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Anguilla As A Sound Offshore Financial Center.

By John Dietz - Email Editor

Date : September 23, 2008

Dear Valued Reader,

Today's discussion gets away from U.S. economics and politics. We take this much needed break to talk about an upcoming jurisdiction as a sound Offshore Financial Center. I am writing from a former British colony (Hong Kong) to speak about another British outpost.

The first jurisdiction I wish to tackle is Anguilla in the British West Indies. Anguilla is the most northerly of the Leeward Islands in the Eastern Caribbean to the east of Puerto Rico and the north of Saint Maartin.  It is easily reached by direct flight from Puerto Rico or via St. Maarten. The beautiful tropic and almost crime-free society was established by European settlement and African ancestry into a high-end tourist destination.

When we examine an offshore jurisdiction, we look into the areas of government stability, company formation, taxation, trust regulation, investment and banking regulations and Asset Protection.

Government Stability

Anguilla is one of Britain's Overseas Territories in the Caribbean and as such, it enjoys a high degree of political stability.  Her Majesty, Queen Elizabeth II, is the Head of State and appoints a Governor.  A local Chief Minister is appointed by the Governor from amongst the elected members of the House of Assembly which is Anguilla's Parliament.

Company Formation

Incorporating in Anguilla is not a complicated process like it is in other offshore jurisdictions.  Companies must be incorporated through a local agent, all of whom are licensed under the Company Management Act 2000 and regulated by the Financial Services Commission.  There is a statutory exemption for companies from paying taxes.

Anguilla has three types of companies.

• The Domestic Company

The Domestic Company is an entity with provisions for easy filings and the listing of the shareholder and director of information on the companies registry.  It is used for local business operations and is tax-free.

Persons conducting international business should opt for the offshore company known as the IBC.

• The International Business Company - IBC

The Anguilla IBC is easily formed or transferred from another jurisdiction.

• The Limited Liability Company, Partnerships and Limited Partnerships

The best way to describe an Anguilla LLC, Partnership or Limited Partnership is to describe the same entity in the USA.  There may be some minor differences.

Anguilla has new legislation for foundations.

• The Anguilla Foundation

The House of Assembly, or Parliament of Anguilla, recently enacted the Anguilla Foundation Act of 2008.  The foundation is an alternative to a trust and the Anguilla Foundation is structured similarly to their offshore neighbors, Lichtenstein and Panama. The Parliament of Anguilla desires to attract charitable businesses and estate planners in the competitive offshore market.

Taxation

Anguilla is a zero-tax jurisdiction but this does not mean that U.S. citizens are exempt from paying due tax to the IRS. There are no income, capital gains, estate, profit, exchange controls or other forms of direct taxation on either individuals or corporations, whether residing in Anguilla or not.

Trust Regulation

Trusts are regulated by a modern legislative trusts act and are permitted for a wide array of purposes, unlike some other jurisdictions that require a specified purpose.  The trusts act allows for a Protector of the Trust, which may be a trustee.  The protector may fire the trustee or replace the trustee and even add trustees.

There are no expiration dates for trusts in Anguilla.  They may exist in perpetuity.

Concerning Asset Protection, Anguilla has deliberately taken a more conventional approach than some jurisdictions.  Where a trust is created under the laws of Anguilla, the Court shall not vary it, set it aside or recognize the validity of any claim against the trust property pursuant to the law of another jurisdiction or the Order of another Court with respect to marriage or its termination, claims of a creditor in an insolvency, the imposition of foreign tax or duty or succession rights.

Investments and Banking

As a territory of Britain, banking and investment are highly regulated in an effort to attract quality business and individuals.  There are 3 offshore banks and 4 domestic banks.  Domestic banks are regulated by the Eastern Caribbean Central Bank while offshore banks come under the review of the Financial Services Commission.

Asset Protection Legislation and Regulations

Regulations are made by the Financial Services Commission and Anguilla makes a priority to maintain an impeccable reputation by establishing and enforcing strict policies against money laundering through the identification and licensing of all new service providers who join the financial sector of Anguilla.

Although privacy is maintained, the government cooperates with financial authorities in the regulatory sector around the globe to maintain Anguilla's excellent reputation.

This can be a worthwhile jurisdiction for estate planners to explore. As with all Asset Protection, going offshore should be an integral part of an overall plan.  The regulatory authorities are a good motivator for the financial sector's service providers to dot their I's and cross their T's, but they do not cure headaches!  Experts should be consulted in all offshore transactions and business.

Until next time,
 
John

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