Offshore Banking

3713 WordsJul 13, 201815 Pages
Offshore banking is the action of having a bank account outside of the country of residence. Since its start, offshore banking has become a considerably lucrative business. Many of those who take part in offshore banking are looking for a secure location to place their income or seize the opportunity of having lower taxes. However, there are those who misuse the privilege of a foreign bank and use the business ventures for illegal actions rather than the original purpose of the dealings. Offshore banks seem to have an impartial acceptance of quite a few clients within the bank that create a lower standard of ethics in contrast to the ethics meant to be held—this includes those of a political position. Furthermore, this has the potential…show more content…
Leona Helmsley, a female that ran a chain of luxurious hotels is famous for once saying, “Only the little people pay tax”. Another main issue for offshore banking is the morality of the banks when accepting clients and disclosing information to the IRS. This coincides with the issue of the banks withholding information of clients, not having an immediate obligation to do so without the true need to. Mitt Romney has millions of dollars in Cayman Island offshore accounts, but unlike him many others do not report their money to the Internal Revenue Services (IRS) which is the agency that is responsible for the collecting of taxes and tax law enforcement. Big corporations also exploit this option parallel to Apple who seizes advantages and save millions of dollars as—according to the online Wall Street Journal—Apple only pays about 1.8 % in taxes opposed to the expected payment of about 35% in taxes. Laws have been enacted to try and curb the use of offshore banking to avoid paying taxes, yet these regulations are "very elastically interpreted”. A new provision of the Foreign Account Tax Compliance Act (FATCA) originally passed in 2010 will take effect in July 2014. This new arrangement will require foreign financial institutions to report information about their U.S. account holders to the Internal Revenue Service (IRS).

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