Reasons For Offshore Investment
Motivations for investment offshore include:
- Tax advantages - tax regulations often contain provisions to protect against taxation by multiple jurisdictions which can be exploited for legal tax reductions. Nations intentionally attract business investments through lower tax rates. The corporate-tax trend over the period from 1980 to 2010 has trended lower, with the top rate in OECD countries (excluding America) moving from 51% to 32%. Investing in such an environment can improve the investor's rate of return on investment.
- Investment diversification - risk can be managed by diversifying investments among a wider range of options than are available for onshore investment.
- Avoidance of forced heirship - inheritance may be passed to the preferred heir, regardless of regulations such as community property laws in the jurisdiction of residence/death.
- Lower levels of regulation - a broader range of investment options are available (e.g. hedge funds, which thrive in low regulatory environments due to their highly aggressive investments strategies, thrive in offshore jurisdictions, principally the Cayman Islands)
- Privacy - confidential financial information helps the individual manage taxes on capital gains, income, and inheritance.
- Specialist financial services - the leading offshore centres have highly developed financial services sectors with expertise in asset management, banking, insurance, trusts, funds and legal services.
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