerjee

Thursday, May 5, 2005 (New Delhi):

The process of setting up mini-Chinas in India has begun with the Cabinet clearing the Special Economic Zone or SEZ Bill.

Ministry officials say that the SEZ Bill will be comprehensive and self-sufficient and will address all the demands and concerns of the industry.

Tax benefits

* Currently, SEZ units enjoy direct tax benefits for 10 years. This will now be extended to a period of 15 years.
* For the first five years, 100 per cent of the units' export profits will be tax free.
* For the next five years, 50 per cent of the profits will be tax free.
* Fifty per cent of the profits that are invested will get tax benefits for another five years.
* There will be no indirect taxes like customs and excise duties.
* But if the units sell their products in the domestic tariff area, they will have to pay duties.
* Offshore banking units set up in the SEZs will be under RBI regulations.

Labour laws

On the crucial question of labour laws, the Bill will give state governments the power to legislate on labour laws for SEZs in their states.

The Commerce Ministry shall be the nodal ministry in this whole exercise.

Indian industry has welcomed the SEZ bill and is keenly watching the political space.

Commerce Minister Kamal Nath returns from Paris later this week and if all goes according to script, the bill will be tabled in Parliament next Monday.

Sending banking services offshore

The Financial Services Authority has released a report on its investigation into offshored financial services, warning companies that they are facing increasing levels of financial crime if they send processes offshore.

National Outsourcing Association Comments:

If companies have had their fingers burned through offshoring, then the likelihood is that they leapt on to the offshoring bandwagon without having the correct procedures in place. Offshoring does not mean "out of sight, out of mind" and saving money into the bargain. Often the ante on management procedures has to be upped in offshoring environments - this doesn't mean that organisations will not be able to realise cost savings. It is just that they may not be as much as first thought. Companies MUST have the right procedures and management structures in place. Offshoring should not be considered a short-term profit margin boosting solution - it should be a considered a medium - long-term business process with every eventuality well thought through.

* Business Continuity is vital: whether a process is outsourced or kept in-house, sent offshore of kept on-shore, business continuity is a core part of any business operation - employing a laissez faire approach to an offshored process is asking for trouble. Stringent management is a pre-requisite of any business process and ensuring you have back up procedures should things go wrong is tantamount to preventing disaster. In the case of an offshore process, a high degree of control of that process needs to be maintained in the on-shore location i.e. back in the UK - if anything goes wrong, processes can be pulled back on-shore with minimal fuss. Companies offshoring a process to a provider (rather than having their own "captive" operation in another destination) need to ensure the provider has a business continuity plan in place.

* Security - Indian workers are no less ethical than UK workers: media hype over offshore security breaches is generally unfounded. Companies often make the mistake that once a process is offshored, minimal management is needed, but this isn't the case - because of the distance, increased management is usually required. This ensures that company procedures are adhered to in every location, not only in Indian locations. India is in the process of formalising its equivalent of the Data Protection Act but in the meantime, Indian companies (and other offshore locations) are falling over themselves in a bid to demonstrate compliance - they are mindful of losing British business. Security breaches occur when a more lackadaisical approach is taken to management or whether you have employed an errant employee - this is as likely to happen in the UK as it is in any other destination

* Sky high attrition: call centres are invariably subject to high attrition levels no matter where they are located. Companies must focus on reducing this through good training, empowering staff, ensuring that staff have the right information to answer queries and complaints (number one bug bear is that staff are ill equipped with information to deal with queries) - these are areas that organisations should be trying to improve. When cultural differences come in to the equasion, these may be harder to address (Indian women not working after marriage) but organisations could start to deal with this by employing an equal gender ratio. Call centres should not be a short-term solution - if companies want to make them financially viable, they need to start investing in improving the longevity of employees' careers.

The NOA offers advice on best practice to any organisation thinking of outsourcing and offshoring and works in close conjunction with other industry bodies, trade unions and other associations to lobby government on best practice in these areas.

Offshore tax havens increasingly popular with Canadians

As the average Canadian household’s net income has increased by an average of 17% over the last three to four years, fuelled in part by steady increases in real estate equity, so the value of financial assets placed offshore by Canadians has significantly increased.

