Tax havens are jurisdictions that impose few if any taxes on foreign individuals or companies. This has made those countries and other areas attractive locations to place assets over the long term. In the Caribbean alone, several countries are viable tax-havens.
Here are ten examples that deserve your attention.
If you’re looking for a zero-taxation situation for your offshore resources, Anguilla is at the top of the list. Any income generated by offshore companies outside the country is considered free of any tax obligation. If the offshore company is incorporated within the country, there are also no stamp duties.
Individuals get to enjoy no taxes on income or any estate taxes. Capital gains taxes are also not an issue for individuals. Pair this with the fact that Anguilla’s banking laws prohibit financial personnel from disclosing depositor information without the express permission and you have an excellent country for creating offshore bank accounts.
2. The Bahamas
Many people have heard the Bahamas referred to as a premier tax haven. Laws enacted during the 1990s provided several incentives for individuals and corporations to establish offshore accounts like checking, savings, time deposit, and investment funding. Personal and corporate trusts also enjoy favored status in the Bahamas.
Individuals and corporations that have bank accounts based in the Bahamas pay no taxes on income generated outside the country. The fact that the nation’s secrecy laws prohibit sharing account holder information without an order from the Bahamian Supreme Court makes it particularly attractive to business owners.
Unlike some other nations on this list, Barbados is not a zero-tax jurisdiction. Offshore companies do pay taxes that pale in comparison to what the same operations based in domestic settings. To make things even more attractive, the taxation rate decreases as the amount of earned profits increases.
A lack of import duties also makes Barbados a good choice for business owners. Business equipment or manufacturing machinery brought into the country does not require payment of any import duty. There are also no capital gains or withholding taxes imposed.
With a strong banking presence that offers offshore accounts for individuals and businesses, Belize is considered one of the most trustworthy options for tax havens. The country provides exemption on stamp duty for any company that is incorporated here. There are also no taxes imposed on income that is earned outside of Belize.
Interest earned on offshore banking accounts established in Belize is not subject to taxation. The lack of tax treaties with other nations also allows the country to maintain a high confidentiality level about bank customers and their accounts.
5. The British Virgin Islands
The British Virgin Islands offers more benefits for offshore accounts and tax reduction than most people realize. There are no taxes imposed on the balances found in offshore accounts established within the country. Like Belize, there are no tax treaties in place with other nations.
International business companies based within the nation do not owe capital gains taxes on any income generated outside the British Virgin Islands. This also applies to any gross profits generated outside the country.
The lack of exchange controls can be beneficial for business owners with interests in other parts of the world. Transferring funds into and out of the nation is easy to manage. Along with protecting privacy, this can come in handy with making and protecting investments.
6. Cayman Islands
The Cayman Islands are likely one of the best-known tax havens in the Caribbean. International business companies pay no taxes, while other types of companies do not pay taxes on income earned outside of the country. There is no domestic income tax, no estate taxes, and no corporate taxes. Business owners do not have to be concerned about capital gains taxes.
All in all, the Cayman Islands are a prime example of a true tax haven. The simplicity of the tax codes coupled with a lack of tax treaties makes it the ideal location for many types of offshore banking accounts. Even individuals can benefit significantly from what the country has to offer.
7. Costa Rica
While Costa Rica is another example of a Caribbean nation that’s not considered a pure tax haven, it deserves attention from individual and corporate account holders. Some would see it as a tax-friendly setting that provides benefits not always found elsewhere.
For example, there are no restrictions on where Costa Rican incorporated companies can do business. They are free to offer products and services within the country as well as abroad. In jurisdictions where the company does not conduct business, no taxes are imposed. Many exemptions may be claimed for up to eight years. Even companies that do pay taxes tend to pay significantly lower rates.
The Commonwealth of Dominica is considered an excellent location for offshore financial accounts of all types, including trusts. There are no corporate taxes or income taxes on any income earned outside the nation. The same holds for any capital gains generated outside the Commonwealth.
Inheritance and gift taxes are not part of the tax requirements for offshore account holders and investors. The same is true for estate taxes. Even the interest generated on offshore bank accounts is not subject to taxation.
As part of St. Kitts and Nevis Federation, the country is considered a tax-friendly setting for limited liability companies, foundations, and trusts. Incorporation is more straightforward here than in many other areas and provides business owners with excellent privacy protection. A lack of stamp duty and any taxation of dividends and interest earned outside the nation also attract favorable attention from many company owners.
As with many nations in the Caribbean, Nevis has no tax treaties in place with other countries. This further increases privacy, something that many business owners will find helpful.
No discussion of Caribbean tax havens is complete without considering Panama. Like Costa Rica, offshore businesses incorporated in Panama are free to offer goods and services within the country and abroad. Offshore owners do not have to pay corporate taxes, income taxes, or even local taxes. The protections for offshore trusts are among the most comprehensive found anywhere.
Panama does not maintain any taxation treaties with other nations. With no exchange control laws in place, moving funds between accounts is uncomplicated. Add in the stringent privacy laws that apply to financial accounts, and you have one of the best tax havens in the world.
Comparing Tax Haven Options
When comparing different tax havens, consider other factors that may apply. Some of these factors can include:
- What is the overall cost of doing business within that nation?
- What banking and investment laws that may apply?
- Are there any cultural issues, such as language barriers?
If you decide that one country has the ideal combination for your purposes, put it to the test for six months to a year. Should all go well, you can begin to place more resources in those offshore accounts.