What Global Crisis actually mean?
‘Global Crisis’ is a term that is thrown around a lot
lately, but what does this actually mean and how does this affect the
individual and the offshore environment?
In short Debt is considered to be substantially to blame for the current crisis. Large scale external debt, like the debt
between countries where underdeveloped countries have borrowed money from other
richer governments, that they can’t repay, and small scale internal debt where
banks have been lending to individuals without maintaining enough available
capital to cover their commitments. The
interest on these debts both external and internal is now at a level of
interest which is making them almost impossible to pay leading to this ‘Global
At this point large
scale external debt between countries needs to be and is being written off as it is causing huge
social and economic restrictions on many of the poorer third world countries
which in particular affect the people their already living well below the
Internally a lot of individuals have been hit very
hard. Banks are not lending like they
used to making it impossible for new businesses to function and many have gone
out of business and this will shape the
future for generations to come. Existing
loans are being called in which has flooded certain aspects of the market, for
instance property. Seized property is
being sold off at a fraction of the cost price, whilst this sounds like a good thing, as
the banks are not lending it is only individuals with money that have survived
the depression that can benefit from the cheaper properties whilst people
looking to sell who are struggling financially are suffering large loses dues
to the lower prices.
So what exactly does this mean for the offshore environment?
There are the clear advantages to going offshore, such as
Asset Protection whereas Limited liability means that business creditors often
may only pursue the business for
settlement meaning that the individuals personal assets such as family home are
safe. Depending on the offshore
structure it is often possible for the
individual to keep assets and trading very separate therefore if some woe was
to befall one it would not necessarily affect the other.
Other advantages include tax benefits. Many offshore jurisdictions are offering
corporate tax from between 0% - 10% much cheaper than their onshore
Regulations with concerns to dividend payments, capital
gains tax, wealth tax, stamp duty and inheritance tax are very inviting in the
offshore environment although these differ from Jurisdiction to Jurisdiction
and it is recommended that clients seek professional advice with regards to
In short, offshore can prove much cheaper and easier to
manage than its onshore counterpart and may offer peace of mind. Whilst governments and banks are trying to
squeeze as much as possible out of the individual to recoup its financial
standing , with offshore many governments in various jurisdictions are
promoting lower taxes and offering incentives to bring investors in, in order
to build on the wealth and economy of the particular jurisdiction.
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