Corb7 International August 2014 Newsletter

“Advocate for International Business”

Editorial:

“A Price Will Be Paid”  by Jeffrey H. Corbett 

Every day, we see  multiple accounts emanating from various locations throughout the world – most heart-wrenching – of war torn areas. If for one moment we set aside the emotional response to these situations, there is a business aspect to these occurrences. Political unrest chases wealth to new locations faster than even the heaviest handed tax collector. Investors always look unkindly at any location that does not have its own house in order. The equation comes down to a simple analysis of risk vs. reward. Therefore, with these forces at work as a driving force flight capital will be economic reality for some time to come.

Flight Capital

This is defined in economics as an occurrence when money rapidly moves from one country to another to seek refuge. Flight capital is most frequently caused by a dramatic increase in tax or political uncertainty. Wealth disappears from the affected country which is usually accompanied by a sharp drop in the exchange rate. The decrease in purchasing power makes it significantly more expensive to import needed goods and devalues a country’s assets.  History is littered with examples of flight capital. The Iron Curtain, the Nazis of World War II, human rights violations in China, Cuba under the Castro regime, the fall of Vietnam and North Korea are all examples of tyrannical behavior having a major influence over investment.

Conclusion

Unfortunately, citizens in some parts of our world face a deep concern over their nation’s current political environment while others are dealing with the dreadful realities of war. This is a sad fact which holds true throughout history and across borders. In response to these events the harsh certainty is that investment capital will move. Nations which position themselves to be competitive on a global basis will prosper from this capital seeking refuge. Anyone active in either international business or investing should remain aware of these realities and accordingly make their decisions.

Monthly Featured Video: 

“Body Language” – We found this to be a very valuable and motivational video for business.

Upcoming Events: 

Several  conferences which you may want to place on calendar:

– European Captive Insurance Forum
November 11-12, 2014 (Luxembourg)
Please Click Here

– Vermont Captive Insurance Conference
August 12-14, 2014 (Burlington, Vermont)
Please Click Here

– Connecticut Symposium on Captive Insurance
September, 17, 2014 (Stamford, Connecticut)
Please Click Here

–  Missouri Captive Insurance Forum 
 September 18, 2014 (St. Louis, Missouri)
Please Click Here

Articles You May Have Missed:

– US Tax Code Hearing on Corporate Inversion:   Read
– The UK’s FATCA and the Cayman Islands: Read
– BVI signs FATCA with US Read
– Guernsey Adds 113 Funds in 12 months Read

Did You Know?

Corporate Inversion

The process of reincorporating a business overseas in order to reduce the tax burden on income earned abroad. Corporate inversion is a strategy most often used by companies that receive a substantial portion of their income from foreign sources. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements. It is a very controversial strategy which has seen a recent uptick in recent activity. Harvard Law School Forum

Travel Warnings: 

General – US State Department Alerts
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