Which offshore jurisdictions will be popular in
upcoming year 2013/14?
Testimony provides imminent and data on company incorporations
in offshore financial centers
Though
incorporation activity in the majority of offshore jurisdictions like Cayman,
BVI, Hong Kong or Dubai was insignificant down in the second half of year 2012
when compared with the first six months of the year, company Set up in certain
jurisdictions offered signs of optimism, according to Appleby, one of the
world’s largest providers of offshore legal, fiduciary and administration
services.
“There are signs that 2013 will be a watershed year
in terms of seeing a universal return to pre-2009 activity levels across the
offshore jurisdictions,” said Farah Ballands, partner and global head of
fiduciary & administration services at Appleby.
Nonetheless, the on-going weakened economic
conditions continued to impact the overall market in the second half of 2012.
There were 37,881 new offshore company formations in the jurisdictions covered
by the report, a decrease of 3.6% from the second half of 2011, and a deeper
decrease of 11% on the preceding six months in 2012 from major jurisdictions.
A short time ago, Cyprus was the most fashionable and
attractive offshore economy, while all settlements were made through Baltic
banks. Favorable terms, easy registration and service in Russian attracted a
lot of clients from Russia and the CIS countries.
However,
everything changes, and offshore jurisdictions either. Requirements related to
transparency, control, anti-money laundering and counter financing of
terrorism, extension of the tax information exchange practice, and other
initiatives, which are implemented primarily by the OECD countries, make
offshore jurisdictions closer to low-tax ones, and low-tax jurisdictions — to
full-tax ones. A lot of established patterns do not bring any tangible benefits
any more, or even become jeopardy for business.
In the previous
year there will be new favorites among offshore jurisdictions. Now, those are
usually not traditional offshore economies such as Belize or Seychelles, Dubai
but low-tax jurisdictions with elevated reliability and good reputation, i.e.
European and Asian ones.
Kazakh
businessmen have found a new partner, a major Asian financial center Singapore,
with reliable banks having brilliant reputation, transactions with which are
not subject to withholding tax making offshore patterns unprofitable. Ukrainian
businessmen have preferred Panama, Hong-Kong, Dubai and Ireland as countries potential
for business. Russian businessmen are aiming at such jurisdictions as Hungary,
Ireland, Denmark, Singapore, though they do not exclude the previous targets —
Cyprus, Netherlands, Switzerland and BVI.
Now new
patterns are emerging, so called ‘sandwich’ patterns involving Irish, Danish,
Hungarian firms, as previous ‘sandwich’ patterns like UK—BVI, Cyprus—
Seychelles are becoming not extremely reliable. Speaking of trading patterns,
the best economies for doing business for the CIS countries will be Singapore,
Estonia, Hungary in partnership with the Netherlands and Denmark.
Trying to
avoid high taxes and tax information exchange, business is seeking new offshore
or low-tax jurisdictions, beneficial offshore patterns and new banks to replace
the Baltic and Cyprus banks. In the next year the offshore business will see
high competition struggling for new patterns, where the winner will be the one,
who will manage to create the most beneficial, reliable and legally ideal
pattern.
In this tough
competition, the advantage will be enjoyed by those, who keep a watchful eye on
the changes in the laws, assess the potential of new countries providing positive
conditions for operations of offshore companies, create new patterns and seek
advice of experts and consultants. Flexibility and inventiveness are the
catchwords of the offshore business in the year to come.
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