Secrecy & Privacy for Offshore Investment

03 Feb

Offshore Investment at HK Victoria Harbour view China Minsheng Banking Corp ICCWhether you are from China or the USA there are TWO important questions in regards to how one deals with money and offshore investment:

  1. on the individual tax compliant level and
  2. at the institutional reporting level

Whether it is the client himself or the foreign financial institution (FFI) they really have no idea about what reporting means in the pension fund context. Managing of foreign financial accounts worldwide whether you are from the PRC or from the good ole’ USA you move down the same two paths.

  1. fully reporting on a continuous basis and
  2. exempt from reporting path on a continuing basis.

Most people have no idea that two paths for offshore investing exist. It will gradually dawn on people that there is an entire financial body, a group, that are regulated, registered and recognized by governments as exempt from financial institution reporting. Specifically registered and government recognized pension funds are on the exempt from report path on a continuing basis.

Pension funds are a Significant Part of the World’s Economy. Government regulated, registered and recognized pension funds are exempt from the U.S.A. Foreign Account Tax Reporting Act (FATCA). Government regulated, registered and recognized this pension funds, in certain specific cases are exempt from the Common Reporting Standard (CRS) of all the O.E.C.D. countries, plus the 13 other countries which includes China.

In addition to the privacy and secrecy of non-disclosure and being exempt from financial institution reporting is that the path of financial transactions for pension money is also different; it is segregated path from securities law and exchange control law.

  1. Securities law and exchange control law is one path and a different path is
  2. offshore investments that are in a Hong Kong Government Regulated Investment Entity.

This means that this is a place where you are not going to have trouble with the local government back at home because in many respects it is like buying a vault. You have your own vault which holds your assets and investments where it is Hong Kong Government regulated and recognized tax compliant, even by the regulations of the upcoming Global Account Tax Comliance Act (GATCA) by the IMF and the OECD.

You have got it right, when you understand that you are safe and secure. You have legal privacy and secrecy and the other thing is you have something that can be organized to be legally recognized in the U.S. and in the domestic law of all the O.E.C.D. countries, plus 13 other countries which includes China, as holding assets to grow tax deferred.

Summary; what you have for private offshore investment are three key features:

  1. Financial Institution privacy and secrecy for your money, investments and assets. You are exempt from financial institution reporting.
  2. exemption from Financial Institution reporting challenges
  3. a Hong Kong Government regulated investment entity that is tax compliant in the PRC and can be organized to be recognized as tax deferred in your country of future residents.

In countries where full disclosure is required on the individual tax level then you report it every year but income inside this specific type of entity are not reported as income until withdrawal and anything gained inside is recognized as not taxable in your future foreign country of residents and not taxable back home in the PRC.

For example: In the USA, a person reports every year and on the reporting form it says that there is no income to report and that it is not taxable until withdrawal.

It is a hiding-place, that is regulated, registered and recognized as being exempt and importantly this entity also gives you control; The rules on control means that you stay in-charge. You can stay in charge without going red in the face and pretending. What people like is a Hong Kong government regulated vault and that’s what your retirement plan is for yourself and your family and it is completely legal and recognized as a tax compliant offshore investment, both in the Peoples Republic of China and/or the United States of America.

So you do not have to worry or not if you have done something illegal.

The privacy and secrecy laws are already there so you can just hide it and don’t talk about it because it is Secrecy & Privacy that you can trust.

So that is that…. but there is a pass key to enter your vault, it’s called “Transparency” as the Custodian has to look, they need to know exactly, where your money came from before permitting you to keep everything secret. It’s the “Know Your Customer” (KYC) Laws to the Nth degree….

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