Offshore banking

I had an interesting discussion with a friend about banking and taxation while working overseas. He advised me to open an account in Singapore. I remembered that another friend also advised me in past to open an account in Hong Kong. That's called offshore bank account. Having an offshore bank account means saving tax and some may have other reasons behind it.


It is said that there are only two things in life that are certain. These are death and taxes. As much as we hate paying it, taxes are integral and crucial elements for society to run properly and for the bureaucracy to operate efficiently.

First of all, you don't have to be wealthy to have an offshore bank account. Second of all, you do not have to be present to open it and you do not have to visit the bank at any time during the life of the account. Offshore banks do not report your income to the Tax authorities in your country so they use an honour system. This means that it is up to you to report your income, but changing laws and other factors can cause issues if you do not comply with the laws of your own country. However, offshore accounts keep matters private and keep others from learning of your affairs. That is why such accounts are so popular amongst people all over the world

Nevertheless, there are some legal implications and some things that must be kept in mind. One of those things is the fact that it may not legal to open an offshore bank account. Sure, you may be protecting your money from creditors or from high taxes, but you could get yourself into trouble. It is very possible that the long arm of the law will not reach your offshore account. Another risk is the fact that your money doesn't have the protection of the government. Your money is subject to the laws of the country that it is in. This means that a coup or some accounting scheme could occur that would cause you to lose all of your money. That is when you must ask yourself which country you want to open your offshore account in. Should you choose Switzerland, Bermuda, the Bahamas, or the Caymans? This can certainly be a difficult decision.

As an Asian and a long-time believer that the twenty-first century will be owned by Asia, the two most classic and well-known offshore banking jurisdictions are still the best: Singapore and Hong Kong.

Hong Kong

The only problem is that, as I reported this summer, Hong Kong banks are making it harder to open an account. They just don’t need your money when they’ve got every rich mainland Chinese tripping over himself to push, pull, or drag his assets over the stripe in the sand that separates Shenzhen and the world’s freest economy. Because their balance sheets are much better, these local banks in Hong Kong aren’t trying to attract every Tom, Dick, and Harry. I doubt anyone in Hong Kong has ever gotten junk mail promising them a free toaster or tickets to the zoo for opening a bank account here.

In fact, when I was in Hong Kong, one of the American friend said that even he – a bonafide expat with a local corporation – had so much trouble opening an account with one of the strong, stable local banks that he gave up and went with HSBC.

Make no mistake – it’s still possible to open a bank account in Hong Kong. There are multinational banks that you’ve heard of that will open an account for you. Some have odd conditions or stricter requirements than others, which makes it tricky. But it can be done. Many of the Hong Kong banks I met with have a requirement that new non-resident customers are introduced by an existing Hong Kong banking customer.

If you were to come to Hong Kong thirty years ago, you would have had these banks at “Hello”. Now, Hong Kong and plenty of other places have found enough local wealth to keep well-run operations afloat. They don’t want to be some international megabank that has to rely on corporate welfare to stay in business. And that means fewer opportunities for you.

Singapore
The country has grown into a premier investment and business haven, comparable to Hong Kong, London, New York, or Tokyo. While Hong Kong sees itself as a financial gateway to expanding China, Singapore is the gateway to all of Southeast Asia. It enjoys a remarkably open and corruption-free environment, and offers stable prices.

Money moves to Singapore primarily for tax reasons because the country has the lowest tax rate in Asia. It is a pretty good place to open a bank account and it can be done with as little as $1. When you open an account in Singapore, you are investing in one of the fastest-growing economies in the world, while at the same time protecting your money and saving on taxes. The typical minimum required balance is $1,000. In terms of documentation needed to open an offshore account, you will be expected to provide proof of who you are (a copy of your passport),where you live (such as a utility bill) and most importantly of all, proof that the funds come from a legitimate source. For example, if the funds you are depositing were obtained from a real estate sale or from an inheritance, you would show the relevant legal documents to prove this. Finally, it is advisable to take a letter of reference from your bankers at home, introducing you as a responsible account holder. One of the disadvantages of banking in Singapore is that you will need to go there to open an account.

Interest earned by individuals on bank deposits and foreign sourced income – including foreign sourced dividends received on non-Singaporeans securities – is exempt from Singapore taxes. Singapore also has no capital gains tax nor estate duty on bank deposits and investments.

Accounts can freely be maintained in all major currencies. These multi currency accounts provide an excellent hedge for those of us who foresee major devaluations of currencies like the dollar and the euro in the months and years ahead.

Dubai
Dubai has a premium banking sector that serves local, expatriate and offshore clients. It is said that the privacy policy for Dubai banks is even better than that of Swiss banks. There are also no taxes in this country. To open an account, you will first need to find what the minimum balance is for each bank. You will need to provide a copy of your passport, a visit visa, proof of address, bank card from your country of residence and maybe a letter of recommendation from a UAE resident