Offshorecash.net

Don’t burn your bridges
Many expats are in such a hurry to put everything behind them when they settle overseas, that they sometimes take actions which can cause difficulties later on.

Bank accounts
Having an offshore bank account is a basic financial planning tool for expats. This provides unrestricted access to your cash wherever you may be. Show up at any ATM machine in the world with your cash card and you can make a withdrawal.

If you don’t have an offshore bank account, don’t make the mistake of closing your bank account in your home country until you have opened an offshore bank account. You will need an existing bank account in order to open an offshore bank account. This can be done much easier if that bank account is located in a Group 1 OECD country like your home country.

Some Thai banks have a policy of only dealing with the Embassy/Consulate of the deceased when a foreigner dies. This is avoidable by taking some simple precautions.

Credit cards
Credit cards are a very useful means of getting cash in an emergency and so they are a valuable life line that is well worth keeping.

Don’t cancel your existing credit cards from your home country, unless you replace them with offshore credit cards with an equivalent credit limit. If you can, arrange for an offshore credit card BEFORE you make your permanent move from your home country. In the home countries of most expats, credit cards are only issued to those who are resident there, so you won’t be able to apply for new ones, once you settle abroad.

Some Thai credit card providers won’t issue credit cards to people who are not ‘working’, meaning that expat retirees are ineligible. Most Thai credit cards actually work like cash cards, with the limit based on your bank balance and so at best, you end up with a much diminished credit limit.

Money
Keep no more money in your Thai bank account than you need for visa requirements or living expenses. As with many countries, it is often easier to transfer money into than out of a country.

Expats often enquire about currency exchange rates in relation to arranging bank transfers to Thailand.

It is beyond either the scope or knowledge of a financial adviser to advise on the timing of transfers to obtain the most favourable exchange rates and we don’t recommend our clients to second guess the currency markets.

After you transfer funds to Thailand, the exchange rate will almost certainly change. The question is would you feel worse waiting and seeing the exchange rate move against you or seeing the exchange rate improve after you transfer?

The other common question is in relation to which currency to choose for holding cash. Given the ongoing automatic devaluation of all currencies as a result of Government printing presses, there isn’t much of a case for holding significant long-term sums in cash, regardless of currency. However, given the exceptional imbalances in the US economy, highlighted by the OECD report in May of this year, which described the ‘unavoidable 20-50% devaluation in the US Dollar’, we would not recommend holding greenbacks.

Health Insurance
If you have existing health cover from a provider in your home country, don’t cancel it until you have fully explored all of your options, if any, here in Thailand.

It isn’t easy to obtain health cover in Thailand if you are over the age of 60, but if you have moved to Thailand with existing cover, your provider may offer continuing cover to you.

If you do not currently have existing medical cover you again need to explore your options carefully. Whilst the levels of cover are usually significantly higher when arranged through International providers, this comes at a cost, often more than five times the cost of the highest level of health cover with the best Thai based providers. Unless there is a compelling need for the additional levels of cover, such as significant time spent in the United States or other countries with very high medical costs, there is often little benefit derived from the additional premiums.
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Most countries impose taxes on income earned or gains realised within that country regardless of the country of residence of the person or firm. Most countries also tax their residents (individuals and companies) on all their worldwide income. One way a person or company takes advantage of tax havens is by moving to, and becoming resident for tax purposes in, an appropriate country. Another way for an individual or a company to take advantage of a tax haven is to establish a separate legal entity (an offshore company, offshore trust or foundation), subsidiary or holding company there. Assets are transferred to the new company or trust so that gains may be realised, or income earned, within this legal entity rather than earned by the beneficial owner.

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• Asia
• Andorra
• Anguilla
• Aruba
• Bahamas
• Barbados
• Belize
• British Virgin Islands
• Cayman Islands
• Cook Islands
• Cyprus
• Dubai
• Ireland
• Panama
• St Kitts
• Switzerland
• Turks and Caicos
• Some tax havens including some of the ones listed above do charge income tax as well as other taxes such as capital gains, inheritance tax, and so forth. Criteria distinguishing a taxpayer from a non-taxpayer can include citizenship and residency and source of income. For example, in the Cayman Islands, one pays no tax if one earns all one’s revenue from outside the country but one does pay tax if one earns income from within the country.

Advantages of offshore banking

Offshore banking provide access to politically and economically stable jurisdictions. This may be an advantage for those resident in areas where there is a risk of political turmoil who fear their assets may be frozen, seized or disappear. However, developed countries with regulated banking systems offer the same advantages in terms of stability.

Some offshore banks may operate with a lower cost base and can provide higher interest rates than the legal rate in the home country due to lower overheads and a lack of government intervention. Advocates of offshore banking often characterize government regulation as a form of tax on domestic banks, reducing interest rates on deposits.

Offshore finance is one of the few industries, along with tourism, that geographically remote island nations can competitively engage in. It can help developing countries source investment and create growth in their economies, and can help redistribute world finance from the developed to the developing world.

Interest is generally paid by offshore banks without tax deducted. This is an advantage to individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return is agreed, or who feel that they can illegally evade tax by hiding the interest income.

Some offshore banks offer banking services that may not be available from domestic banks such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities not available elsewhere.

Offshore banking is often linked to other services, such as offshore companies, trusts or foundations, which may have specific tax advantages for some individuals.

Many advocates of offshore banking also assert that the creation of tax and banking competition is an advantage of the industry, arguing with Charles Tiebout that tax competition allows people to choose an appropriate balance of services and taxes. Critics of the industry, however, claim this competition as a disadvantage, arguing that it encourages a “race to the bottom” in which governments in developed countries are pressured to deregulate their own banking systems in an attempt to prevent the off shoring of capital.

Disadvantages of offshore banking

Offshore banking has been associated with the underground economy and organized crime, through money laundering. Following September 11, 2001, offshore banks and tax havens, along with clearing houses, have been accused of helping various organized crime gangs, terrorist groups, and other state or non-state actors.

The existence of offshore banking encourages tax evasion, by providing tax evaders with an attractive place to deposit their hidden income.

Offshore jurisdictions are often remote, so physical access and access to information can be difficult. Yet in a world with global telecommunications this is rarely a problem. Accounts can be set up online, by phone or by mail.

Developing countries can suffer due to the speed at which money can be transferred in and out of their economy as “hot money”. This “Hot money” is aided by offshore accounts, and can increase problems in financial disturbance.

Offshore banking is usually more accessible to those on higher incomes, because of the costs of establishing and maintaining offshore accounts. The tax burden in developed countries thus falls disproportionately on middle-income groups. Historically, tax cuts have tended to result in a higher proportion of the tax take being paid by high-income groups, as previously sheltered income is brought back into the mainstream economy.