Is Investing Offshore Legal and Ethical?

Offshore investing is often portrayed as an immoral, illegal or unpatriotic activity by the media. The mental image of investors secretly hiding huge amounts of money in illegal companies located thousands of miles away in countries where there are barely any tax requisites is formed in the minds of the public. The truth is, while there are still some less reputable offshore companies, the majority of domiciles are completely legal and may be able to provide you with numerous advantages.

The term offshore investing refers to the multiple opportunities.  They allow you to capitalize on the financial advantages available to you outside of your own country. Your finances are kept in a territory other than your own country of residence; usually as a solution to reduce tax burdens. The main reason that offshore investing is so widely used is avoiding high tax rates; although second central factor is lower regulations than those found in onshore investments options, allowing the investor to act more freely than he or she could in a more regulated environment. Offshore investment services are available to anyone who can meet specified requirements that may involve a minimum investment amount or a fee to open the entity.

While there is no scarcity of services offered by legal offshore companies, there is undoubtedly a fair share of ethically questionable offshore tax havens that are used primarily for tax evasion, money laundering and for concealing illegally acquired money from the authorities. These poorly regulated domiciles are another factor that has helped offshore investing to gain its a bad reputation, which may have deterred many potential investors.

Whether offshore investing is ethical another matter and should really be left up to the individual to determine; however a clear trend toward tax havens suggests the majority of society believe this to be the case. “More than half of the world’s assets and investments are held in offshore jurisdictions and many well-recognized companies have investment opportunities in offshore locales,” reports Investopedia.

Of course, there are some critics who beg to disagree. The following arguments are typically cited to demonstrate that offshore investing is an unethical practice:

• Offshore domiciles allow investors to evade the security exchange legislation that was implemented after the great depression to ensure stability in the world’s economies and create a fair marketplace.
• The national jurisdiction is abused by the lack of transparency offered by the transactions.
• Offshore investment is an exploitation of the advantages of the wealthy as practices mean that earnings are taken out of circulation and cannot be re-taxed for services and country infrastructure.
• Tax competition between countries is encouraged.
• Poorly regulated tax havens may elude sanctions.

Well regulated offshore domiciles are entirely legal.  And they are considered a great advantage by the majority of wealthy business owners and companies. They provide excellent benefits to those who choose to invest ranging from the avoidance of taxes and forced heirship to lower levels of regulation and increased privacy. While there are those who may argue that offshore investment is not ethical, there are numerous options that allow investors to find a domicile they deem to be a responsible choice.

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