|
Mail Forwarding or Mail drop Service | 
Back |
A fully-legal commercial enterprise using a stable physical address as a delivery destination for letters or parcels on behalf of fee-paying clients who don't live on the premises. Mail can be held or forwarded at the client's request. Some maildrops provide similar services for faxes as well.
|
Effectively a nominee settlor or grantor who creates an offshore trust but often has no further connection with the trust once it is created.
|
An offshore bank also known as a Class "B" or Cubicle Bank. The Managed Bank is not required to maintain a physical presence in the licensing jurisdiction. Its presence in the licensing jurisdiction is passive with nominee directors and officers provided by a managing trust company with a physical presence. The Managed Bank is not permitted to
transact business within the licensing jurisdiction but may maintain its books, records, etc., to assure secrecy of operations.
|
With respect to an LLC, it means those persons (individuals), or other companies) appointed as manager(s) of the Company. The manager may also be a member (owner).
|
|
Mandatory Provisions of the Ordinance |
Back |
Defined as those provisions of an Ordinance which may not be waived by the shareholder or members acting unanimously or otherwise.
|
A certain type of U.S. corporation doing business in Mexico. In late 1999, the U.S. and Mexico reached an agreement concerning the tax treatment of type of business entity.
|
|
Marc Harris Organization |
Back |
In 1999, Harris lost resoundingly in his claim for a defamation law suit
against publisher David Marchant. The case was decided last August in
Florida. There is an appeal pending in the Eleventh Circuit. The Harris
Organization is currently involved in a similar suit against the "La
Prensa", a newspaper in Panama. In the Florida decision, the federal judge
commended Mr. Marchant on his truthfulness, and essentially found that
everything that Mr. Marchant reported about Mr. Harris was true.
|
|
Marchant, David (Profile) |
Back |
Investigative reporter David Marchant, the controversial editor of
Offshore Alert, is a fraud-busting journalist with a passion for
uncovering offshore financial scams. From a humble career start in a small
Welsh coal mining town to his recent well-publicized legal battle with the
Panama-based Marc Harris Organization, Marchant has become one of the most
recognized names in the offshore finance industry. Despite repeated
threats to his personal safety, the fearless Marchant keeps crusading,
sometimes uncovering financial boondoggles worth tens of millions of
dollars. Through his doggedness and determination, Marchant proves that
"the pen is mightier than the fraud".
|
|
Mareva injunction |
Back |
Intended to remedy possible abuse by a debtor or party. The Mareva injunctions has been developing in England since 1975 in the Court of Appeal decision in Mareva Compania Naviera S. A. v. International Bulkcarriers S. A., 2 Lloyd's Rep. 509. Although the cases reveal some uncertainty regarding Mareva's jurisdictional basis, the better-reasoned and more recent decisions ground Mareva in equity's traditional power to remedy the "abuse" of legal process by defendants and the "injustice" that would result from defendants "making themselves judgment-proof" by disposing of their assets during the pendency of litigation. Iraqi Ministry of Defence v. Arcepey Shipping Co., 1 All E. R. 480, 484-487 (1979) (internal citations omitted); see Hetherington, Introduction to the Mareva Injunction, in Mareva Injunctions 1, 10-13, and n. 95, 20 (M. Hetherington ed. 1983) (explaining the doctrinal basis of this jurisdictional theory and citing cases adopting it). Go here for more info.
The Mareva injunction is not recognized in the U. S. but is a part of
European law, including jurisdictions having asset protection trust laws. The Mareva injunction is an ex parte (on behalf of one party only) order resulting in the civil arrest of a person's property on a worldwide basis. When a Mareva injunction is issued by the judge on behalf of one party, the defendant is not permitted to present his case.
|
|
Marriage penalty |
Back |
The U.S. personal income tax rate on married couples filing jointly is higher than for single persons. This is the so-called marriage penalty.
|
|
Matthewson, John |
Back |
Mr. Mathewson, having moved back to the States after
the Cayman authorities closed his bank for money laundering, brought
with him a back-up tape of his former account holders coupled with
their personal and confidential information. This information he
subsequently exchanged with the U.S. government for leniency in the
matter of an FBI sting operation that nabbed him.
|
Mauritius provides the double benefit of a taxpayer-friendly domestic tax environment and an advantageous tax treaty network. For example, Mauritius' foreign tax credit system "has been designed to be especially generous to taxpayers." Written evidence must normally be provided to the commissioner of internal revenue regarding the amount of foreign tax paid. Can't provide this
evidence? No problem -- if evidence is not presented, the foreign tax will be
conclusively presumed to be equal to 90 percent of the Mauritius tax chargeable
(90 percent of 15 percent). Thus, the maximum effective tax rate payable by an
offshore entity on foreign-source income is only 1.5 percent.
Of its 24 treaties, Mauritius' tax treaty with India has contributed the
most to render the island a significant participant in international tax
planning; as the author notes, "[T]he highly successful Mauritius-India tax treaty has undoubtedly been a primary driving force behind the emergence of
Mauritius as an offshore center, although its full significance was probably not envisaged when the treaty was originally signed in the early 1980s."
