Is it possible to have a discreet and anonymous offshore company? In today’s article, we are going to talk about how to build a company in the Marshall Islands and its advantages and features.
We have previously written about offshore companies on this blog. You already know what legal types exist, what purpose they serve and under which conditions you can actually run a tax-free offshore company from your country.
You also know how the automatic exchange of information can reduce the anonymity of these offshore companies.
This is because the fight against international tax competition is escalating and tax optimisation is becoming increasingly difficult, at least for those who don’t know how to do it.
Instead of manual bilateral tax information exchange agreements, we now have multilateral automatic exchange schemes (CRS) which report assets held abroad to the beneficiary’s country.
It is true that there are still many loopholes in the CRS (which we will talk about very soon, but these are expected to be corrected gradually).
There are still countries that have not entered into the CRS, mostly poor, developing countries or, until now, unfamiliar territories to do banking in. However, these options are also expected to disappear in the future.
The new tax haven that the USA has turned into is still an option but it is not easy to open a business bank account with a US LLC. It is also not easy to find a bank that allows you to open an account for an LLC in the European SEPA area.
While the USA generally doesn’t share information about business accounts, this is different in other countries.
Simplified requests in Belize and the Seychelles
For example, in recent years, Belize and the Seychelles, two of the most popular options for cheap offshore services, have been struggling with money-laundering scandals among their banks, in addition to other challenges.
As they fall under the OECD’s remit, these countries have particularly come under pressure to implement exchange schemes and to comply with the international standards.
The pressures have not greatly affected the popularity of these tax havens; many entrepreneurs have continued to found their companies there, often without taking the steep tariffs of some local banks for day-to-day operations into account.
In fact, Belize and the Seychelles are no longer used for tax evasion.
This is because in both states, as of 2017, a simplified procedure was implemented to be able to discover the identities of the financial beneficiaries of the offshore companies established there.
Before this, it was extremely difficult for financial authorities to track offshore companies in these jurisdictions. Now, with the new procedures, high-tax countries can easily expose the schemes created to evade taxes in Belize and the Seychelles.
Instead of having to specify the full name of the financial beneficiary in the requests for information, as was the case until recently, they now only need the corporate name of the offshore company concerned along with a simple justification.
Therefore, in the past, many online entrepreneurs have chosen to hide behind an IBC in Belize, specifying this information in their website’s legal disclaimer and not declaring their income in their country of origin. In these cases, the tax authorities cannot do anything with just the company’s name.
This is because virtually no offshore company register allows you to take a look at the real owners of the companies.
In the USA, the register is public to a certain extent but it only shows the name of the company and not the identity of the owner.
Most countries do not even have a public register. And, even though the standard fiduciaries / nominees or bearer shares usually provide sufficient anonymity, they do not work for avoiding requests for information by governments.
About the registers: anonymous or protected
At least in Belize and the Seychelles, this is now over and it is likely that, as a result of the Panama Papers affair, the same will soon happen in other popular offshore jurisdictions.
Of course, however, there are still countries that can guarantee complete anonymity, either because the information is unavailable or because it is protected against enquiries by certain countries.
A classic example is the United Kingdom with its crown and overseas territories. From the famous Channel and the Cayman Islands to the lesser-known Anguilla or the Isle of Man, the offshore British Empire is vast and the opposition to the creation of a public register is very strong, even by the now ex-Prime Minister David Cameron.
Without a doubt, Brexit is going to suggest that things will not change and that the British overseas territories will continue to benefit from the utmost discretion, at least for a few more years.
However, they are the focal point: their purpose is well-known and protection has its limits.
For offshore companies on the Marshall Islands, this is rather different.
It is a relatively unknown tax haven, protected by the most powerful tax haven in the world: the USA.
Those wanting to sell on the US market will not be able to do so with an LLC in Wyoming nor in Delaware, at least not if what they want is to avoid paying taxes and to not have to file their accounts. Add to this the obligation to share information about your finances (FBAR) and the notoriously difficult opening of business bank accounts for an LLC.
If you do not have a private account that can be used for your LLC, the many advantages of having an LLC rather than an offshore company, like the good reputation and acceptance of invoices, will count for nothing.
So, is there an alternative that combines the discretion in the US with the advantages of typical offshore companies and also allows you to open bank accounts for your company?
The company in the Marshall Islands – a discreet alternative
Fortunately, there is an alternative like this – a small island country which you have probably never heard of.
Located in the isolated Pacific Ocean are the Marshall Islands, which are strongly supported by the USA.
Colonised in the past by the Americans in order to strengthen their hold in the Pacific, the Marshall Islands, along with the Cook Islands, are currently the offshore financial centre in the Pacific region.
