(CNN) — For the international businessperson with the ability to choose where to live, work and invest, the words “tax haven” almost certainly come to mind.
From a laid-back lifestyle in the Caribbean, to the precision of Switzerland, if you have got money to spare, there are plenty of countries that are keen to attract it.
Monaco, the UK’s Channel Islands, Isle of Man, the Bahamas, the Cayman Islands, and the Virgin Islands all have low or in some cases zero income tax rates.
Even a number of South Pacific nations, including the Solomon Islands, are eager to get in on the act.
At all of the above destinations you can create an offshore account and reap the benefits, although there is one country where there is no escape from the taxman — the United States.
“If (a U.S.citizen) has really been out of the country for a long while and really has no particular connection there, they will probably still have to file a tax return,” John Whiting, tax partner of PricewaterhouseCoopers, told CNN.
“Chances are they will not have any particular tax liability there [the U.S.], but they still have to go through the hoops.”
Location, location, location
The problem for many international business people is that they have their wealth spread across a number of countries. This can end up creating a complex tax situation that is expensive to administer.
Guy Hamilton of HSBC International Banking believes it make things easier if you choose one destination and one bank to consolidate your money.
Although choosing this destination can be a daunting task, Michael Payton, banker and chairman of Bahamas Financial Services, says accessibility is a major factor.
“Invariably the businessman is going to want to visit his bankers, so I think location plays a part. You are also going to want to ensure it has a political and economic track record,” says Payton.
“Substantial financial institutions on the ground (is important). I would never recommend to a client a small bank that has no affiliation with a larger institution.”
Although offshore banks are keen to ensure your privacy, they are far more regulated than they used to be. High profile cases of tax evasion, as well as a crackdown on questionable funds have led to a greater degree of scrutiny and transparency.
“The misnomer or the misperception out there is that banking countries such as the Bahamas, the Cayman Islands and Jersey are black holes. It is just not true,” says Payton.
“You had better be prepared for a high degree of vetting and disclosure as to who you are and what your source of income is and your source of funds are.”
— CNN’s Leone Lakhani contributed to this report