Under the Mauritius-India treaty, withholding tax on dividends is imposed at
rates of 5 or 15 percent. However, in June 1997, India abolished withholding
tax on all dividends paid to nonresident shareholders and replaced it with a 10
percent secondary tax on distributed profits, effectively negating this
generous tax provision. As a result, there has been some decline in the number of investors choosing to channel their investments in India through
Mauritius.
|
|
Mathewson, John |
Back |
Mathewson, 71, was sentenced to 5 years of probation in 1999 in one of the largest disclosures of tax evasion by Americans in the Cayman Islands. U.S. Attorney John J. Carney identified Mathewson as "...the most singularly important government co-operator in tax haven prosecutions in the history of the IRS..." Also, See Guardian Bank. Others cooperating bank customers included: Mark Vincini of N.J., Bartholomew D'Ascoli, M.D., of N.J. and Frederick Gipp, of N.Y.
|
|
Melchizedek, Dominion of |
Back |
1) The Dominion of Melchizedek has repeatedly claimed that it has been “de facto
recognized” by the United States. It need not make that claim in the future
because the United States via the SEC has in fact recognized the Dominion –
as a criminal scam. Melchizedek exists only as an Internet site, www.melchizedek.com. It is a fictitious nation without a physical presence. Media research indicates that Melchizedek has been identified as a base for fraudulent schemes involving purported bank charters and other bogus corporate documents. There is no recognized governmental authority that actually charters banks in the name of Melchizedek. To see SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 16368 / November 23, 1999, go here.
Last update: 11/24/1999
2) The Wall Street Journal revealed that its last listed home for
Melchizedek was Karitane Island, actually a seamount a hundred feet below
sea level. John Stockey, special Assistant to the U.S. Comptroller of
Currency, warned in May of 1999 that Melchizedek "was a major international fraud which has been perpetrated worldwide since 1990".
|
Dog droppings such as, one slipping in merd du chien.
|
A European form of an Investment Bank.
|
|
Migration clause |
Back |
Where a domestic (onshore) trust contains automatic migration language (the so called flight clause) to change the situs of the trust to an offshore jurisdiction when under a creditor attack, the IRS deems the trust to be a foreign trust. IRS uses a migration test and the use of automatic migration language in the trust instrument causes a trust to be cast as a foreign trust.
|
A short (usually preprinted) form of a trust, often used as a confidentiality enhancer, to bridge the ownership and management of an International Business Company. The Mini-Trust is intended only to pass assets on the death of the settlor, i.e. a will substitute.
|
|
Money laundering |
Back |
1) The technique of "filtering" profits from illegal activities through multiple banks (usually offshore) to disguise their true origin. See also "Laundering, money".
2) The act of converting money gained from illegal activity, such as drug smuggling, into money that appears legitimate. Procedures to change the identity of illegally obtained money so that it appears to have originated from a legitimate source. The process by which criminals attempt to conceal the true ownership of the processes of their criminal activities.
3) In drawing the line between legitimate and illegitimate profits, the
government must not only prove that the money came from the illicit
(drug) deals; it must show that the recipient "knew or should have known" its source. In the war against money laundering, the line has proved very fuzzy.
4) The British Virgin Islands' Financial Investigation Unit role is to
investigate, prevent and prosecute money launderers. "Financial
investigation units work," says Graeme Smith, head of the BVI unit.
"They've driven up the price of money laundering. For every dollar you
laundered in 1985, you received 80 cents. Today, for every dollar you
launder, you get back 20 cents."
|
The risk of financial loss as a result of issuing an insurance contract on a person who survives for less for than the average life expectancy or as a result of issuing an annuity contract to a person who lives longer than the average life expectancy.
|
|
Multi-currency Accounts |
Back |
These accounts permit you to maintain an account in a currency other than your own while still earning interest on credit balances.
|
|
Multilevel Marketing (MLM) |
Back |
The person who brought you in (recruited you), or sponsored you into a MLM program is called your up line and the person you sell a membership or sponsor into a specific program is called your down line.
|
|
Mutual Legal Assistance Treaty (MLAT) |
Back |
A treaty which provides for mutual legal assistance, including the exchange of information, etc., in cases where criminal offenses have been committed.
|
|
Net worth assessment |
Back |
Similar to the IRS "economic reality test". Living beyond the means indicated by your previous tax returns may cause Revenue Canada to perform a “net worth assessment” that is meant to track tax evaders. In general, the assessment involves establishing the individual’s net worth and comparing declared income with living expenses. If the assessment reveals a gap, Revenue Canada will assume that it constitutes undeclared income and will go after the individual for the tax, interest and penalties.
|
One of the two countries forming the sister federation of St. Kitts and Nevis. Nevis, which has one-fifth of the federation's 48,000 population,
almost seceded amid complaints it was being unfairly treated by St. Kitts.
|
The Securities and Exchange Commission entered a final judgment of permanent injunction on Jan. 20, 2000, against defendant Lazarus R. Long ("Long") (a/k/a Howard Turney). The judgment permanently enjoined Long from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Defendant Long was also ordered to pay disgorgement in the amount of $24,000, plus prejudgment interest, however payment of disgorgement and interest was waived based upon Long's sworn showing of inability to pay. Moreover, the Court did not order Long to pay a civil penalty because of his demonstrated inability to pay. Long consented to the entry of the judgment.
The Complaint, which was filed by the Commission on April 8, 1999, alleged
that between May 1998 and March 1999, Long offered and sold securities over
the Internet to purportedly fund a new country he claimed was being
developed in the middle of the Caribbean Ocean. Long named his new country
"New Utopia." In connection with the sales of the New Utopia securities, the
Complaint alleged that Long made material misrepresentations and omissions
concerning, among other things, the status of construction of the project,
the companies associated with the project, the safety of the investment, and
the status of the Commission's investigation into his activities. Long was
successful in raising $24,000 from the sales of securities.
|
Presence in (for instance) a US state, giving rise to a liability for sales tax.
|
|
Niemöller, Martin |
Back |
Activist as Bystander: The Oft-Quoted Reflection, in "Jewish-Christian
Encounters over the Centuries", ed. Marvin Perry and Frederick M.
