The Pros and Cons of Offshore Investing

Offshore investing has become popular investment strategy and has been practiced for years. It capitalizes on the different advantages being offered outside the investor’s country. In short, it is a way of keeping the money in another country. This is a way of reducing taxes that are usually charged in most countries whether it is small or large scale investors. This is the main reason why most companies and individuals jump into offshore investing.

Pros

Here are several beneficial reasons why people chose offshore investing:

1. Helps in tax reduction. There are several countries that offer tax incentives for foreign investors. These tax rates for offshore countries are built to promote a better investment deal in attracting outside wealth. Even for small countries with limited resources and population count is low, by attracting investors through offshore investing; it can increase the country’s economic activity. This is why it is beneficial not just for the investor but also for the country that offers investing opportunities.

2. Serves as an asset protection. For individuals (investors) who are concerned in not getting a lawsuit or lenders that are foreclosing on some outstanding debts, offshore investing is a great way to protect the assets. Investors chose to transfer a portion of their assets regarding their personal estates outside of their home country.

3. There is strict confidentiality compliance. These countries have imposed laws to adhere to strict corporate and banking confidentiality. How can this be an advantage for investors? According to the laws in offshore investing, this will allow the investor’s identity secret while getting shares of a public company which is a great deal of financial and legal advantage for the investor. If the confidentiality agreement is breached, serious penalties will be faced by the party who have made the offense.

4. Investment Diversity. Offshore accounts do not restrict any international investment opportunities for investors to be able to create a more diversified portfolio. They are more flexible; provide unlimited access to international markets and exchanges.

Though there are several benefits of offshore investing, there are disadvantages to it as well.

Cons

1. Tightening of tax laws. When it comes to auditing and accounting, a lot of tax agencies are quite aware of offshore investment strategies and have closed down on some old-school style of avoiding tax. There may still be loopholes, but pretty soon they’re going to catch up on the hype.

2. Cost. Having an offshore investment is not cheap. The cost always varies for every investor’s investment goals and the jurisdiction that they chose.

3. Security and safety in investing. Common offshore companies that offer secure investment opportunities are the Bahamas, Cayman Islands, Bermuda, and Isle of Man. It is common knowledge for every investor to choose a reputable investment firm. It is highly recommended to consult with a lawyer or an investment advisor that focuses in international investment.