Companies & Businesses
Want To Preserve Your Net Worth? ‘Hide’ it Here!
So you’ve spent more years than you care to remember building your nest-egg to see you through the rest of your life in some comfort. Now, how to prevent the tax man getting his hands on a sizeable portion of it?
Most people will have heard of ‘tax havens’, but where are they, and what do they really provide you with that retaining your hard-earned wealth or investing in your home country does not? Investing through a trust or company based in a tax haven is a perfectly legal – the best tax havens offer low or no taxes even on personal income, as well as interest, capital gains and inheritance. Corporations reporting profits through headquarters, or even subsidiaries in countries with favourable taxation environments can obviously save billions. The super-wealthy also stand to save millions or even billions by taking advantage of the world’s best tax havens. So, the major benefit of a tax haven is saving on taxes.
Following, in no particular order, is a summary of 10 noted tax havens, and what the main attractions are which might persuade you to move all or some of liquid assets ‘off shore’. Interestingly, ‘off-shore’ is an appropriate description, as seven of the 10 are islands!
Switzerland
The country has long been the home for – some would say ‘notorious, or secret’ – bank accounts. Low taxes and a banking system which, until recent relaxations, protected account holders’ secrecy, have long made the Swiss cantons a magnet for overseas funds to take advantage of low taxes. This has made the country a popular centre financially for both individuals and corporations. Capital Geneva is the 13th-largest financial centre in the world, and longest established, plus its in the centre of Europe with a reputation for neutrality in more ways than one. US companies report well over $50 billion in profits going to Swiss subsidiaries, with almost a third of Fortune 500 companies having well-used offices in Switzerland, including Morgan Stanley, Marriott, Black & Decker, Ecolab and Pepsi.
Luxembourg
This small small European country – population half a million – has laws friendly to business that allow international companies to allocate a percentage of their profits there. About a third of U.S. Fortune 500 companies have establishments in Luxembourg, including Amazon HQ through which all European sales are accounted for, although recent EU investigations have seen the company diversify profits to country of origin.
Monaco
36,000 residents live in the two square kilometres of Monaco, where residents have paid no income tax since 1869; those rich enough to be able to claim Monaco as their place of primary residence will keep all of the money they earn, however they earn it. Of course, this has attracted many of the world’s wealthiest – one in three residents is at least a millionaire – which has made real estate prices the most expensive in the world with $1 million needed to buy just 100 square metres. Corporation tax is also low, encouraging corporations such as rental car company Avis Budget Group to establish subsidiaries in there.
Cayman Islands
The Caribbean islands country offers what has been described as “probably the biggess tax loophole now for individuals as well as for multinational corporations.” Corporation can be formed and retain assets without paying tax, although the tax laws are somewhat complex, so a professional hand is required. However, tax benefits can be worth it, as evidenced by many businesses from around the world having assets in the Caymans, in fact estimated at equal to a 15th of the world’s total $30 trillion in banking assets, including majors such as Wells Fargo, Pfizer, Pepsi, and Marriott.
Bermuda
The Atlantic island nation has long been recognised as a tax haven – wealthy individuals can feel protected by laws of secrecy covering assets held there, even including their identities. Big businesses also benefits from Bermuda’s low taxation, including no no corporate tax at all. Again, around 25% of Fortune 500 companies have at least offices in Bermuda, perhaps most prominently Google, which routinely routes profits to Bermuda through Ireland and the Netherlands, which saves the company a minimum of $2 billion a year in taxes, reports Bloomberg.
Bahamas
No capital gains, inheritance, personal income and gift tax make The Bahamas another popular tax haven, especially to wealthy older people hoping to limit tax on inheritance or to start gifting money. US corporations have reported over $15 billion in profits making it to The Bahamas, equal to more than 125% of the country’s own gross domestic product in one year. Energy provider AES and Wells Fargo Bank are just two of the 5% of Fortune 500 companies with subsidiaries in the country.
Isle of Man
Lack of corporation, capital gains, inheritance tax and stamp duty make this destination – between England and Ireland – and also with income tax’s highest rate at 20% and total amount capped at 120,000 pounds, very attractive. Additionally, many international companies have their employee pension plans held in accounts here because of asset protection, coupled with the ability to take benefits from the age of 50. However, only employer-sponsored retirement accounts benefit from this tax code.
Jersey
Jersey’s location – between England and France – status as a tax haven has been convenient since the mid-20th Century, when many British citizens moved their wealth to the island, as Britain’s inheritance tax on amounts over one million Pounds was 80%, compared to zero in the self-governed Channel Island. Even today, there is still no inheritance, capital gains tax, and standard corporate tax, except on financial services, property and utility companies. Consequently, over $200 billion in notionally UK assets are domiciled here.
Ireland
Irish officials deny that te country is a tax haven however, this was refuted somewhat when US drug company Pfizer amalgamated with Ireland-based Allergan, and re-located its headquarters to Ireland, helping Pfizer avoid taxes on an estimated $150 billion in profits held internationally.
Apple, which has accumulated over $180 billion in profits internationally, also has HQ in Ireland, thus avoiding an estimated $59.2 billion in US taxes. Over 25% of Fortune 500 companies also have branches Ireland – one doesn’t need to wonder why!