Schweitzer (1994)) as the following: "First they came for the Communists,
but I was not a Communist -- so I said nothing. Then they came for the
Social Democrats, but I was not a Social Democrat -- so I did nothing. Then
came the trade unionists, but I was not a trade unionist. And then they
came for the Jews, but I was not a Jew -- so I did little. Then when they
came for me, there was no one left who could stand up for me."
|
|
Nietzche, Friedrich |
Back |
The German philosopher Friedrich Nietzche once said something along the lines of “All truth comes in three phases. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as
self-evident.”
|
|
Nominee Company |
Back |
A company formed for the express purpose of holding securities and other assets in its name or to provide nominee directors and/or officers on behalf of clients of its parent bank or trust company.
|
|
Nominee Director |
Back |
A director whose function is passive in nature. The director receives a fee for lending his or her name to the organization. Nominee directors are subject to director responsibilities.
|
Name in which security is registered and held in trust on behalf of the beneficial owner.
|
|
Non-grantor trust |
Back |
A trust created by a non-U.S. person as settlor.
|
|
Non-resident alien (NRA) |
Back |
Gifts to U.S. person that are delivered within the U.S. are subject to U.S. Federal gift tax. ( See Section 2501(a)(1)). Transfers to U.S. persons that are outside the U.S. may not have the imposition of U.S. gift tax since it is dependent on the manner of the transfer, whether there are branches of U.S. banks involved, among other factors. [attribution: ABA-Tax list]
|
|
Non-resident owned investment corporation (NRO) |
Back |
Canadian tax authorities have decided to abolish nonresident-owned investment corporations, which were perceived as leading to the erosion of the Canadian tax base. No new NROs may be created after February 27, 2000 and existing NROs must be phased out by the end of 2003.
|
|
Notice accounts |
Back |
These deposits can be withdrawn after an agreed amount of notice has been given. This can be one or two days, a week, month or any number of months.
|
|
Numbered accounts |
Back |
1) These accounts can be any of other account types, but instead of being recorded by the bank in a depositor's name, they are noted under a number only. Originally from Europe, such accounts were established to protect client confidentiality and are mostly used in Switzerland, Austria and Luxembourg. The use of these accounts is under attack by the OECD (Organization for Economic Co-operation and Development), which has increased the pressure on countries that permit such accounts and fail to disclose account holder identity.
2) Numbered bank accounts have pretty much been eliminated but some of the smaller eastern European countries may still have them. Our opinion is that it is not worth the trouble of getting such a bank account. Any such account that still exists may have high fees, currency risks, risk of bank failure or other possible disadvantages.
|
The person or company that is obliged to make the annuity payments, also known as the transferee or buyer (of the property)
|
|
Office of Foreign Assets Control (OFAC) |
Back |
OFAC issues bank reporting rules with respect to foreign controlled assets. Daily updates of files are generated for those "OFAC Specially Designated Nationals" which include, Specially Designated Terrorists, Specially Designated Narcotics Individuals as well as compliance with Commerce Department Denial Orders.
|
1) Offshore is simply a "code" word for away from your own home country. If you live in Europe - under certain conditions, the USA can be "offshore" to you. The term is always used in reference to attempting to reducing one's taxes, or protecting one's assets - by structuring one's financial affairs under the laws of another country (jurisdiction) - one more favorable than where you currently reside.
2) In the context of e-commerce offshore means that a site is
situated on a server that is physically located in an IOFC.
|
Any bank outside of the country in which the depositor lives. For example, if a Mexican living in Baja California has a bank account across the border in San Diego, CA, he is banking offshore because he is banking in a country (the USA) where he is not a resident. The whole idea of offshore banking revolves around the concept of legal jurisdiction. Offshore banking is simply having the depositor in one jurisdiction and the deposit in another. [attribution: Mark Harris Organisation]
|
|
Offshore bank failures |
Back |
Some include Guardian Bank-Cayman, Euro Bank-Cayman, First International Bank-Grenada, European Union Bank-Antigua, Finsbury Bank-Cayman, Gulf Union Bank-Nassau, First Cayman Bank-Cayman and BM International Bank-Nassau.
|
|
Offshore Banking |
Back |
By popular usage, the establishment and operation of foreign banks in such offshore tax havens.
|
|
Offshore Banking Unit (OBU) |
Back |
A bank in an offshore financial center, not allowed to conduct business in the domestic market but only with other OBU’s or with foreign persons.
|
|
Offshore Booking Centers |
Back |
An offshore financial center used by international banks as a location for "shell branches" to book certain deposits and loans. Such offshore bookings are often utilized to avoid regulatory restrictions and taxes.
|
|
Offshore Company |
Back |
See International Business Company or exempt company.
|
|
Offshore Financial Centers |
Back |
A country or jurisdiction where an intentional attempt has been made to attract foreign business by deliberate government policy such as the enactment of secrecy laws and tax incentives.
|
|
Offshore Group of Banking Supervisors (OGBS) |
Back |
Established in October 1980 at the instigation of the Basle Committee on Banking Supervision with which the Group maintains close contact. The primary objective of OGBS is to promote the effective supervision of banks in their jurisdictions and to further
international cooperation in the supervision between the Offshore Banking Supervisors and between them and Basle Committee member nations and other banking supervisors. Current OGBS members are: Aruba, Bahamas, Bahrain, Barbados, Bermuda, Cayman Islands, Cyprus, Gibraltar, Guernsey, Hong Kong, Isle of Man, Jersey, Lebanon, Malta, Mauritius, Netherlands Antilles, Panama, Singapore and Vanuatu.
|
|
Offshore Institute |
Back |
An Institute originally formed by attorney Barry Engel.
|
|
Offshore insurance |
Back |
1) Where a foreign based insurance company issues a universal or variable life policy you can get tax free access to foreign mutual funds for investment purposes. Where a irrevocable life policy, you achieve wealth transference to the beneficiaries where they are the owners of the insurance contract. The death benefits of the insurance policy are not in the estate of the insured upon his or her death.
