The independent offshore and alternative investment guide for expatriates and the globally aware investor.

Sponsored by HSBC Bank International

Sections: Offshore & Alternative Investment Knowledge Base | News | News Archive | Features | FAQ | DIY Investment Selector | Your Views | Service Providers | RSS
Subjects: Asset Protection | Banking | Education | Equities | Expatriates | Forex | Health Care | Hedge Funds | Investment Funds | Pensions | Real Estate
Sign up to the free Investors Offshore newsletter:
Learn More | Unsubscribe






The Benefits of Lower Taxation

This might seem an oxymoron, but the point is to examine the advantages for an investment manager and for investments themselves of being based in a low-tax area.

All jurisdictions, whether they tax low or high, give some tax advantages to certain preferred types of investment, usually starting with government's own bonds, which are often tax-exempt (why else would anyone buy them?). In high-tax countries, most of these exemptions apply only for small investments, and seldom to high-return investments. Pension investment might seem to be an exception for the investor, but it isn't really because the tax is only being deferred, not escaped. Established tax exemptions for pension fund managers in high-tax areas are under attack in some countries, notably in the UK.

As a generalisation, investment managers in low-tax areas have a considerable tax advantage over their colleagues in high-tax areas, which is eventually reflected in better returns for the investor. Offshore jurisdictions which have good double-tax treaty networks (surprisingly, there are quite a few) are often able to receive investment income even from high-tax countries without the imposition of withholding tax, and usually offer tax-exempt or tax-reduced local regimes, so that the final investor has access to gains in a fund or an investment with little or no intervening taxation.

It is obvious that a fund which pays a composite rate of 10% tax on its profits will grow much more quickly that one which pays 20%, and differentials on this scale are easy to achieve just as a result of picking a low-tax base as against a high-tax base.

At a more basic level, bank interest has traditionally almost never been subject to withholding taxation in offshore jurisdictions. However, the EU Savings Tax Directive, introduced in 2005, has meant that savings interest received in any of the signatory countries is subject to a withholding tax, or to information exchange, in order to ensure that it is taxed in the EU resident's home country).

The STD notwithstanding, however, a roll-up money market fund is going to grow more quickly offshore than in a country which imposes 30% corporation tax on its gains. Of course, if you are resident in a high-tax area, the taxman will eventually catch up with the gains, but it may be at a much lower rate of Capital Gains Tax - or you may have retired and emigrated by then!

For in-depth information on the taxation regime in most offshore jurisdictions, see The Offshore Legal and Tax Regimes section of any jurisdiction in www.lowtax.net.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IO By Email
Register your email to receive the free Investors Offshore newsletter:
Learn More | Unsubscribe

Lowtax Network

New On The Network Today

This feed is published daily with selected new or updated content from across our network. For a list of network sites, many of which feature daily news, see below.

 
02/09 New Lowtax Editor Column, by Kitty Miv
01/09 International Privacy and Security, Investors Offshore special feature
31/08 Lowtax Belize, annual update
27/08 IRS To Drop UBS Lawsuit, Tax-News.com
26/08 New Lowtax Editor Column, by Kitty Miv
25/08 New PBTG Editor Column, Caroline, PBTG editor
24/08 Uruguay Stays On OECD Grey List, Tax-News.com
23/08 Don't Forget Doha, And I Don't Mean The Tennis, Jeremy Hetherington-Gore blog entry
20/08 Ireland Plans Social Security Overhaul, Tax-News.com
19/08 New Lowtax Editor Column, by Kitty Miv
18/08 New PBTG Editor Column, Caroline, PBTG editor
17/06 Lowtax Cayman Islands, annual update
16/08 Germany's Fiscal Court Seeks Property Tax Reform, Tax-News.com
13/08 Jurisdiction Special Focus: Antigua and Barbuda, Investors Offshore special feature
12/08 New Lowtax Editor Column, by Kitty Miv
11/08 New PBTG Editor Column, Caroline, PBTG editor
10/08 Brazil Cuts Import Tariffs, Tax-News.com
09/08 Ukraine Tax Code Published, Tax-News.com
06/08 France Plans Reform Of Property Tax Credit, Tax-News.com
04/08 New PBTG Editor Column, Caroline, PBTG editor
02/08 Islamic Finance - The New Mainstream Alternative, Investors Offshore special feature
28/07 New PBTG Editor Column, Caroline, PBTG editor
27/07 UK Launches Raft Of Tax Consultations, Tax-News.com
26/07 Fat Tax On The Menu , Jeremy Hetherington-Gore blog entry
23/07 Sarkozy Seeks 'Fiscal Convergence' With Germany, Tax-News.com
20/07 Singapore Base For Tuvalu OIFC, Tax-News.com
15/07 St Vincent & The Grenadines, Investors Offshore special feature
13/07 Tax- News.com Jersey Review 2010-2011
12/07 Goodbye To All That, Jeremy Hetherington-Gore blog entry
06/07 Hong Kong Full PBTG Guide, added to Personal Business Tax Guide
28/06 Lowtax Dubai, annual update
18/06 Singapore - Another Hong Kong?, Investors Offshore special feature
15/06 Swiss Parliament Approves UBS Agreement, Tax-News.com
08/06 Dubai Full PBTG Guide, added to Personal Business Tax Guide
04/06 Lowtax Panama, annual update
01/06 Lowtax Luxembourg, annual update
03/03 Personal Business Tax Guide, PBTG, has launched!
Providing essential tax news and information for globally mobile artists, contractors, entrepreneurs, professionals, small businesses, sportspersons and entertainers.
 

 
Lowtax Network Sites
Lowtax Network Portal: 'Low-tax' business and investment in the top 50 jurisdictions covered in exceptional detail.
Tax News: Global tax news, continuously updated through the day.
Investors Offshore: The independent offshore and alternative investment guide for expatriates and the globally aware investor. Sponsored by HSBC Bank International.
Law & Tax News: Daily news and background data on tax and legal developments for international business.
Offshore-e-com: A topical guide to offshore e-commerce focused on tax and regulation.
Lowtax Library: One of the web's largest and most authoritative business and investment information sources.
US Tax Network: The resource for free online US taxation information, covering: corporate tax, individual tax, international tax, expatriates, sales and e-commerce tax, investment tax.
NEW! Personal Business Tax Guide: Providing essential tax news and information on business for contractors, entrepreneurs, professionals, small businesses, artists, sportspersons and entertainers.
 

IMPORTANT NOTICE: INVESTORSOFFSHORE.COM has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments. All materials on this site copyright INVESTORS OFFSHORE 1999 to 2010.


All content on this site has been provided by BSIRN.