Corb7 International June 8, 2018 Newsletter

International Business

Feature

Tax Havens & Their Path to Antiquity

by Jeffrey H. Corbett

“A tax loophole is something that benefits the other guy. If it benefits you, it is tax reform.”
— Russell B. Long, U.S. Senator  

Tax havens have a long history, have been under tremendous attack for approximately the last ten years, but might remain inevitable in the future as long as governing authorities impose tax legislation, which is perceived as unfair. It does not really matter whether or not the tax is justified, but it is the perception of those paying the tax that counts.

To gain an understanding of tax havens it is important to define the difference between tax avoidance and tax evasion.  These are legal terms that are poles apart.   Tax avoidance is the legal utilization of tax legislation and/or investment vehicles in order to reduce the amount of tax that is payable. By contrast, tax evasion is the general term for illegal efforts not to pay taxes that extend outside of the law. Therefore, as a law-abiding citizen, it is perfectly within your right to avoid tax, but people run into trouble by crossing the line to evasion. It is important to reiterate that, generally speaking and for the purposes of this column, the amount of avoidance that can be accomplished through offshore entities is minimal and best done by an experienced, international tax professional. Further, if you are a US citizen, there is virtually no tax benefit to going offshore as you are taxed on worldwide income.

The phrase tax haven is often considered to be synonymous with offshore.  In this day of worldwide income tax, however, the conventional characterization of the term tax haven is seemly on a path to antiquity.  Starting with the Organization for Economic Co-operation and Development’s (OECD) report on “Unfair Tax Competition,” published in the year 2000, a war has been waged by the world’s wealthiest countries against tax havens.  Economic and political pressure has been steadily applied to these nations resulting in a totally new international landscape. With teams of CPAs and tax attorneys even the world’s largest multinational corporations are finding it increasing more difficult to structure their dealings in such a way as to benefit from jurisdictional tax relief. The only remaining logical conclusion is that it is rarely possible for an individual to do so. Offshore financial centers, therefore, are less tax driven and much more focused on capturing direct foreign investment by offering businesses lower regulatory environments to operate in and protection from litigation.

Historically, tax havens have come in all shapes and sizes, each differing according to their own culture and the type of capital they wish to attract.  Therefore, they are not easily defined. It is nearly impossible to provide a specific interpretation that will not result in the exclusion of an important participant. Clouding the picture even further is the fact that governments commonly make singular concessions to large corporations in order to create jobs and bring in industry.  Grants, loans or tax holidays are frequent enticements offered to these types of entities on a specific project basis.

As means of comparison and contrast we like to draw an imaginary line dissecting tax havens (and offshore financial centers) into two separate categories.  This is of assistance since again there is no exact consensus.  Consequently, for our analysis we will express tax havens as falling into one of two broad groups defined as either “low” tax havens or “no” tax havens.

• A “Low” Tax Haven – is defined as one in which local income tax would apply to business transacted within its domestic borders but not to foreign source income.  So, in other words, business transacted outside the jurisdiction is exempt from any tax.

• A “No” Tax Haven – is defined as a country that is totally exempt from corporate and personal income tax. Business can be transacted both domestically and internationally without tax ramifications.  There is, however, usually a nominal, annual stamp duty collected by the government that is determined by the capitalization of the company.

There are three main geographic areas that are commonly recognized for having nations that would fit these parameters.  The Caribbean is best known for offering a tropical atmosphere and its proximity to the United States. Up until the early 1960’s, it was commonplace and perfectly legal for wealthy Americans to place cash here while on vacation and thus out of the reach of the tax man.  The South Pacific is a lesser-known area but still a major presence, especially with Asian investors.  Finally, Europe has several countries that represent the oldest and most respected havens of the world.

(to be continued.)

International Business

Business Tools 

SWIFT Business Applications

SWIFT: Direct Membership Alternative

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International Business

Business Psychology 

Why Privacy Matters

Video Review:

Over the last few weeks personal privacy is again in the news. If protecting an individual’s right to personal privacy is of importance to you then the following video would be wise investment of your time.  We found Mr. Greenwald’s insights and analogies inspiring and hope you do too. It may well be the best talk on the subject we have ever seen.

Featured Video: 

Lifestyle

Executive Fitness

The Dangers of Dehydration!

[Dehydration can affect anyone at any time, which only highlights why men, women and even children should learn to identify signs of dehydration and what to do should it surface.]

Dehydration is a simple condition to understand, but one that can lead to a host of complicated problems. Many people may be quick to associate dehydration with athletes, particularly those who exercise outdoors in warm climates. But dehydration can affect anyone at any time, which only highlights why men, women and even children should learn to identify signs of dehydration and what to do should it surface.

What is dehydration?

Dehydration happens when the loss of body fluids, namely water, exceeds the amount of fluids that is taken in. When a person is diagnosed as dehydrated, that typically means his or her body has lost so much fluid that is has begun to lose its ability to function normally.

Who is vulnerable to dehydration?

Anyone can suffer from dehydration, which can be especially dangerous to young children and older adults. The Mayo Clinic notes that older adults, who naturally have a lower volume of water in their bodies, may not feel thirsty until they are already dehydrated, so it’s important that aging men and women understand that thirst is not always the best indicator that they’re becoming dehydrated. Babies may become dehydrated when they get sick with an illness that causes vomiting and diarrhea. But even teens and otherwise healthy adults can suffer from dehydration.

