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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Tuesday, September 30, 2003 - Vol. 5 No. 115
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In This Issue:
* COMMENT: E.U. Tax Hounds
* OFFSHORE: Bahamas Glowing? Moody's on Bahamas, Cayman. Caribbean
Concerns. Belize Trusts. Gibraltar EU Exempt. Very Small Nauru.
Living, Retiring Offshore; Pressures, Quality of Life.
* WEALTH: Richest Americans, Australians, Indians, British.
Chinese May Be Allowed to Go for the Gold.
* PRIVACY & RIGHTS: Congress Cuts Anti-Privacy Programs.
Visa Tracking Project. EU Bio-Passports. US Official Secrets.
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COMMENT: E.U. Tax Hounds
Dear A-Letter Reader:
You can't be any more weary than I am of hearing about the European
Union's insidious "savings tax directive." After 14 years of debate,
EU politicians said last June they had reached an agreement that would
end what they claim is massive cross border tax evasion.
The announced deal provides that the current 12 EU member nations,
(and new EU nations), will begin exchanging information on investments
of each nation's non-residents from 2005 onward. Three EU countries
with banking secrecy, Luxembourg, Belgium and Austria, will levy a
withholding tax instead of sharing information. The tax rate will rise
from 15% in 2005 to 35% in 2010. (Only residents of EU nations are
affected. US persons with EU accounts are not covered.)
There's just one major problem for the EU tax collectors; EU citizens
who have EU bank and investment accounts are still free to transfer
cash to non-EU jurisdictions worldwide. Once cash is stashed in Panama,
Hong Kong or Singapore they wont have to worry about information sharing
or a 35% tax -- or any tax at all, depending on where they choose.
This explains why massive asset shifts now are showing up in many Asian
banks. French-based SG Private Banking says concerns about bank secrecy
and EU taxes have caused thousands of Europeans to shift money to Asian
and Middle East offshore centers. During June 2002/June 2003 there was a
30% growth in Asian assets, the bulk of it coming from Europe.
And it appears the EU tax directive itself may have sprung a major leak
within its own borders. Jersey experts have identified a possible
loophole that could benefit rich individuals who can afford to create
offshore trusts.
Unnamed Jersey officials told the Financial Times that high net worth
individuals who establish discretionary trusts might escape the EU tax
because trusts don't fall within the EU savings tax directive. Jersey
trustees can establish tax exempt companies with bank accounts. Banks
that pay interest to such companies would not have to report or apply
the EU tax because its corporate, not individual income.
Whether this Jersey loophole is valid, remains to be seen. As soon as
the FT article appeared, Jersey officials denied its contents,
insisting trusts can be subject to EU taxes. Jersey loophole or not,
you can be sure the EU tax directive will never achieve its stated
goal of ending global tax competition, in Europe -- or anywhere else
in the real world of international banking and finance.
That's the way that it looks from here.
BOB BAUMAN, Editor
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COMMENT LINKS:
* Jersey finds alleged flaw in EU savings tax plan.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=13483
* Jersey officials deny EU tax loophole claim.
LINKS: http://news.bbc.co.uk/1/hi/world/europe/3143534.stm
* Jersey could lose independence under EU plans.
LINK: http://news.bbc.co.uk/2/hi/europe/3168049.stm
* EU fails to reach agreement on savings tax directive.
LINK: http://www.euobserver.com/index.phtml?aid=8609
* Persian Gulf Banks Start Awakening. LINK:
http://www.businessweek.com/magazine/content/03_39/b3851715.htm
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* OFFSHORE *
BAHAMAS PRIME MINISTER GIVES GLOWING REPORT
WASHINGTON: Contrary to all reports of a major decline in Bahamian
offshore financial activity, PM Christie says everything is OK. LINK:
http://www.thenassauguardian.com/national_local/334941029413892.php
* Moody's new Bahamas credit ratings look good. LINK:
http://reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=3525014
* Moody's CAYMAN ISLAND ratings also good.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=13488
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U.S. CONCERNED ABOUT POSSIBLE CARIBBEAN TERRORISM
Banks and financial activity are special targets. LINK:
http://www.jamaicaobserver.com/news/html/20030928T040000-0500_49585_OBS_AMERICA_WANTS_TO_KEEP_THE_CARIBBEAN_SAFE.asp
* US accountant using sham BELIZE trusts put out of business.