2) Tax Advantages. Most life and non-life reinsurers domiciled in Bermuda and the Caribbean are not required to pay income tax or capital-gains tax. Under U.S. tax rules, these companies effectively
don’t pay U.S. tax, but they pay an excise tax, which is imposed on
premiums. In addition, Bermuda, like some other countries outside the United States, allows holding companies to invest their assets in a more diversified way, which compliments their business plan and allows for transparency for their investors. They can place more investments in nontraditional instruments, undertake more active trading of investment
portfolios and create innovative funding structures for corporate risks
such as asset values and currency exposures. This is a strong attraction for life reinsurers that need to hold liabilities for a long time and want to see good, consistent investment returns during that period.
|
|
Offshore investing |
Back |
The pros
Tax benefits/tax deferral
Financial and political sophistication
Concentrated financial expertise
Diverse range of services and products, some unique to offshore world
International focus
Safe havens for certain assets
Confidentiality
Situated in convenient time zones
The cons
Usually more expensive services, such as funds
Hidden costs which can affect performance
Complex products
Offshore trusts only worth it for large assets
Some products have long lock-in periods
Regulation lax in some jurisdictions
Secrecy and confidentiality under attack from the likes of OECD
and G7
Money laundering and tax evasion image
|
|
Offshore Limited Partnership (OLP) |
Back |
1) A partnership, the general partner of which is an offshore company. The limited partners may be onshore entities.
2) A relatively new entity with the recent enactment by the British Virgin Islands (BVI) and the Cayman Islands of limited partnership laws based on the U.S. Revised Uniform Limited Partnership Act. The IRS has rules for reporting transfers to these entities by way of Notice 98-17. To be conservative you must report literally every
significant asset transfer to an OLP including appreciated assets, such as stock. The general partner is often a corporation in another jurisdiction.
|
|
Offshore Profit Centers |
Back |
Branches of major international banks and multinational corporations which are established in low tax financial jurisdictions to lower taxes for the business entity as a whole. The resulting high- and low- (or non-) taxed profits are blended to enhance the overall return to the shareholders.
|
|
Offshore provider |
Back |
How much you want to spend on an offshore provider depends on what services you expect to receive from them and the amount of capital you put in your offshore company. Reputation, reliability, years of
experience all enter into the decision. You have to determine if the
services you are receiving are worth the cost. The cheapest isn't
necessarily the best and neither is the most expensive. Different people
have different needs. And some people don't need an offshore company at
all, maybe just a bank account with a reliable bank in a jurisdiction with good confidentiality.
|
The quality that differentiates an offshore trust from an onshore trust is portability. The offshore trust can be transferred to additional jurisdictions to maintain confidentiality and to advantage desirable facets of the new jurisdictions laws.
|
|
Offshore Trusts for Canadians |
Back |
RevCan rules differ somewhat from the IRS rules but both seek to restrict or limit offshore tax and estate planning. For a Canadian settled trust, any present or former resident of Canada is not a permissible beneficiary of the trust. Further RevCan proposed restrictions in 1999 that imposed trust reporting requirements and taxation
of the offshore trust.
|
In the vernacular, usually refers to having set-up an APT many years prior to any claims or litigation arising relieving the settlor from claims of fraudulent conveyance being supportable.
A properly implemented plan starts the statute of limitations relating to fraudulent conveyancing running the moment it is funded. It is cheap insurance. Do not wait until the world starts to fall down around you to do your plan. Do the plan when you are financially healthy. Do your initial planning when the financial seas are calm.
|
The term old money was given new meaning by L.M. Boyd in his nationally syndicated "The Grab Bag". He claims that there was a time when more than half of the millionaires in the U.S. lived in Natchez, Mississippi. Bet he didn't know that many Confederates practiced asset protection by moving some of their wealth to London before and during the Civil War.
|
Appears to be an offshore MLM program where "investors" are promised a huge return on their money. This appears to be a scam that targets at the
religious right and it seems that many of the investors are still "true believers". They are still are confident that they will be getting a "funding" at any time. We are not aware of any large payouts to date.
|
|
Online gambling |
Back |
1) In an effort to skirt U.S. laws against gambling, many companies with Web sites have set up operations offshore in such exotic Caribbean locales as Antigua, Curacao, and the Dominican Republic. But federal law enforcement authorities are pursuing the companies anyway. [attribution: Reuters]
2) The first U.S. cyber-casino operator has been jailed. The United States has successfully prosecuted its first cyber-casino operator,
by obtaining a guilty verdict and a 21 month prison sentence for Mr. Jay
Cohen, who is a co-owner of Antigua-based “World Sports Exchange.”
According to U.S. Attorney Mary Jo White, as quoted in the Financial Times, the Wire Wagers Act of 1961 “criminalizes taking bets from Americans using interstate and international phone lines, whether those phone lines are connected to regular telephones or to personal computers.”
|
|
Onshore asset protection trust |
Back |
The domestic (AK, DE, RI, NV) asset protection trust is unproven and
offshore asset protection trusts generally are still stigmatized from the Anderson case fallout. Secondly, the domestic APT structure, like all trust-based structures, is vulnerable to fraudulent transfer attack.
