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International Offshore Financial Centres (IOFCs) often provide a welcoming environment for investment companies. Offshore investment vehicles may take a variety of forms: unit trust, mutual fund or investment company, and may be open-ended or closed. They will be referred to generically as 'offshore funds'. In all cases the key reasons for being offshore are that the gains from investment are untaxed or very lightly taxed in the IOFC concerned, and that the regulatory regime in the IOFC is lighter than in the high-tax countries where the investors and often the promoters (owners) of the fund are to be found.
IOFCs vary greatly in the legal and fiscal regimes they provide for offshore funds. The most widely-used jurisdictions are Bermuda, the Cayman Islands, Guernsey, Hong Kong, the Isle of Man, Jersey and Luxembourg. Recently, Bahamas makes it simple to set up fund by having a Smart Fund for licensed practitioner (as hedge fund) or non-licensed practitioner (for private investors).
Offshore funds usually offer greater returns than onshore funds, many countries restrict investment in such funds by their citizens, and restrict marketing by offshore funds on their territory or to their citizens. The USA is particularly fierce in this regard, and offshore funds take great care not to offend against US law, refusing to accept investment from US residents. The UK's regime is more permissive while still not very flexible. The laws and regulations of high-tax countries in respect of offshore funds are directed not just to limiting the behaviour of their citizens but also to preventing 'money-laundering' and other illicit uses of IOFCs.
The European Union is now attempting to create a Union-wide regulatory regime for investment funds which is seen as being mostly negative by funds both inside and outside the EU. For much of 2010, the legislation was tossed back and forth between the European Parliament, which wanted it to be tougher, and the Council (the heads of the member states) which mostly wanted it to be more relaxed. The AIFM (alternative investment fund managers) directive will impose registration, reporting and initial capital requirements on a financial industry sector which until now has been subject only to "light touch" regulation. It is hoped that, following its introduction in 2013, the enhanced regulatory oversight over alternative investment fund managers will enhance investor protection and financial stability. The most controversial proposal in the directive has been that AIFMs from 'third countries' would be able to obtain that EU permit, or ‘passport’, to sell their funds within the EU without first having to seek permission from each member state and comply with different national laws - a planned regulation the terms of which have been widely awaited by non-EU funds wanting to continue to operate in Europe. In this respect, therefore, the EU has moved noticeably closer to the US model. The pre-existing UCITS legislation (Undertakings for Collective Investment in Transferable Securities) has been quite successful, but cannot be used directly by non-EU OIFCs.
Individuals or companies who are tax-resident in a high-tax country may not be able to benefit much from the tax advantages of an offshore fund if they are taxed on their world-wide income Some funds 'roll up' income and capital gains for this reason, at least allowing the tax-payer to defer taxation until the fund eventually distributes gains, or units/shares are sold.
The rules and regulation governing the financial sector for below jurisdictions, you can send an email to info@intershores.hk.
Andorra, Anguilla, Bahamas, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Cyprus, Dubai, Gibraltar, Hong Kong, Isle of Man, Labuan, Liechtenstein, Luxembourg, Malta, Mauritius, Monaco, Panama, Seychelles, Switzerland and Vanuatu.
If you want to know more, please do not hesitate to contact us: Whatsapp : (852) 6499 4686 Phone : (852) 2186 6936 Email : info@intershores.hk
Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice. |
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