LINK: http://www.cincypost.com/2003/09/26/account092603.html
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GIBRALTAR EXEMPT FROM E.U. DIRECTIVES
Court of Justice ruling frees UK from enforcing EU rules on The Rock.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=13484
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SMALL NOT BEAUTIFUL WHEN IT COMES TO 'NATIONS'
NAURU is a good example of a case where size does matter. LINK:
http://www.sltrib.com/2003/Sep/09292003/commenta/commenta.asp
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RETIREMENT OFFSHORE; A DREAM COME TRUE?
Thousands see offshore retirement as the best of all choices. LINK:
http://www.telegraph.co.uk/global/main.jhtml?xml=/global/2003/09/15/firtire415.xml&sSheet=/global/2003/09/23/fin_home.html
* Personal pressures that come with an offshore work assignment.
LINK: http://213.159.10.102/germany.asp?pad=194,228,&item_id=34452
* International Living's 2003 Quality of Life Index of nations.
LINK: http://www.internationalliving.com/postcards.cfm?pcard=3031
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* WEALTH *
RICHEST 1% OF AMERICANS LOST INCOME
But they also paid less taxes in 2001.
LINK: http://www.nytimes.com/2003/09/27/business/27TAX.html
* The most expensive ZIP codes in all of America.
LINK: http://moneycentral.msn.com/content/invest/forbes/p62018.asp
* ZIP code list by US city or town.
LINK: http://moneycentral.msn.com/content/invest/forbes/P62020.asp
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* Taxing times for AUSTRALIA's 600 richest citizens. LINK:
http://www.heraldsun.news.com.au/common/story_page/0,5478,7390987%255E664,00.html
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* The billionaires club in INDIA, a group with a difference.
LINK: http://www.rediff.com/money/2003/sep/27spec4.htm
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* In the UNITED KINGDOM, you may be richer than you think.
LINK: http://www.guardian.co.uk/business/story/0,3604,1051551,00.html
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CHINA MAY GO FOR GOLD
HONG KONG: Experts urge end to curbs on gold ownership; new
market could mean major increase in world gold prices. LINK:
http://www1.chinadaily.com.cn/en/doc/2003-09/25/content_267390.htm
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* PRIVACY & RIGHTS *
U.S CONGRESS BLOCKS ANTI-PRIVACY PROGRAMS
* Airline passenger profiling system put on hold.
LINK: http://www.wired.com/news/politics/0,1283,60600,00.html
* All funds cut for Pentagon's TIA project.
LINK: http://news.com.com/2100-1029_3-5082253.html
* TIA - government's assault on American liberties.
LINK: http://www.cato.org/research/articles/levy-021124.html
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HUGE NEW U.S. VISA TRACKING PROJECT
Automated system will track every foreigner entering the US. LINK:
http://www.washingtonpost.com/wp-dyn/articles/A14287-2003Sep28.html
* US delays new visa waiver requirements
LINK: http://www.brunei-online.com/bb/fri/sep26w3.htm
* EU biometric passports another Big Brother step back to "1984."
LINK: http://www.unobserver.com/layout5.php?id=1071&blz=1
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GOVERNMENT SEEKS TO CURB ALL 'LEAKS'
The US equivalent of the UK's 'Official Secrets Act'.
LINK: http://writ.news.findlaw.com/dean/20030926.html
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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER. *
Bob Bauman, Editor * Daniel Aponte, Jr. Research Asst.
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