Word: riches
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Last year, when the International Monetary Fund published a paper on offshore tax havens, it included Switzerland, the Cayman Islands, Jersey, the Bahamas and several other countries where the rich stash their money beyond the reach of grabby governments back home. But there was one surprising new entry on the list: the United Kingdom. The IMF was merely recognizing what wealthy foreigners in Britain have known for years. While British citizens shoulder taxes of up to 40%, residents who weren't born there can take advantage of the nondomicile - or nondom - rule, which means they're only taxed on income...
...little bit crazy," says one French private-equity investor who has lived in London for over 15 years. "It's been a bonanza time for nondoms - like Christmas every day." But here comes the Grinch. Spurred on by mounting criticism over what many see as unfair special treatment for rich foreigners, the British Treasury has announced that the fun is over. Along with a new 18% flat rate for capital-gains tax, the government is proposing an annual fee of around $60,000 for any foreigner who lives in the country for more than seven years, and wants...
...more than 45 recognized tax havens, holding up to $7 trillion in assets, and these numbers are growing. According to the Boston Consulting Group, the number of households with assets of $1 million or more swelled by 14% in 2006 to 9.6 million, while last year's Forbes Rich List included a record 946 billionaires. Figuring out ways to help the rich stay that way is a lucrative business. Based on GDP per capita, 11 of the world's 20 richest countries are tax havens, with Luxembourg holding the top spot...
...residents. And as the rate goes up to 35% by 2011 in compliance with the E.U. directive, foreigners will find the Swiss tax man reaching deeper into their pockets. But for every tax haven that loses its seductive charms, there's another working hard to woo the rich. Dubai, which has been dubbed the Switzerland of the gulf, has spent billions creating zones where foreigners can set up and invest in companies free from corporate tax. And other gulf states like Qatar and Oman are following Dubai's lead by making their own tax regimes more foreigner-friendly...
Then there are Singapore's new trust laws, which help the rich keep their fortunes in the family by letting them pass assets on to beneficiaries tax-free. And the perks strongly favor foreigners. "To get all the benefits one must not be Singaporean, nor should one's beneficiaries be Singaporean," says Michael Troth, Asia-Pacific head of global wealth-structuring for Citigroup. As a result, says Troth: "Singapore is becoming the predominant provider of trust services to our Asian clients...