Offshore banking
Posted by Ripon Abu Hasnat on Friday, June 13, 2014 | 0 comments
An offshore
bank is a bank located outside the country of residence of the depositor,
typically in a low tax jurisdiction (or tax haven) that provides financial and
legal advantages. These advantages typically include:
Greater privacy (see also bank secrecy, a
principle born with the 1934 Swiss Banking Act)
Low or no taxation (i.e. tax havens)
Easy access to deposits (at least in terms of
regulation)
Protection against local, political, or financial instability
While the
term originates from the Channel Islands being "offshore" from the
United Kingdom, and most offshore banks are located in island nations to this
day, the term is used figuratively to refer to such banks regardless of
location, including Swiss banks and those of other landlocked nations such as Luxembourg
and Andorra.
Offshore
banking has often been associated with the underground economy and organized
crime, via tax evasion and money laundering; however, legally, offshore banking
does not prevent assets from being subject to personal income tax on interest.
Except for certain persons who meet fairly complex requirements,[1] the
personal income tax of many countries[2] makes no distinction between interest
earned in local banks and those earned abroad. Persons subject to US income
tax, for example, are required to declare on penalty of perjury, any offshore
bank accounts—which may or may not be numbered bank accounts—they may have.
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