Thirdly, domestic life insurance is less protected than foreign life insurance. Many states exempt life insurance from creditors' claims, but there are often "catches", e.g., in some states, the policy must be for the sole benefit of the spouse and children (and a policy in a trust is often not so, at least not entirely, which may be enough of a chink in the armor to give a creditor the edge); other states have other twists that make the life insurance exemption less favorable than it seems at first glance. Finally, U.S. insurance companies and U.S. trustees are also subject to U.S. courts, of course. If a U.S.
court decides that the insurance is not exempt or that the policy premiums were fraudulently transferred to the trust, there's not much to stop the creditor from forcing a U.S. insurance company or a U.S. trustee to turn over the cash value to the creditor. That wouldn't be the case in most offshore jurisdictions. attribution: Attorney Chris Riser
|
An offshore trust with discretionary beneficiaries that may be used for money laundering in a tax havens.
|
A body of laws, similar to an Act. For example, "The Nevis Limited Liability Company Ordinance 1995", as it may be amended from time to time, and any successor to such Ordinance.
|
|
Ordinary income |
Back |
For tax purposes, this is a category of income that does not enjoy any special tax advantages. For purposes of an annuity contract, the imputed interest and the element of the payment that represents compensation for the termination of the obligation at death are taxed as ordinary income.
|
|
Organization for Economic Cooperation and Development (OECD) |
Back |
1) A Parisian based organization placing pressures upon designated tax havens who are deemed to be potentially harmful to tax competition. Listed countries are expected to bring their tax regimes into line by year 2006.
2) This is the international organization of the industrialized, market-economy countries. At OECD, representatives from Member countries meet to exchange information and harmonize policy with a view to maximizing economic growth within Member countries and assisting non-Member countries develop more rapidly. http://www.oecdwash.org/ABOUT/abouto.htm.
3) The OECD is an unsanctioned economic group whose only purpose is to put economic pressure on tax haven countries to form tax treaties with high tax G-7 nations. In June of 2000, a list of targeted tax haven countries will be released. We already know that several of the European tax havens are about to impose taxes on International Business Companies. They are Sark, Guernsey, Jersey and possibly Isle of Man & Monaco. Luxembourg is not expected to be affected. [attribution: www.offshoretips.com]
4) A group of 29 developed nations of the world comprise the Organization for Economic Cooperation and Development (OECD). They are know in the international tax havens as the organization that is attempting to level the playing field, to stop nations poaching investors and their precious capital from each other. More importantly their study was aimed to arrest the flow of funds offshore, lured offshore by nominal tax rates, preferential treatment to non-residents and worst of all, bank secrecy. The "document" of course, one with which most are familiar with is entitled "Harmful Tax Competition: An Emerging Global Issue set out 19 guidelines aimed at combating this practice". [attribution: www.goldhaven.com ]
|
A combination of contradictory or incongruous words such as in the IRC: "resident alien."
|
1) Seventy percent of Panama's economy is derived from the financial services that
it offers. Panama has the necessary features to operate as an effective tax
haven: receptive attitude toward foreign investors, economic and political
stability, secrecy and confidentiality in banking and corporate law, excellent
communication system, geographic location, no money exchange control laws, uses
the American dollar as its currency and much of the labor force is bilingual.
Among the special opportunities which Panama offers are: stock companies, open
ship registration, Colon Free Zone, the Panama Canal, trust services, factoring, banking secrecy laws, and the Private Interest Foundation.
Panama's current high debt, the lack of armed forces for defense, and excessive corruption in government introduce too much uncertainty to warrant an investment in Panama at this time.
2) Panama DOES NOT have an economic citizenship program. It does have a
residency program, which after three years allows you to apply for
citizenship. It is worth noting that the citizenship application is not
guaranteed after three years.
|
|
Panacea Trust Bank |
Back |
Up to 100% per month return on deposits! Panacea Trust Bank is one
of the world's safest and most secure banks. It is located in a country with an excellent and untarnished reputation - The Republic of Nauru. As one of the richest countries in the world and a sophisticated
banking centre, you can always feel confident. New York and London
have been trying to compete with Nauru's power house financial
centre, the Yaren District, for years. Hope you've enjoyed this bit of levity.
|
|
Panamanian Foundation |
Back |
This is Panama's version of the Liechtenstein Anstalt.
|
|
Paradiso fiscale,... |
Back |
... paradisi fiscali, pianificazione fiscale, pianificazione fiscale internazionale. Name your language; it's still a tax haven for all
nationalities. |
|
Passive foreign investment company (PFIC) |
Back |
1) The IRS imposes severe tax penalties to discourage U.S. investors from investing in foreign mutual funds (passive income) where the U.S Government can't force the payor of the income to report (Form 1099) the income of the fund to the IRS every year. (Some observers believe these rules were instigated by U.S. mutual funds.) To discourage U.S. investors from investing in foreign investment funds, the U.S. has adopted a set of tax rules that essentially impose current taxes on a U.S. shareholder's portion of the income of the foreign mutual fund, or which impose a punitive tax rate and a high rate of interest on the deferral of tax. [attribution: Offshore Tax Strategies, rpi@sky.net].
2) The asset test for PFIC status is not based on "average valuation."
Instead it is a "snapshot" test applied to the value of the corporation's
assets at the end of each quarter of the tax year.
3) A PFIC is a foreign corporation that receives 70% or more of its income
from passive investments or that uses 50% of more of its assets for
investment purposes.
4) The basic PFIC regime does NOT require current taxation of the foreign corporation's income. Rather, PFIC converts capital gain into ordinary income and imposes an interest charge to reflect the deferral between the time the income was earned by the PFIC and the time it was distributed to the U.S. owner. There is no current inclusion of PFIC income unless the U.S. owner elects to apply either the QEF rules or
the "mark to market" rules.
|
Things move slowly offshore. Everything is still going along at the "island's pace".
|
|
Pecuniary dynastic offshore trust |
Back |
A non-grantor trust established under section 663(a)(1) of the IRC. Has low level promotion by service providers. Formed with the intent to utilize this code section and to be able to exclude from the trust's deductible distributions and from the beneficiary's includible amount, that amount provided for under the terms of the trust documentation. It is claimed that if the payments are clearly specified as gifts and not distributed in more than three installments then it is not subject to the throwback rule and interest charge as provided for in Subpart D of Subchapter J. It is suggested here that this type of trust is quite tax aggressive and currently untested with the IRS and the U.S. Tax Court.
|
Generally means a natural person, partnership, domestic or foreign limited partnership, domestic or foreign limited company, trust, estate, LLC, association, or corporation.
