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Offshore Is More Than A Vacation

By John Dietz - Email Editor

Date : May 5, 2009

Dear Valued Reader,

If you should employ yourself to be diligent in your tax compliance and have the right counseling and legal advice, offshore opportunities exist for more than vacations.

To read an article on the Full Faith and Credit Clause click here.

It certainly appears to the skeptical eye that the Obama administration is making an example of tax evasion by blacklisting most of the Offshore Financial Centers. We understand the government’s pursuit of tax dodgers, however, it begs the question of who is the Obama target; does he really want you and me?

Many lawmakers say that there is a specific objective to the Stop Tax Haven Abuse Act and the blacklist and we should be careful not to read it with the wrong assumption, or with an interpreted meaning that does not apply. Congress’s Joint Committee on Taxation estimates that the failure to report income of U.S. controlled corporations will cost taxpayers $56.4 billion in revenue between 2008 and 2012 if something is not done to stop offshore tax abuse.

The report identified countries around the world as blacklisted tax havens and it heavily emphasized that some major companies have avoided taxation by using international and offshore companies, specifically identified was AIG. American International Group was found to have 115 subsidiaries in tax haven countries including 59 in the Cayman Islands. Citigroup had 427 subsidiaries in such countries, including 90 in the Cayman Islands and 21 on the Isle of Jersey. These facts lead us to see that the microscope and subsequently the new laws are a call to all to comply…or else, yet a specific message is intended to reach corporate targets.

The main theme is still tax revenue, however, if you are like myself and the clients of Trustmakers, a compliant taxpayer, I do not believe the bill was created to repeal your right to Asset Protection or to do international business, only to make it more difficult for people trying to avoid tax.

International Business and Trusts from the South Pacific

Today I am writing from Rarotonga, the centerpiece and the main banking center for the island nation called the Cook Islands. The Cooks with their group of fifteen islands, separated by eight northern atolls and seven southern volcanic groupings, are all gems of the South Pacific.

Most of us who think about the South Pacific, conjure up thoughts of places like Fiji, Bora Bora and Tahiti and the possible wayward artist which put them on the map. If Guaguin would have seen the Cook Islands before he visited Tahiti, he surely would have painted the people and the inlands with similar zeal. The Cooks are situated in the southern hemisphere about equal distance from the equator as Hawaii is to the north. You can leave Los Angeles in the evening and wake up in the Cook Islands for one-third the cost you may spend for going to other popular island vacation destinations.

All Cook Islanders are multilingual; English is the first language along with native Maori. The local currency is New Zealand Dollars, as of today’s writing, you get $1.75 for every US dollar.

The Cooks enjoy a stable government and a symbiotic relationship with New Zealand that offers a backyard, warm, ideal holiday destination. The Cook Islands are an independent sovereign nation, in free association with New Zealand. Essentially all Cook Islanders retain New Zealand citizenship and its inherent benefits. This means that the Cooks come under the protection of the New Zealand armed forces and by extension of the ANZAC spirit, The Cook Islands also have special defense ties with Australia.

The legal system is based on British common law and closely reflects that of other common law jurisdictions. There is a High Court and a Court of Appeal, the judges being appointed under warrant from the New Zealand bench. It enjoys a stable Westminster style democracy with the British Monarch as the Head of State.

The Cook Islands enjoy a highly developed infrastructure for business. There is a well-educated English speaking labor force. The country has sophisticated telecommunication links with the rest of the world. There are no foreign exchange controls affording complete freedom to repatriate capital and profits. It boasts the highest GDP per capita amongst the South Pacific small island nations.

The Cook Islands is therefore ideally suited to conduct business with Asia (there is a 7 hour difference with Singapore), Australasia (where there is a 4 hour difference with Sydney), and North America (there is a 6 hour difference with New York). The working day in the Cook Islands overlaps with a myriad of other jurisdictions.

To sum it up, a mature banking system, rule of law and lack of poverty to be found anywhere in the Cooks make this island nation a wonderful place to conduct business, and not bad spot to work on your tan.

Until next time,

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