What are the symptoms of dehydration?

Symptoms of dehydration vary with age. Parents of babies and young children should be on the lookout for signs of dehydrations, as infants and even toddlers may not be able to communicate that something is wrong.

Signs of dehydration in infants and young children include dry mouth and tongue, a lack of tears when crying, sunken eyes and cheeks, and a sunken soft spot on the top of the skull. In addition, babies who produce no wet diapers for three hours may be suffering from dehydration. A sense of listlessness or irritability in infants and young children is another potential indicator of dehydration.

Adults who experience extreme thirst may be suffering from dehydration. Less frequent urination and a dark-colored urine when going to the bathroom also is symptomatic of dehydration. Fatigue, dizziness and confusion are some additional indicators of dehydration in adults.

Can dehydration be prevented?

Dehydration can affect anyone, but there are ways to prevent it, even among those people who are especially susceptible to dehydration, such as children and older adults.

Parents of babies who are vomiting or experiencing diarrhea should speak with their pediatricians and discuss the ways to prevent such children from becoming dehydrated. Breastfeeding more frequently and giving the baby a medicine such as Pedialyte® can prevent the occurrence of dehydration in babies who are sick. The Mayo Clinic recommends parents take a proactive approach to preventing dehydration in young children, meaning they should not wait until dehydration occurs or symptoms of dehydration present themselves before taking action.

Adults who want to prevent dehydration should drink plenty of fluids and include lots of fruits and vegetables in their diets. Such foods contain lots of water and can help the body avoid becoming dehydrated.

The Mayo Clinic recommends that athletes begin hydrating the day before engaging in strenuous exercise. A telltale sign of a well-hydrated body is clear, diluted urine. Athletes should replenish their fluids during exercise and continue doing so even after they finish working out or competing.

Older adults should make a concerted effort to drink more fluids when suffering from minor illnesses, which is when such men and women most commonly become dehydrated. Drink extra water when battling influenza, bronchitis or bladder infections, remembering that feelings of thirst often surface only after the body has become dehydrated.

Dehydration is a serious yet preventable threat to men, women and children.

Lifestyle

Spirits & Cuisine   

Emergency Food … Just by Adding Water!

With the recent tragic events in Hawaii, we thought it an excellent time to review an emergency food provider. WiseFoodStorage.com is a company that provides real food options, which can be prepared in minutes by just adding water. Since we live in earthquake country, this is a product that we personally use and have in storage.

Lifestyle

Living & Traveling Offshore  

Tips to Find a Great Summer Rental!

The growth of lodging websites such as Airbnb and VRBO has given travelers more temporary housing options than ever before. Such sites may appeal to those vacationers who want a taste of home away from home without having to pay potentially exorbitant hotel prices.

The cost savings of vacation rentals can be considerable, providing more bang for budget-conscious travelers’ bucks. But vacationers who have never strayed from the hotel/resort path may be hesitant to dip their toes into the vacation rental waters. While travelers accustomed to staying in luxury hotels may need to adjust their expectations when booking vacation rentals, the following are some ways to find a great vacation rental that suits you and your fellow vacationers.

· Make a list of your lodging priorities. Popular lodging and vacation rental websites offer an array of options, so make a list of your lodging priorities so you can find the right fit without having to peruse hundreds of listings. If you want to save money by cooking your own meals, then a home with a full kitchen may be your biggest priority. If beach access tops your list, then you can save time by searching for oceanfront homes or condos. If saving money is your biggest priority, then expand your search to properties further away from coastal areas or homes, but are within walking distance of local nightlife. What you sacrifice with regard to view and convenience you’ll recoup in cost savings.

· Don’t pull the trigger too quickly. Low prices may tempt prospective travelers, especially those accustomed to staying in expensive hotels, to book lodging before they full vet a property. Fight the temptation to book a rental before you have done your homework. Learn as much about the rental as you can before booking your stay. Read reviews of the property and carefully examine the property listing so you know exactly what you are getting. Carefully examine any photos included in the listing, and try to confirm that the property is not in foreclosure, which may pose problems when you’re ready to embark on your trip. Find out as much as you can about the property owner as well. Some are renter-friendly while others may have poor reputations.

· Determine who handles any potential problems that arise during your stay. Unlike a hotel stay when you can simply call the front desk and request a maintenance staffer be sent up to address any problems that arise in your room, you may be on your own in a vacation rental should the refrigerator go on the fritz or the air conditioning unit suddenly stop working. Determine how problems are handled before booking a rental. Rental homes that are part of a homeowners’ association may have on-site maintenance ready to respond to any issues, while homes offered by private homeowners may come with no such benefits.

· Book early if you’re attending a specific event. Hotels book up quickly on busy weekends, and so do vacation rentals. Vacation rental prices fluctuate just like the cost of hotel rooms, so begin your search early if you are traveling to attend a festival or another event that figures to attract large crowds.

Vacation rentals can save travelers money, but finding the right fit requires effort on the part of vacationers.

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