In fact, between 1990 and 2003 the amount of Canadian assets held offshore has increased by a staggering 700%. It seems that as word spreads about offshore tax havens, their accessibility, security and obvious financial benefits, so confidence in the offshore world has increased.

Statistics Canada, the company responsible for collating these figures, further reported that the increase in Canadian assets held offshore had risen from 11 billion dollars in 1990 to 88 billion dollars by 2003. There is no denying the fact therefore that offshore tax havens are becoming increasingly popular for Canadian assets!

The tax havens favoured by Canadians are fairly typical and include Barbados, Bermuda, the Cayman Islands and the Bahamas with Switzerland and Ireland also growing in popularity. Switzerland has an image as a first class offshore haven, this combined with the sophistication and security of its offshore banking structures and the privacy it affords its investors has led to its increase in popularity. Ireland on the other hand has cleverly structured and positioned itself as a haven on the fringes of both Europe and the offshore world and offers foreign investors significant tax benefits, privacy guarantees and interesting investment opportunities.

The amount of money being placed offshore by Canadians is in direct contrast to the amount of direct finance being invested in the US by Canadians...this has seen a significant decline over the same period. And when you consider that the figures presented by Statistics Canada relate only to the amounts placed offshore by Canadian companies, the true figures would be far higher if personal offshore assets were also taken into account.

The move offshore has been strong, sharp and significant. And it is not only the US that has suffered from investment decline as a seemingly direct result of the increased use of tax havens. While Canadian direct investment offshore annually is now averaging 18% so direct investment in the US has dropped to 8%, and investment across all other non-tax haven countries has dropped and now only adds up to 14%.

The largest proportion of assets held in tax havens belonged to companies in the financial sector, which is unsurprising as these are companies who are completely up to date with legislation and opportunities across the financial market place...they are also the companies best placed to understand and take advantage of offshore opportunities as they present themselves. Where they invest, so other market sectors and then private individuals will follow.

Those responsible for collating the figures were unable to draw definitive conclusions from the overall statistics, but I think it’s fair to say that offshore tax havens are becoming increasingly attractive across the board. After all it’s not only Canadians who are moving more wealth and assets offshore; the whole world is awakening to the fact that as personal privacy and asset security are no longer guaranteed onshore due to the fact that the world has grown increasingly litigious and our governments have grown increasingly paranoid and greedy in equal measures, we are responsible for securing our own financial future security. And where the legitimate use of offshore tax havens for personal wealth protection is an option, so more of us are taking the options and opportunities as they present themselves to us.

Is asset protection legal?

Perhaps you've heard of or seen Hollywood's portrayal of Swiss Bank accounts, Offshore Trusts and Corporations, and Tax Havens of the rich and famous as jet setting moguls live mysterious yet exciting lives.

But in the real world, although these same financial structures (most administrated by reputable and legal banks), have been around for hundreds of years, there are still many people who consider the above strategic asset protection entities as illegal.

I think we need to look at what they were intended to do. Asset or lawsuit protection laws were designed for the very purpose of protecting your assets from being frozen and the possibility of unjust forfeiture.

Still others consider asset protection a moral dilemma... something unethical or dishonest. This is the furthest thing from the truth.

But, at the same time, I'm not trying to start a moral debate here nor am I recommending nor would any attorney in their right mind advise that you avoid paying a judgment or fine that you rightfully owe.

That being said, I feel you should be in the position to make the final verdict on what is fair and right.

Because when lifetime, incumbent judges and bleeding-heart juries stop handing out ludicrous decisions, then I'll be the first person to tell you that you'll no longer need to protect your hard earned assets.

I guess the irony of it is, collection lawyers, government agencies such as the IRS and the FTC, and everyone outside the asset protection circle, make every effort to characterize legal asset protection as dishonest, fraudulent, or worse.

Of course, their motives are transparent. They viciously denounce anyone who successfully stop their efforts to collect or seize their assets which then disrupts the stream of income flowing in their direction.

So, total asset protection is NOT illegal or a privilege; it is a freedom protected by the U.S. Constitution. Imagine that.

I think most people would be totally surprised at how many of our politicians and well known corporate giants have gone offshore to safe guard their millions in assets.

