Four Myths About Opening An Offshore Bank Account

 

When it comes to opening offshore bank accounts, there is a lot of information on what exactly it is, operation, and even legality. Most of this information is wrong, misconstrued, or issued in bad faith. In this post, we look at these myths to help you make the right decision when opening an offshore bank account. 

“People open offshore bank accounts to avoid paying taxes back home. It is illegal.”

This is a myth

Opening an offshore account is not in any way related to evading taxes. It is a legal process. Once you have earned cash either as a salary of business profits, it is up to you to bank it where it feels safer and convenient. Once you have met all the required personal tax obligations, no law demands all the cash to be deposited in a local bank. The only thing you need to do is reporting the amount in the foreign account.

The truth about an offshore bank account in Hong Kong is that it comes with numerous benefits such as higher interest rates and cannot be frozen in case a lawsuit knocks your door.

“There is no difference between local and offshore banks.”

This is a myth

For years, many people have been treated to this myth. Though you will still be dealing with banks even in an offshore jurisdiction, the truth is that there is a huge difference. Top offshore jurisdictions such as Hong Kong have many advantages including diverse currencies and stable banking systems. The banks also allow clients to make large withdrawals anytime, offer better privacy, and diversification.

“Going offshore is very costly.”

This is a myth

Going offshore is not a preserve of the rich. An offshore bank account operates in many ways just like the local banks, and any one can open and run an account. Many people open offshore bank accounts to channel savings, borrow cash, or prepare to open companies in respective jurisdictions. Some people channel their savings offshore for some time until they reach a different tax bracket.

Though many rich people prefer to operate from offshore accounts for easier management of their accounts, the truth is that anyone can open and run an offshore account.

“The offshore banking system is not regulated.”

This is a myth

For many people, the term offshore has been used to mean an unregulated state. This is a lie. The term offshore simply means another nation. Therefore, you are simply opening an account in a different country. One of the most favourite offshore jurisdictions is Hong Kong.

This Special Administrative Region of China has very straightforward policies on the banking and offshore accounts operations. It is these regulations that guide every activity to make the jurisdiction very attractive.