By tax haven, we understand a country that offers natural persons or businesses little or no tax liability.
One of the most popular tax havens in the world is the Caribbean, providing benefits such as very low tax liability and financial privacy. Among the most used Caribbean tax havens are the Bahamas, Panama, and the Cayman Islands.
The only cost for most of these countries is an annual business license fee, with a 0% tax rate. We advise working with a seasoned tax professional before setting up an offshore account or business.
The Cayman Islands
One of the five largest offshore financial centers worldwide, providing services such as offshore banking, offshore trusts, and the incorporation of offshore companies.
The Caymans have no income tax, no corporate tax, no estate or inheritance tax, and no gift tax or capital gains tax, making it a pure tax haven.
There are no exchange controls in the Caymans restricting money transfers in any way.
The Caymans have very strict banking laws designed to protect banking privacy, and the incorporation is a very simple, streamlined process.
- offshore companies are not taxed on income earned abroad, and there is no taxation of Cayman international business companies (IBCs);
- offshore corporations in the Caymans are not required to submit financial reports to any Caymans government authority;
- offshore businesses are not required to pay stamp duty on asset transfers.
The Republic of Panama is considered a very secure pure tax haven. One noteworthy characteristic of Panama’s offshore jurisdiction law is that the companies are allowed to conduct business operations within and outside of the offshore jurisdiction. Offshore Panamanian companies and their owners are not subject to income taxes, corporate taxes, or local taxes, and people of any nationality may incorporate within Panama. The privacy of offshore trusts and foundations is strictly protected by law.
As a provider of offshore banking services, Panama has strict banking secrecy laws designed to protect the privacy of account holders. Panama has no tax treaties with any other country and no exchange control laws.10
in 1990, after passing legislation that enabled the incorporation of offshore corporations and IBCs, the Bahamas became widely popular as a tax haven. The Bahamas is still one of the preferred tax havens for residents of the United States and European countries.
The Bahamas was the first Caribbean nation to adopt strict banking secrecy laws.
The Bahamas provides:
- offshore banking, registration of offshore companies, registration of ships, and offshore trust management;
- banking secrecy, the information on offshore bank account holders can only be disclosed by the specific order of the Bahamian Supreme Court;
- pure tax haven, with no tax liability at all for offshore companies or individual offshore bank account holders on income earned outside of the jurisdiction.
The British Virgin Islands
The British Virgin Islands (BVI) is an ideal place to establish an offshore bank account.
The British Virgin Islands provides:
- does not impose any taxes on offshore accounts, and it has no tax treaties with other nations, thus protecting the financial privacy of bank account holders;
- there are no taxes on offshore companies, and BVI IBCs pay no taxes on profits or capital gains generated from outside of the BVI;
- no exchange controls on offshore banking customers and offshore companies incorporated in the BVI;
- easier to transfer funds from one place to another for trading and investment purposes while protecting financial privacy.
Often confused with the Dominican Republic, the Commonwealth of Dominica has initiated legislation that facilitates the creation of offshore corporations, trusts, and foundations, providing tax-friendly and privacy-protected offshore banking services.
Dominica’s asset protection and financial privacy laws are very strict, making Dominica a secure offshore tax haven.
- Dominica is a pure tax haven that imposes no income taxes, no corporate taxes, and no capital gains tax on income earned abroad;
- no withholding taxes and no estate taxes, including inheritance taxes or gift taxes;
- offshore companies and trusts do not have to pay any stamp duty on transfers of assets;
- people of any nationality may form offshore corporations in Dominica;
- privacy laws that shield the identities of owners and directors of offshore companies incorporated in Dominica;
- no taxation of interest earned on offshore bank accounts, and information on offshore account holders are not shared with tax authorities of any other country.
Nevis, together with St. Kitts, forms St. Kitts and Nevis Federation.
Incorporation in Nevis only requires one director and one shareholder, who can be the same person.
St. Kitts and Nevis provide:
- tax-friendly formation of offshore limited liability companies (LLCs), trusts, and foundations, along with excellent offshore banking and insurance services;
- financial privacy by not making public any information regarding owners and directors of offshore companies;
- an exempt trust is exempted from taxation on any income earned outside of Nevis, including dividends and interest;
- trusts do not have to pay stamp duty on transactions;
- doesn’t impose any local taxes on income earned outside of the jurisdiction;
- offshore companies and their owners do not have to pay withholding taxes, capital gains taxes, or estate taxes, and they are not subject to corporate taxes or local taxes on income generated outside of Nevis;
- no exchange controls in Nevis and the country has refused to sign any taxation treaties with other countries.
Anguilla is a part of the Britain Overseas Territory, and it has become a respected tax haven.
The Offshore Banking Act of 2005 prohibits all bank employees or agents from disclosing any financial information without the express consent of the account holders.
The offshore jurisdiction of Anguillaprovide:
- levies zero-taxation on all income generated outside of the jurisdiction by offshore companies;
- not impose income taxes, estate taxes, or capital gains taxes on individuals or corporations;
- offshore entities incorporated in Anguilla are exempt from paying stamp duty;
- financial legislation strictly protects the privacy of offshore bank accounts and business entities;
- no exchange controls regarding monetary or asset transfers.
Costa Rica, bordered by Nicaragua and Panama, is not considered a pure tax haven, but it is recognized as tax-friendly enough to have been referred to as the Switzerland of Central America. Through a number of tax incentives, the country has been extremely successful in attracting some of the world’s largest corporations.
The offshore jurisdiction of Costa Rica:
- companies incorporated in Costa Rica are allowed to conduct business both within and outside of the jurisdiction;
- no local taxes are imposed on revenue generated by companies that do not conduct business in the jurisdiction;
- grants eight-year exemptions from any taxation to many corporations;
- corporate entities that are required to pay taxes pay extremely low rates and are generally exempt from taxes on interest, capital gains, or dividend income;
- offshore companies incorporated in Costa Rica do not have to file any financial reports with Costa Rican tax authorities and are not required to disclose the names of owners to the registrar of companies;
- tightly protects the privacy of offshore banking;
- money or other financial assets can be transferred in or out of Costa Rica without any limitation on the amount and without having to disclose the source of funds.
Belize offers offshore banking and the easy incorporation of offshore companies or the formation of trusts or foundations. Offshore businesses incorporated in Belize do not pay any taxes on income earned abroad. Belize-incorporated companies and trusts are exempt from paying stamp duty.
The government of Belize is strongly committed to protecting financial privacy.
- offshore bank accounts are not taxed on earned interest, nor subject to repatriation or capital gains taxes;
- banking legislation guarantees strict confidentiality for offshore banking;
- names of account holders and any other financial information can only be disclosed by court order in relation to a criminal investigation;
- no exchange controls, nor does it have any tax treaties with foreign governments.
Barbados offers a thriving offshore financial sector providing offshore banking, incorporation of offshore corporations, and exempt insurance.
Barbados is not a pure tax haven, but it is a very low-tax environment for offshore corporations incorporated in Barbados. Taxes on profits of offshore companies are generally in the range of 0% to 5.5%, and the tax rate decreases as the profits earned an increase.
Offshore companies can import the necessary machinery or business equipment without paying any import duty.
There are no withholding taxes or capital gains taxes. Unlike most Caribbean tax havens, Barbados does have double taxation treaties with a number of other countries, including Canada and the U.S.