Looking into asset protection and then taking action to protect your business and personal assets maybe one of the most important and intelligent financial decisions you may ever make.

So, talk to an asset protection consultant and attorney now... before its too late.

Because the cost of setting these protection devices in place will be ridiculously small compared to the cost of losing your home, cars, retirement and investment accounts. Not to mention the unimagineable stress. Do it now.

About The Author

Floyd Tapia has over 8 years of tireless work and research experience on the topic of total asset protection. His news tips, The Tapia Brief, has up-to-date tips on affordable bulletproof lawsuit protection for all:

http://www.lawsuit-protection.com/the_tapia_brief.html

http://www.lawsuit-protection.com/bulletproof_assets.html

webmaster@lawsuit-protection.com

Expat Insurance

If you and your family relocate overseas, one of your first priorities from a financial planning point of view may very well be establishing health care cover.

Costs and services abroad can differ greatly to what you are accustomed to ‘back home’. Therefore it is essential to make sure that you are fully covered.

From straight health insurance for you and your family you may need to consider both critical illness insurance and income protection. Making sure that you have the important insurances in place will afford you greater peace of mind coupled with greater security as a family.

Personal peace of mind will enable you to get on with enjoying your time abroad and allow you to concentrate on establishing long term financial freedom.

Health insurance

In terms of health insurance, it is essential to make sure that you and your family are covered in your new country of residence and also when travelling.

Always make sure that you are comfortable with any restrictions or limitations of policies recommended to you, and any excess you may be liable for in the event of a claim.

Medical costs differ greatly around the world, as do the standards of treatment available. Find out what services are available in your country of residence, what your expat insurance covers you for, and always make sure that you have the option to repatriate in the event of an emergency.

There are so very many companies offering health insurance to expatriates in the market place today and all come with features, benefits, exclusions and exceptions.

I would recommend that you speak to a financial adviser to find out what your best options are depending on your personal needs and those of your family.

With something as precious and essential as your health are you prepared to accept second best?

Know what’s available and be a smart expat insurance buyer!

Critical illness insurance

Critical illness insurance can take away stress and financial strain if ever you are incapacitated through serious illness.

Financial expenditure and outgoings will not cease if you are taken ill: your ability to provide for your family will however cease. Critical illness insurance is designed to payout in the event that you are unable to work due to serious and ongoing illness.

Income protection insurance

Income protection insurance may also be available to you and of interest. This insurance is used to replace a percentage of your income if you are unable to work through injury or illness.

Life insurance

As an expatriate living in a ‘foreign’ country there are many uncertainties, upheavals, unknowns and concerns especially when it comes to fiscal matters.

Life insurance is one of the most important products when it comes to peace of mind. You want to protect your loved ones in the event of your death - protect them financially and emotionally.

For your family to maintain the same standard of living in the event of your death you have to make sure that you have the correct type and level of life insurance.

The type of life insurance you need depends on what you want to achieve with your policy.

If you simply require insurance against your untimely death for the fixed number of years of your offspring’s childhood for example, this can be arranged via level term life insurance.

Decreasing term insurance can be used to pay off a mortgage or other loan in the event of your death during the outstanding period of the loan.

Whole of life insurance is exactly as it sounds - it covers your beneficiary in the event of your death whenever it occurs.

And annual renewable life insurance can be used by expatriates who wish to insure themselves one year at a time depending on their changing circumstances.

Life insurance policies are available for your whole family and are definitely something worth considering when it comes to financial peace of mind.

First steps

Whether you are a new expatriate, an expatriate in a new country, or an expatriate worried about the levels of insurance you have for your family, you shouldn’t put off until tomorrow that which you can get done and dusted today!

Yes, insurance is boring!
But insurance does bring protection.
And protection brings peace of mind.

When it comes to financial and wealth management and making your money work harder for you and your family, the first step is to actually make sure your current position is secured.

We all know that we should have enough in the bank readily to hand to cover a rainy day or an emergency trip back home - but at the same time we need to look out for ourselves and our family today as well as securing our future tomorrow.

