Precisely defining and explaining the difference between tax avoidance and tax evasion can be quite frustrating simply because, for as easy as the concept may be to some, others do not understand, while certain groups of people pretend not to. We are bombarded with a barrage of scholarly papers in which tax mitigation is described as delinquent behavior and harmful practice, despite the legality of saving on taxes.
This attitude apparently stems from the theory of ‘Intaxication’ defined as tax, tax and spend, and more tax; which seems to be the motto by which most “developed” economies currently function. And because Governments seize and Governments always find new excuses to increase taxes for “our sake”, and spend more than they collect, tomorrow they will want to introduce more taxes to close the gap. But then again, they will spend more than they collected; and this vicious cycle goes on and on…
Most of us would think that by now, the level of technological and infrastructural development that our countries have realized would have been at par with economic sustainability, productivity, efficiency and success. But instead, what we see is the increased struggle of governments in trying to curtail widening fiscal deficits – the basic problem that plague countries and have been almost impossible to resolve as unemployment increases, economies are rendered more fragile and people become even more displaced in the cross border search for better opportunities.
Worse for Governments yet, globalization’s unprecedented advance seemed to have gently tugged control from the hands of Governments as the world got entangled in an economic maze which is complex and intangible. And we obviously will see attempts to take back control over people’s freedom, even invade people’s privacy and gain more control over individual liberties.
But here comes developing economies and tax havens with their zero or low taxation policies attracting investors and businesses from developed countries. This type of policy really hurts “tax and spend” bureaucrats in developed economies and restrict their ability for unlimited tax increase, meaning that Governments of developed economies actually need to introduce competitive taxation rates. But, it was always known that much easier is to create a monopoly (in this case tax monopoly or global tax cartel) than to compete with others; and as we learn throughout history, monopolies always hurt the consumer (in this case, the taxpayer).
Whether crisis or recession deepens into depression is yet to be seen and may heavily depend on the decisions and actions of affected countries over the next few months. There is the global economic crisis and dark times are good for selling a socialism (sometimes National Socialism) snake oil.
As we follow politics and the world economy, the blamestorming sessions going on are becoming more interesting – poor and failed government control, greedy execs, consumer gluttony, trade liberalization and deregulation; banks, hedge funds, rating agencies and now suddenly tax havens, but never Governments themselves. President Barack Obama has a little edge compared to other G7 Governments – he can temporally blame George Bush and have the opportunity not to jump on a European socialist bandwagon as yet, but we could see it soon.
In Europe where pressure on tax havens originated, Governments were trying to find somebody to blame except themselves by selling their failed policies and actions to the voters.
Three European countries, France (most socialist country from G7, doesn’t much matter which party is in power), Germany (election in September this year) and the United Kingdom (election looming not later than next year) which are behind this turn of pressure on tax havens, were trying to find someone to blame except themselves for their economic failure. And after series of meetings and meetings again, they suddenly realized that they are “not guilty”, but many others obviously are, including…. tax havens – alleluia (!). So they picked the “strongest” side to point the finger and now are trying to use the G20 Forum to remove more privacy and confidentially not only from their own citizens, but worldwide. As Goebbles (Nazi propaganda boss) once said: “The bigger the lie, the more people will believe it”.
So who’s or what’s to blame? Wall Street? Banks? Rating Agencies? Globalization? Tax Havens? Multinational Corporations? Governments?…
Pick the ones you want or all together, but it boils down to this: taxpayers (not the Governments or people who are permanently on welfare) are the ones who always bear the brunt of an economic crisis on their shoulders – many of whom lose a fortune while others are forced to start afresh at some point in the future when a silver lining finally appears from behind the grey financial clouds.
More now than ever, the need to protect assets, save on taxes and secure funds in a country other than your own is piercingly clear. More now than ever, financial freedom needs to be asserted and entrusted to an offshore jurisdiction with solid and reliable offshore laws and financial services. More now than ever an average taxpayer must protect himself.
And in these highly bad economy charged times, going offshore has long surpassed its tax savings benefits as its worth deepens and embraces a new meaning: protecting and preserving personal best interests – self, family and future.
But somehow, the crux of the matter has slipped between the cracks of media sensationalism, politics and billion dollar bailouts, making it almost impossible to objectively muster these thoughts into rational discourse. And in the interim, taxpayers ride the economic rodeo, hoping not to fall off by just hanging on here and there.
More than before, there are many ways to save on taxes and protect your assets or investment portfolio, some of which have proven futile or caused disappointment. Are tax havens completely immune from fraud and scams? – Not at all; and this is why finding an experienced and reliable offshore service provider prior to “going offshore” is a must.
And more than ever, one should be mindful of the high incidence of domestic fraud compared to investment in well regulated tax havens; yet another reason for making a prudent and wise investment of a meaningful portion of your wealth and taking advantage of the opportunities that are legally available in economically and politically stable offshore jurisdictions.
It is a chance surely worth taking; and like stepping into the blazing sun with an umbrella in hand, going offshore is a safe and prudent way of protecting yourself from being drenched in an unanticipated downpour of financial troubles.
Taxes, taxes and more taxes cannot and should not be the solution to economic challenges which transform themselves into a vicious taxation cycle when sound, efficient and long term strategies should be implemented in order to build sustainable economies. And guess what; this is a fact that most of us have realized, hence the reason why we all try to cut back on expenses, stick to our budgets, plan our finances and prioritize – multibillion corporations are doing it, so…
In the USA, Obama still has time to realize it and not go through with his election campaign strategy of increasing taxes and spreading the wealth, but it doesn’t matter what he does, American taxes will remain too high anyway in the foreseeable future.
Whether or not one thinks that individuals have the right to legally save on taxes will always remain a bone of contention between the two opposing ends of taxation – the taxpayers and the collectors, the people who create wealth and the ones who spread it, spend it,… wasted it.
And some will continue to find the “malign influence of tax havens” in promoting tax evasion – this will continue to be a running battle between high and low tax countries as long as taxes in one country are lower than those of another; and high tax country bureaucrats will always insist that tax competition is harmful.
More and more, the advantages of tax havens for business expansion, foreign investments, property ownership, E-Commerce, asset protection, inheritance planning and tax savings are evident. And more than that, tax havens are actually very beneficial to the world’s economies because they create real tax competition (… probably not to the test of French President or German Chancellor) in the world, and as a result benefit every hard working or investing individual in high tax countries too by keeping respective Government’s taxation rates in check.
As mentioned earlier, tax havens and offshore entities have long surpassed their traditional offshore benefits which currently are deepened into something much more meaningful and transformed into somewhat of a basic requirement for protecting and preserving personal best interests in these trying economic times.
Most of us are unable to foresee the future, but we are capable of containing the financial impact of unexpected events in the years or months to come by just making that one wise decision.
Tax havens don’t provide blind secrecy for criminals, but for lawful individuals and businesses which offer asset protection and confidentiality, thereby facilitating privacy and handling personal matters discreetly, giving protection from undesired eyes; that which with the exception of some hard core socialist/communist societies is supposed to be everyone’s right.
What is even more amazing is the availability of these benefits to people of all walks of life; for contrary to popular belief, offshore companies, offshore foundations, offshore trusts or offshore banking and investing are not restricted to the super wealthy and are designed, structured and flexible enough to suit the requirements of the small and average size business or private investors.
In such crisis, for many people and businesses, offshore tax havens are good news. It is the right time to discover offshore vehicles and open the door to increased profits, tax savings, asset shielding and wise investing.
About The Author
This article was prepared by Offshore Companies House – the place where you can find solutions for your offshore needs.