We begin this overview with a question: what should one look for when choosing a jurisdictional location for tax planning?
It used to be said that the chosen country had to be politically stable and economically well managed. It must possess a well educated and qualified workforce, modern communications and other relevant infrastructure. While these qualities remain very important to this day there is the rider nowadays that entrepreneurs and wealth managers are looking for more.
This "extra" occurs when a country is perceived to be highly disposed towards foreign investment. Often this manifests itself when a government and all other departments of state are as one as to the primary importance of foreign investment for that country's long term development and future. Such favourable perceptions take the form of uniform proofs across the board that the government has consistently and repeatedly:
- Enacted attractive tax laws;
- Interpreted those laws in a way that attracts foreign investment;
- Promoted being used as a conduit for the purposes of tax planning;
- Supported and funded the completion of double taxation treaties.
Although tax planning does not lead but follows and compliments business and investment objectives, via careful navigation of tax laws, tax planning presents a significant opportunity for wealth managers to avoid double taxation, defer tax and boost investment returns.