|
|
"Planned" forgiveness |
Back |
"Planned" forgiveness of a loan constitutes a gift at the inception of the proposed transaction.
|
Ponzi's first name was Charles. Not very Italian for an immigrant to the U.S. After spending 10 years in jail in the U.S. for a Ponzi scheme that defrauded 40,000 people out of $15,000,000, he was deported to Italy. He died a pauper in 1949 in Rio de Janeiro never realizing that his name would become a commonplace description for using current investor's money to pay off older investors. The prime bank guaranty, roll program, bank debenture program, high yield promises, etc., are all frauds that use the Ponzi system to keep going until the flow of new suckers stops or the promoter moves offshore to enjoy your money. For more, go here.
|
Under the US Uniform Commercial Code (UCC), except for money itself (that means the actual coins and paper currency, not a deposit account), there is no collateral under revised Article 9 where the only method of perfection is possession. See revised 9-312(b).
|
|
Preferential tax regimes |
Back |
These are nations whose international financial center and laws are structured to attract capital worldwide by imposing low tax rates or no taxes on those monies.
|
The immediate value of an amount or series of amounts that are not due until a future date. Generally, the present value of a future sum is the amount that would accumulate to equal that sum at a specified rate of interest (compounded) for a specified term of years. |
|
Pretty Good Privacy (PGP) |
Back |
In 1991, computer programmer and civil libertarian Phil Zimmerman created an encryption program called "Pretty Good Privacy" (PGP) to protect e-mail from being read by unauthorized recipients. He posted PGP on the Internet as free shareware and it quickly spread worldwide. This caused the U.S. government to conduct a 3-year probe of Zimmerman for possible violation of export laws. The investigation ended in 1996 without action against the PGP inventor. Today, PGP is unquestionably the leading encryption software in the world. Zimmerman can be e-mailed at: prz@pgp.com.
[attribution: The Sovereign Society.]
|
An older term for a well known (top-25, top-100) international bank. The term should be avoided and replaced by "money center bank" or "international bank". A scam program
|
|
Prime Bank Guarantee (PBG) |
Back |
Guarantees issued by prime banks. In this context the word prime is an adjective and not a noun, meaning that the bank issuing the bank guarantee is of prime status, one of the top international banks. A scam program. (See also bank debenture or medium-term note.)
|
|
Privacy, Internet |
Back |
U.S. and Colombian officials have reported that drug traffickers were making use of the latest technology to protect and advance their business. They keep in touch by using Internet chat rooms protected by firewalls that made them impossible to penetrate, officials said. The traffickers also had access to highly sophisticated encryption technology, far beyond what law enforcement has the capacity to break quickly, sources said. One U.S. official said it took some of their best computers 24 hours to crack a 30-second transmission by the traffickers, making the exercise pointless.
|
|
Private annuity |
Back |
Generally an annuity contract that is not issued by an insurance company or is not a commercial annuity.
|
|
Private Exempt Company (PEC) |
Back |
An entity used in St. Kitts. A company limited by shares or by guarantee. Where limited by guarantee, it can be structured as an LLC equivalent.
|
|
Private Foundation |
Back |
Private foundations (PF) are tax-exempt entities formed by a donor with an interest in preserving and controlling assets for distribution to charities. PFs are often used by families as a technique to retain control over assets for several generations. Contributions to PFs are tax deductible. PFs may also be
formed in foreign jurisdictions. Foreign PFs may be used to provide a donor with more flexible administration and investment discretion than is available with a domestic PF.
|
|
Private Investment Company (PIC) |
Back |
In some jurisdictions, the international business company or exempt company is referred to as a private investment company.
|
|
Private operating foundation |
Back |
This type of U.S. foundation is required by the IRS to derive most of its revenue from and expend their funds in direct charitable endeavors, as opposed to "regular" private foundations, which essentially take in donations and then make grants to public charities which do the actual charitable work. In order to qualify as a private operating foundation, the foundation must meet certain income and expenditure tests,
in order to prove that it is actually engaging in direct charitable works, both in terms of the sources of its income and how it expends its income. These tests make it difficult to qualify for private operating foundation status, since much of what
passes for charitable work in fact consists of what the rules would classify as grants, as opposed to direct charitable revenue or expenditures. [attribution: ABA-PTL list]
|
|
Private Placement Life Insurance |
Back |
This is insurance that the purchaser negotiates directly with the insurance company; there is no uniform policy which the purchaser is required to buy. As part of these negotiations, the purchaser can obtain some unique benefits including the following:
First, the purchaser can designate his own investment manager, including
hedge funds, tech funds, and venture capital funds, etc.;
Second, the policy can be structured so that it is mathematically
efficient for the purchaser;
Third, expenses and fees within the policy can be negotiated down;
Fourth, the death benefit can be negotiated upwards; and
Fifth, other terms of the policy can be much more flexibly written,
including the designation the life (or lives) upon whom payout is
based, and any other policy term within limits.
|
|
Private Trustee Company |
Back |
A company incorporated in certain offshore jurisdictions, such as Bermuda, to act as a trustee for a limited class or group of trusts. Private trustee companies are not permitted to offer trustee services to the public generally.
|
The body of law which governs the validity and interpretation of a contract or trust deed.
|
|
Protected cells |
Back |
An evolution of the limited liability company (LLC). Each cell within the LLC is insulated from the obligations and duties of the other cells. The assets of a particular cell may not be affected by the claims, liabilities and debts of the other cells. Originally cells were used to isolate different insurance companies within a master LLC licensed insurance company but that utilization is expanding. The State of Delaware now permits "series" LLC's (abbreviated SLLC's) where the series are similar to a cell. Each cell in Delaware may have different members (owners). Guernsey, in the Channel Islands, has licensed insurance companies as Cell Companies and they are called Protected Cell Companies (PCC's).
|
A person appointed by the settlor/grantor of a trust, who has limited powers to control the trustee. The trust protector usually has the right to change trustees.