Based on your country of residence, country of domicile, intention to remain or repatriate, and the needs and requirements you have, a financial adviser will be best placed to advise you when it comes to all your insurances and assurances.

If you need further information, specific policy literature or assistance in locating a financial adviser in your location, contact us and we will assist you.

And if you are after even more top tips, Shelter Offshore recommend you read the following: -

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The authors’ optimism and common sense come from their multiple international moves and more than 30 years experience living and working overseas. The authors provide essential tools to make each expatiate an expert at surviving in his or her new culture.

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About offshore investment funds

Funds offer the investor an affordable way to access a wide variety of professionally managed investments; in fact the benefits of mutual funds, offshore investment funds and even their onshore equivalents are manifold.

This article will discuss the important differences between the different types of fund available and the associated benefits of each.

Investment Funds

This type of investment vehicle allows the investor to pool their money with other subscribers (also known as unit or share holders) for greater investment purchasing power. The investment fund is established and marketed by the promoter, it is professionally managed on behalf of the investors by the fund manager and a custodian effectively holds the assets within the fund on behalf of the investors. Profits and losses are shared between investors proportionally based on the percentage of their subscription to the fund, and all three bodies involved in the administration and management of the fund are paid by the investors based on the value or success of the fund.

Mutual Funds

Mutual funds - which are also referred to as unit trusts - are a form of investment fund that often benefit from beneficial taxation treatment in the country in which they are established - this is generally in an attempt to promote personal saving. The way a mutual fund works is an investor buys and sells units or ‘shares’ of the fund from the manager - almost like trading, and the net asset value (NAV) of the fund per unit is calculated on a regular basis. Many of the European mutual funds available adhere to the EU UCITS Directive which is a central form of regulation. UCITS stands for “undertakings for collective investment in transferable securities” and funds that adhere to it can only invest in companies which are listed on public stock exchanges but they can then market their funds throughout Europe.

Offshore Investment Funds

These funds are structured in the same way as their onshore equivalent but they are based offshore - or at least based outside high taxation countries like the US for example. The benefit of an offshore investment fund over its onshore equivalent usually comes down to regulation. For an onshore fund to qualify for promotion in high taxation jurisdictions it generally has to be highly regulated and only invest in the least volatile sectors of a given market for the protection of the fund’s investors - naturally enough this places a certain restriction on fund potential. Offshore investment funds escape this heavy regulation and restriction and as a result such funds come in many flavours from income, bond, capital equity, property, money and emerging-market funds etc., and they offer far greater potential for growth and returns but can be riskier and more volatile.

There are six general advantages associated with investing via funds, namely affordability, regulation, tax benefits, diversification, variety and professional management. Let’s examine each one in turn.

Affordability - by pooling money with other investors via an investment fund, purchasing power is increased. The investor therefore has potential exposure to a far broader portfolio of investments than would otherwise be affordable with his level of investment commitment.

Regulation - depending on the type and jurisdiction of fund the investor selects they will benefit from a certain guaranteed level of regulation. For those with low risk tolerance who choose to invest via an onshore investment fund or a UCITS mutual fund they will benefit from the greatest levels of regulation and investor protection.

Tax benefits - there are significant taxation benefits associated with offshore investment funds - they can grow tax free, income or profits can be realised without the deduction of tax at source etc., but there are also tax breaks sometimes offered to those who invest via mutual funds as well. Often the government in the country where the mutual fund is based is keen to promote personal saving and investing and will offer tax incentives to those who take the investment initiative.

Diversification - the key to successful wealth management and in the fight against risk is diversification. By investing via an investment fund your money can be invested across different sectors, securities and/or asset classes thus offering more potential stability within your investment portfolio.

Variety - not only can you invest in a variety of different securities via one investment fund, you can invest in a wide variety of fund types as well to satisfy your risk profile, requirements and investment appetite.

Professional management - fund managers are skilled in the art of assessing, projecting and reacting to market conditions, they are professional investment managers and will apply their unique skill for the direct benefit of each investor within the fund...after all, they are usually paid on performance therefore it is in their best interests to offer the very best management of your investment fund.

If you’re interested in finding out more about the best funds currently available please contact us with your requirements and we’ll seek to find the most applicable investment vehicles for your personal requirements.