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This is the story about Offshore and how it changed over the course of 10 years.
When someone says ''offshore'' the first thing that comes to mind is a tropical island where big corporations form shell companies in order to pay less tax. People commonly refer to jurisdictions such as the British Virgin Islands, Cayman Islands, Belize, Vanuatu, Anguilla, and offshore jurisdictions. But how true is this? How relevant are these jurisdictions and do people really form companies there anymore?
The answer is NO. The time when small islands were tax havens where one could hide money is long gone. They are pretty much useless today. And we will tell you the story of why is this the case.
As you're probably aware, the world has changed drastically over the last couple of decades. Under the pressure of the US, many banks globally needed to change and update their rules about bank secrecy. Therefore banking got much tougher, and banks will rarely accept businesses that they don't understand or that don't have substance in a local jurisdiction.
This pretty much meant the death of offshore islands - these places just weren't viable as places to set up the operations.
CFC rules, FATCA rules, Company residency rules, Anti-tax avoidance acts, etc. really cracked down on traditional tax-havens. The world of offshore shifted from shell companies to actual operations in low tax jurisdictions.
This meant that many companies moved to Singapore, Hong Kong, UAE, or believe it or not the USA. Also, places like Bulgaria and Georgia became increasingly popular. The same can be said for Malaysia, where many companies were incorporating in Labuan and were running operations from Kuala Lumpur.
These more reputable jurisdictions could grant you good banking, unlike small black-listed islands.
At the same time with digitalization, many businesses were concerned with payment processing which is simply impossible if you don't set yourself up correctly. Many people started thinking of ''planting flags'' and getting multiple citizenships and residencies to use them as a plan B.
Residency became more important than ever, and we can see many people opting in to pay some taxes just so they can say that they did it somewhere.
That's why we see the rise of so-called mid-shore jurisdictions, countries that have some taxes but they're not too high.
What people think of offshore is nowadays very outdated and wrong. This world has changed drastically and is continuing to change as we speak.
Hiding money in an offshore bank in the Cayman Islands is simply not an option anymore. Bank secrecy is not a thing of the 21st century and governments want to access more and more information about their citizens. Unfortunately for you, they're able to do so more than ever before.
Amidst all this, we've seen the rise of crypto, which has the potential to change the world, especially our industry. The rise of DAOs, smart contracts, privacy and security, safe and fast transfers with no compliance, are just the beginning.
The world of offshore is continuing to change. It is an exciting but at the same time nerve-racking journey. If anything else, we can expect to see more changes in the near future. Where will these changes take us? Let's wait and see.
Who are we and what do we do?
We are Offshore Citizen team. We help people become global: get a second passport, set up a second residency, pay less taxes, do banking abroad, etc.
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Author: Michael Rosmer
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