A Protector can be given various powers that affect overseas trusts,
limited liability companies, international business companies (IBCs), etc.
The powers given to the Protector usually are the ability to change
trustees or managers or officers, change venues, co-sign on accounts to
assure security of funds, some veto powers over management actions, approve
the investment adviser, trigger certain events, etc.
|
|
Protectors, committee of |
Back |
A committee of advisors convened to guide the trustee. Comprised of a diverse group such that no one family member can have full advisory power over the trustee to add or delete beneficiaries by themselves. The committee should also be barred from adding themselves as a beneficiary unless they are already a beneficiary of the trust. It is advisable use as many independent, non-family members as you can on the protector committee. The protector position is analogous to a board of directors of a corporation, responsible for oversight, structural issues, strategic planning, etc. [attribution: ABA-PTL list]
|
PT is a term coined by Sir Harry D. Schultz, noted political-economic commentator and investment adviser. Used as an acronym, many variations have been coined, such as Paltry Taxpayer, Parked Temporarily, Part-time Tourist (Traveler/Traveler), Part-time Tourist (Traveler/Traveler), Passing Through, Past Taxpayer, Perfect Thing, Permanent Tourist (Traveler/Traveler), Perpetual Tourist (Traveler/Traveler), Person of Talent, Possibility Thinker, Prepared Thoroughly, Preparing for Tomorrow, Prior Taxpayer, Private Transactor, and Publisher Temporarily.
|
A sham concept promoted by fringe marketers. The so called "pure" trust has now become a code word for a trust that is alleged to provide extensive tax benefits (tax avoidance) and asset protection benefits. In fact, such benefits are rarely available if the trust arrangement is challenged by the IRS or by a determined creditor. Also see abusive trusts.Here is a LARGE Website promoting one particular pure trust: puretrust.com.
We do NOT condone the use of this type of structure. Nevertheless, if you wish to read the supportive legal arguments as to the alleged validity of the pure trust, see the PURE TRUSTS POINTS AND AUTHORITIES page here.
These pure trusts generally fall into two categories:
- Simple Trusts. Simple Trusts are used for holding assets such as property or managing financial matters. These Trusts are short and to the point. Each contract is only 2 to 3 pages in length. Simple Trusts Are: Banking Trusts and Holding Trusts.
- Complex Trusts. Complex Trusts are used for managing assets such as homes
and businesses, or to go offshore. These contracts are lengthy and go into
great detail. They are 20 to 35 pages in length. Complex Trusts Are:
Management/Business Trusts, Family Trusts, and Offshore Trusts
|
1) A trust without beneficiaries which allegedly does not have to be reported to the IRS. Used as a business operating vehicle in some common law jurisdictions, for example, to run a store.
2) A trust created for an express purpose without any individually ascertained or ascertainable beneficiaries. A purpose trust is typically used in circumstances where the trust is of philanthropic nature.
3) The purpose trust has a purpose, not beneficiaries. Under the U.S. tax
regulations a trust is an "arrangement" involving a grantor, a trustee
(as legal owner) and the beneficiaries. There are no beneficiaries in a
purpose trust. The purpose trust is classified as an association taxable as a corporation. It may also be classified as a CFC. [attribution: OSPro list]
4) Under Jersey Law, it is permissible to have a special non-charitable purpose trust, where there are named individual beneficiaries. In all these cases, the
main requirement is that there is an "enforcer" who enforces the terms of the trust and sees to it that the trustees act correctly. The enforcer is, thus, in a fiduciary position and can be sued just as trustees can, if they do not see that the terms are enforced. This can also set en enforcer apart from a trust protector, where usually, although not always, the protector would not be a fiduciary. [attribution: OSPros, rpi@sky.net]
5) The U. S. tax regulations look for a legal owner (a trustee) to serve in a
fiduciary capacity for the benefit of "beneficiaries"--the beneficial owners. U.S. tax regulations do not comprehend the concept of a purpose trust. In a U. S. Tax Court case or a U. S. District Court case, the court will likely construe the regulations according to the manner in which they are written. The purpose trust will likely fail to be classified as a trust. This is the position of the Chief Counsel's office of the IRS and it is the position of one of the U. S. Tax Court Judges. A Tax Court Judge said the entire concept of a purpose trust under U. S. Tax laws was a sham which is being used to improperly
defer U. S. income taxation, that the only reason that these so-called trusts are being used are for tax avoidance purposes, and he said that he will strike them down when they come into this Court. The U. S. courts will likely find that the "purpose" of the purpose trust is to improperly defer or avoid U. S. income taxes. In other words, the U. S. court system will find that the primary purpose of the purpose trust is the deferral or avoidance of taxation and that other reasons for establishing the trust are secondary.
[attribution: OSPros, rpi@sky.net]
6) In summary, the true purpose trust has no beneficiaries, it exists merely to serve a purpose or accomplish a result. Such an entity would almost certainly be "an association taxable as a corporation" and not a trust for U.S. federal income tax purposes. The U.S. tax rules applicable to trusts simply cannot be made to function in a rational manner with respect to purpose trusts.
7) The purpose trust is a commercial, non-charitable "trust" created in recent years by statute in Bermuda, Barbados, the British Virgin Islands, Cyprus, Belize, the Cook Islands and the Isle of Man. Compared to a traditional trust created to benefit named beneficiaries or to a charitable purpose trust, a commercial purpose trust is established for a particular business objective. It's been used for multi-million dollar aircraft and shipbuilding financing transactions, multi-entity share holding, asset securitization and cross border joint ventures.
8) The Cayman Islands' "Star Trust" is a form of purpose trust.