Even though the Cook Islands are very attractive for the wealthy, with its secure banking and trust structures, the Marshall Islands are a better option for those looking to start a discreet offshore company.
Thanks to the influence of the US, the Marshall Islands are not part of the automatic exchange of information nor do they co-operate with other countries when tax information about the financial beneficiaries of companies founded there is requested.
This fact places the Islands on the OECD’s blacklist, although this does not actually affect the country too much.
In any case, it is not the reputation that you should focus on when looking for a discreet jurisdiction that allows you to found anonymous companies.
You have to keep in mind that, although the Marshall Islands are not part of the CRS, this does not automatically make it a good place to open your bank account.
In fact, the only real option there is the Bank of Marshall Islands but only if you do not care about the high banking fees.
However, unlike what happens in many other offshore jurisdictions, the American deposit insurance of $100,000 applies in the Marshall Islands.
Discretion with Fintech companies and their e-money accounts
Unlike what happens in the USA, companies in the Marshall Islands do not have problems with opening company accounts in most locations in the world.
It is indeed true that European Banks can pose more problems but are still an option that you should avoid if you are looking for anonymity and discretion, which is ultimately usually the reason for choosing a company in the Marshall Islands.
International business companies (IBCs) are often used in conjunction with an e-money account. Ultimately, companies that offer these financial services are not all that different from banks, only they work solely with digital money.
Instead of conducting classic banking business with loans and speculation, the providers of these accounts are financed through tariffs that are much lower than in typical offshore banks, around €2 in the SEPA area.
E-money accounts come with a normal IBAN so that you can receive and send money anywhere in the world like any other business account.
In any case, the biggest advantage of Fintech companies and their e-money accounts is that they do not fall within the CRS and do not exchange information (at least if they are outside of the European Union). Here is a link to a long list comparing e-money accounts.
After all, these providers are not banks – they are fully licensed and regulated financial service companies (fintech). This makes your e-money accounts a real opportunity to continue doing business discreetly and without sharing your information with anybody.
How to register your IBC company in the Marshall Islands
Once the issue of bank accounts has been clarified, offshore companies in the Marshall Islands are not all that different to the IBCs in other jurisdictions, just more discreet.
The company cannot do business on the Islands nor provide certain banking or insurance services. Beyond that, it is completely flexible.
The company’s founder can simultaneously be the director and a shareholder.
Of course, an IBC in the Marshall Islands is completely tax-free, does not require accounting records and has a minimal administrative burden with a simple annual report. This report only has to confirm ownership and that the company still exists.
The commercial register is not public and is not kept in the Marshall Islands, but in the United States.
What can be a problem for Americans is, in turn, a big advantage for the rest of the world. Requests for information by other states notoriously become more difficult.
The price of founding a company in the Marshall Islands is also not too high. You can start an IBC company in the Islands along with an offshore account for around $2,300. The annual management fees are around $1,200 from the second year onwards.
If you are interested in starting an IBC, get in touch with me.
How to relocate your company headquarters from Belize or the Seychelles to the Marshall Islands
The CRS and the possibility of requesting simplified information have sealed the slow death of the Seychelles and Belize as offshore jurisdictions. They are no longer special and they aren’t anonymous (well, Belize can still be interesting for commerce with cryptocurrency). Only their low cost make them interesting for those living in countries where they do not pay taxes and have nothing to hide.
However, it is clear that this was not the case, until now, and that the IBCs in Belize and the Seychelles have been used significantly to evade taxes.
This has come to an end and the respective owners have the option to confess and turn themselves in so that their punishment is lessened (highly risky) or to try to liquidate their company without leaving a trace (quite expensive) or to relocate the company’s headquarters to a more discreet country.
Fortunately, the offshore IBCs are so flexible that you will have no problems in relocating them. By doing so, you can continue using the same bank account from before. Everything stays the same, except suddenly the company’s headquarters is in the Pacific rather than the Caribbean or Indian Ocean.
The old company, in a sense, merges with a new company but without leaving a trace of the previous company. The price isn’t even as high as the cost of a new foundation.
Owners of companies in Belize and the Seychelles can relocate their headquarters to the Marshall Islands for around €650. In comparison, liquidating the company would usually cost around €2,000.
The only condition to benefit from this offer is to have a business bank account in one of the most common offshore banks with which our partner agency has connections. With other company bank accounts, relocation is theoretically possible but involves additional effort and costs.
Belize and the Seychelles are the past: the future of offshore is elsewhere. The Marshall Islands are an excellent place to continue safeguarding your legal right to privacy which is increasingly disappearing in various countries around the world.
If you have any doubts about this, you can hire a consultation with us.
Don’t forget, your life is yours!