Offshore Banking in Asia
Published on 18 May 2006
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The most significant jurisdictions that those with a requirement for offshore banking in Asia currently consider are China, Hong Kong and Singapore. Singapore is the most attractive offshore jurisdiction in the region by far and it is one of the fastest growing offshore banking jurisdictions in the world having received an influx of investors and a growth in the number of private offshore bank account holders following the introduction of the EU Savings Tax Directive last year.
China, Hong Kong and Singapore all have unique offshore features that make each an interesting jurisdiction in their own right; this article provides an examination of three of the main offshore banking centres in Asia.
China – China is rapidly developing economically and enjoying an influx of international investment as a result; companies are keen to establish a presence in China for many diverse reasons, the fundamental element of each reason is achieving a level of efficiency not achievable elsewhere in the world currently.
For example many who establish operations in China find they can save money by manufacturing in and exporting from China, others utilise the skilled, sophisticated, hardworking and cost effective Chinese workforce to add an extra element of efficiency to their global operations. But one of the most exciting aspects of China is the fact that it has an array of company structures and operating entities through which an individual can trade, each of which has an altogether different taxation treatment for example.
With expert assistance it’s possible for a business to establish itself in China and save tax by utilising the bank account and the right company structure within the correct special economic zone – of which China has hundreds!
China’s special economic zones all offer various different taxation concessions and rebates and each zone differs massively from the next – it is therefore essential for those seeking an offshore solution in Asia to take expert advice about the elements of the Chinese system - from incorporation to banking - that could be beneficial to their overall operations.
Hong Kong – Many of those who incorporate in China find that they can use a Hong Kong based company as a parent of the Chinese operations to further enhance taxation advantages of incorporating, doing business and banking offshore in Asia.
Hong Kong has representative offices of about sixty of the world’s one hundred largest banking institutions and is one of the world’s largest international banking centres. It attracts many wealthy clients who require offshore banking services in a secure jurisdiction in Asia and that is exactly what Hong Kong represents. Its offshore banking sector is legally governed according to terms of The Banking Ordinance which clearly dictates that each bank requiring a license to operate has paid in capital and net assets representing hundreds of millions of dollars which is of great comfort to many seeking secure offshore banking institutions.
The one aspect of Hong Kong offshore banking that prospective account holders should be aware of is the number of private banking institutions who market themselves as such but which are in reality more like investment houses using the bank front end to attract client’s money which they can then invest. There is nothing wrong with such an entity in practice – but they should at least make it more obvious to clients that they offer few useful banking services but many useful investment services!
Singapore – Possibly the most attractive aspect of Singapore as an offshore jurisdiction is that it has one of the lowest taxation rates in Asia; the next most attractive feature is that the jurisdiction was one of the few attractive offshore centres to avoid being included in the European Union’s 2005 taxation directive which meant that the number of people banking offshore in Singapore shot up significantly in the last two years which has further enhanced the standing of Singapore in terms of its world rankings as a first class jurisdiction.
The numbers of individuals and companies offshore banking in Singapore is rapidly expanding as are the numbers of financial institutions establishing themselves in the jurisdiction to service the growing demand - therefore the future of Singapore as a successful offshore banking centre seems well established.
As the Asian region expands economically and attracts greater numbers of investors so offshore banking in Asia becomes a requirement for growing numbers of people and businesses. As a result of this fact more Asian nations are seeking to service the demand and the future of offshore banking, incorporating and investing across Asia should be quite exciting to behold.
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