9) A trust created for a specific purpose without any individually
ascertained or ascertainable beneficiaries. A purpose trust is often used where it is intended to be philanthropic in nature. For example, perhaps the grantor might want the trust to benefit genetic research that seeks a cure for Parkinson's disease.
|
|
Qualified appraisal |
Back |
A formal valuation and appraisal analysis by a qualified appraiser who specializes in making appraisals of the subject property. The appraiser must be independent of the annuitant and the obligor.
|
|
Qualified Domestic Trust (QDOT) |
Back |
A QDOT is used when one or both spouses are U.S. residents, but not citizens. If the beneficiary of an estate is a U.S. citizen, an unlimited marital deduction applies and estate tax will only apply when the second spouse dies. However, if a U.S. citizen married to a non-citizen dies, the unlimited marital deduction does not apply. In order to avoid immediate tax on the decedent's portion of his or her taxable estate, the decedent's assets must be held in a QDOT. The QDOT defers estate tax on the assets of the first spouse to die
until the death of the surviving spouse. While the trust's income is
distributed and taxed to the surviving spouse as ordinary income,
distributions of principal will attract current estate tax.
|
|
Qualified Intermediary |
Back |
1) An intermediary is defined at Treas. Reg. Section 1.1441-1(e)(3)(i). A Qualified Intermediary is an intermediary that has entered into a
withholding agreement with the IRS. Treas. Reg. Section 1.1441-1(e)(5)(ii). The rules in this area are at 1.1441-1(a) thru (e.)
2) Before any financial institutions based could apply for Qualified
Intermediary status, they have to satisfy 18 "know your customer"
principles.
3) "Qualified intermediary" means they then assign a "U.S. withholding agent" to tax these accounts at rates from 0% to 31% depending upon the
individual accounts and account holders.
|
|
Qualified Terminable Interest Property Trust (QTIP) |
Back |
A QTIP trust is used to insure that assets are ultimately distributed according to the decedent's wishes. While the income of the trust is distributed to the surviving spouse upon the survivor's death, the assets of a QTIP trust pass according to the trust's terms. The typical QTIP example is where one spouse dies and the survivor remarries. In order to protect the interests of the children from the first marriage, the decedent's assets are held in a QTIP trust. While the living spouse will receive income from the first trust,
distributions of principal are usually restrictive.
|
In the whimsical sense, a fictitious unit of currency, created by The Adkisson Advisor at www.falc.com
|
A trust which enables you to defer receipt of substantial compensation and bonuses until the next tax year and therefore the current year's taxes on that income.
|
|
Rates of Interest |
Back |
Offshore banks, because of their jurisdictional location, lower fixed overheads and higher degree of efficiency when compared to large domestic banks, are able to pay higher interest rates.
|
|
Re-domiciliation Corporations |
Back |
Some offshore jurisdictions allow corporations incorporated in other jurisdictions to reincorporate in their own at will.
|
|
Re-insurance (Re) |
Back |
The sharing of the risk between the principle carrier and the re-insurance company by sharing the premiums. Munich Re is the world's largest reinsurance group. Currently, there is worldwide overcapacity in reinsurance markets.
|
A Receiver is a Manager who, in almost all circumstances, is appointed by a court upon an application by a creditor who is owed money by a business. The Receiver, once appointed, examines the business and decides whether it is possible to sell the business as a going concern or whether it should be liquidated.
|
|
Related persons |
Back |
Generally this includes a spouse, children, parents or grand-children and any entities such as partnerships, corporations or trusts in which you or anyone related to you have effective control over the entity.
|
New legislation in Bermuda under a proposal from the Ministry of Finance will make it easier, quicker and cheaper to form rent-a-captives (or "protective cell captives"). Currently they are set up through a private members bill which has to be passed by Parliament and can cost between $8,000 and $15,000. The new legislation will allow formation within a short process period - taking no more than 30 days and much less costly.
|
A person who lives in the U.S. for an extended period but who is not a citizen of the U.S. A resident alien is subject to the U.S. tax laws in substantially the same extent as a U.S. citizen.
|
|
Resident Company |
Back |
A bank, trust company, or holding company permitted to deal only in local currency. Any transactions in foreign currency must be approved by the local regulatory authorities. If your business (or proposed business) is international in scope, this kind of restriction could be a major impediment to corporate efficiency.
|
|
Resident of the US |
Back |
Under the immigration laws of the United States, a resident is only someone who has been given a permanent residence visa. But under the tax laws a resident is someone who holds a permanent residence visa, or someone who has maintained a “substantial presence” in the United States.
There is a specific formula as to when someone meets the “substantial presence” test based upon the number of days they have been present in the United States for a given year and the two prior years. The test is confusing, but to be safe, the non-resident should stay in the United States no more than 122 days in any given year. It is this “substantial presence” test that causes the most trouble for non-U.S. citizens who stay any length of time in the United States.
|
|
Restricted trust company or bank |
Back |
A company with a banking and/or trust company license to operate that restricts the persons with whom it may do business by specific names or by class.
|
|
Revenue Canada (RevCan) |
Back |
The Canadian counterpart of the IRS.
|
The OECD has also compromised on its desire to remove "ring- fencing", in which governments allow foreign-owned companies to be taxed at minimal rates or not at all while local companies are taxed at higher rates. The US Treasury did not want to appear to be dictating tax rules to smaller countries. Under the agreement, a ring-fencing regime won't by itself make a country subject to sanctions, but it will be a criterion for being labeled by the OECD as a tax haven.
|
See Bank debenture or medium-term note.
|
|
Roll-over, money laundering |
Back |
The process of commingling legal and illegal funds to frustrate prosecution for money laundering. The rapid manipulation of funds in multiple accounts as done in the recent Bank of New York scandal involving Russian companies.
|
|
