It’s an offshore thing

by Alex Delmar-Morgan Sunday, 31 May 2009

Following the downturn, many expats in the Gulf are staring at a return to their home countries, into the clutches of the taxman. As a result, a growing number are looking to leave their money offshore. Alex Delmar-Morgan reports.

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From Monaco to Malta, tax havens around the world are under threat. In the wake of the current global economic slump, governments are clamping down on the movement of money offshore as they attempt to bolster tax revenues at home.

The impact of tax and the tax regime has moved up people’s agenda in the last year or so; it has become far more prominent.

At the G20 summit in March British Prime Minister Gordon Brown stood shoulder to shoulder with his German counterpart Angela Merkel and boldly claimed the world has “no place” for tax havens.

And earlier this month the Obama administration backed legislation to crack down on tax havens, raising the possibility of a showdown with Switzerland’s opaque banking system.

According to Carl Levin, the Michigan senator who was the driving force behind the senate bill, offshore tax evasion drains the US Treasury of $100bn a year.

All of which means that those leaving the income tax-free environment of the Gulf are exploring ways to prevent their bank balances disappearing into the taxman’s pockets upon their return home.

“You get used to the tax-free lifestyle and you want to retain as much cash as possible,” says David Lewin, manager of global accountancy firm KPMG’s tax practice in Sharjah, UAE. “It’s not very palatable to go back to a tax regime after living in Dubai, for example, and if [expats have] built up sufficient wealth here, then they’ll perhaps want to keep it offshore.”

And as expatriate job losses mount across the real estate and construction sectors of the Gulf, companies who specialise in advising high net worth individuals how to keep their money offshore, are reaping the rewards.

“Globally, we’ve a lot of movement from a tax planning perspective,” says Brian Holmes, head of international tax at the Gibraltar-based STM Group. “High net worth executives are looking to minimise their exposure [to tax].



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