Mauritius
In the middle of the Indian Ocean, Mauritius is a popular haven for ‘foreign investments’, with its relative proximity to India. Corporations with ‘interests’ there include Pepsi, JPMorgan Chase and Citigroup. A 15% corporate tax levy is in place, however companies that are tax residents cab gain tax breaks granted through double tax treaties. Additionally, interest and capital gains are not taxed, so it is a rather attractive tax haven.
Economy
Investing Advice from Millionaire Mohnish Pabrai
Purchasing the stock exchange is mind-boggling for lots of individuals. Comprehending it looks like such a complex process which we leave it for the significant investors to fathom. However, are you aware the most successful stock traders live from the philosophies. Warren Buffett is really a known to maintain his investment principles quite fundamental, also it worked. Warren Buffett is really one of the very successful investors and among the richest guys on the planet. He likens it to the entire procedure for flipping a coin, “Heads, I win. Tails, I don’t drop a lot of.” This lets you know how seriously he takes Buffett’s theory within the diversification of investments. Based on Warren Buffett, diversification is really a protection against ignorance. Being a real Buffett disciple and following Buffett’s principles plus a few of their own sets of basic principles appeared to work. For individuals who don’t know, Mohnish Pabrai is an investor and philanthropist. Then a longonly equity fund he handled could create a cumulative 517% internet to investors versus. 43% for the S&P 500 Index since beginning in 2000. This implies an outperformance of 1103%. The globe was amazed and Pabrai became a star investor. Discover several hints and lessons as he shares how he was competent to do it.
Read Warren Buffett
According to Pabrai, it all started for him by reading Warren Buffett’s annual letters to investors and other Buffett books (The Essays of Warren Buffett, Warren Buffett Speaks and Thoughts of Chairman Buffett) and biographies written by Lowenstein and Schroeder. Pabrai is a living proof it pays to read.
Own It
Following closely Buffett’s example of not looking at stocks as just pieces of paper but internalize that you’re actual owners of these companies. As a joke surely no wise businessman will take his investments. Who wants a company that appears questionable and undervalued? He constantly weighs in both the negative risk and possible prior to making an investment.
Patience Is a Virtue
Another investor Pabrai seems as much as is Charlie Munger who’s a huge proponent of waiting. He believes that you’re able enough to earn money by means of purchasing or selling but within the waiting. And waiting isn’t the simplest thing to do this you demand every ounce of someone’s forbearance. Yes, sometimes what you’re looking forward to is some sort of disaster to occur that will significantly change the share prices. To stay positive about this would be to consider reaping something from the unfortunate circumstances which could present.
Learn from Mistakes
The fact is it doesn’t usually benefit the best constantly. You develop some, you lose some. Whenever you purchase shares, you must monitor carefully how it will. Pabrai says that after a particular trade doesn’t function, you discover immediately what might have went wrong so that you won’t do the same errors over and over. It is worth it to be aware of how others do it, if it’s right or wrong, in order to learn away from their successes and failures.
Checklist Investing
Another guiding light in Pabrai’s means to success is Atul Gawande’s novel The Checklist Manifesto. He recognized that there were clear signs within the initial location, when assessing how a trade went all wrong. So he made a check list which consists of around 98 questions he examines before making a trade or investment. These questions vary from leverage to debt covenants, moats, union and labor relations, direction and possession. Pabrai noted that since he incorporated using a checklist in investing, his error rate decreased quite considerably.
Cloning
Pabrai will be the first to inform you that not one of his investment ideas are original and groundbreaking. After all investing is actually not an originality competition. He picks on other people’s minds. The Buffet partnerships in the 1950’s was the design for the arrangement of his own fund. Furthermore, he gets investment ideas from investors he greatly admires. For example, he lifted the structure of his own fund straight from the Buffett partnerships of the 1950’s.
Give Back
Pabrai collectively with his wife began the Dakshana Foundation in 2005. It was the Pabrai’s intention to provide back to society at least two% of their earnings that’s about $1 million annually. Their primary focus was supposed to utilize the cash to help relieve the poverty within their state in India. How they are doing it is through supplying tutorial services for the lowest of poor students of India to ensure that they’ll have the ability to pass the grueling entrance examinations of the very competitive institutions such as the IIT Joint Entrance Examination and the AllIndia Engineering Entrance Examination, get great jobs and assist their loved ones. Again-all of Pabrai’s non-profit initiatives were inspired by Warren Buffet who’s a huge philanthropist himself.
Companies
BlackBerry Expected to get $500 Million Tax Refund
BlackBerry is poised to get a huge tax break. Within the 2nd quarter of FY 2014, BlackBerry posted a tax reduction of $965 million, chiefly in the foundation of inventory writedown. But, various other facets of the finances are going to look when some regulatory filings become public. Some of those variables include the prices with remodeling the whole smartphone lineup, laying-off 4, 500 workers and revamping sales and marketing. The business is in the middle of restructuring and is seeking a customer, as revenue of the BlackBerry Z10 touchscreen mobile are lower than expected. It seems, though, that BlackBerry might ultimately be coming out after once having become the darling of the PDA market.
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