If you are familiar with the concept of offshore banking, you know that this refers to banking that is actually located outside of the account holder’s country, and it is usually in a lower tax jurisdiction in order to provide legal and financial advantages. Those who seek an offshore account are usually attracted by strong privacy policies, less restrictive regulations, little or no taxation, easy access, and protection from possible instability in local economic or political circumstances.
Originally referring to the Channel of Islands off the shore of Great Britain, many offshore accounts continue to be housed on island soil. However, many of the most trusted and utilized offshore banking establishments are now located in countries that are entirely landlocked. These include places like Luxembourg, Andorra, and Switzerland, to name a few.
A misconception of offshore banking is its association with organized crime or underground markets. Yes, offshore accounts have been used for these purposes for obvious reasons, but there are also many legitimate endeavors for which offshore banking can be used. The most recent addition to the spectrum of helpful offshore banking solutions is that of the offshore merchant account. Offshore merchant accounts make it possible for business to collect credit card payments into their offshore account. This might be fore transactions at a retail store, an online shopping cart, or even over the phone.
Why would someone consider an offshore account? One of the biggest reasons people choose to open offshore accounts is for security, especially in the event of any turmoil in the political atmosphere. Some offshore banks can offer high interest rates on savings account because they have fewer regulations by the government. Also, the interest paid is usually paid without tax being deducted. On top of that, many offshore banking solutions also offer some services that are not found in domestic banks. Some examples of these would be anonymous bank accounts, loans with better interest rates, and other business opportunities. Some advocates of offshore banking also claim that it brings competition to domestic taxes and banking, and therefore allows individuals to choose an appropriate balance of services and taxes.
This brief little explanation of the origins and uses of offshore accounts should help you start your investigation as to whether you would like to open your own. Remember to heavily consider the advantages and disadvantages and be very leery of making any decisions that might put you in legal jeopardy.
About the author:
Jennifer Loganathan is the President and CEO of Stradafee Limited an international merchant service provider. Stradafee is a retail and an electronic payments company specializing in global eCommerce and Internet merchant accounts. Merchant accounts make it possible for businesses to provide credit card processing for card present and card-not-present transactions. For more information on credit card processing visit http://www.stradafee.com
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