If you are looking to establish an offshore trust or company, which jurisdiction should you choose? And what do you need to consider before coming to a decision?
Many factors come into play, location for starters. Not surprisingly, many people prefer to work with a financial centre that is close to home or at least in the same hemisphere, and certainly in a place which speaks the same mother tongue.
Many other influences come into play, with low tax invariably a high priority. Beyond that, reputation also counts. Does the jurisdiction have a robust financial rating, good governance and sound regulation? Do words such as privacy and confidentiality hold water? Does the incorporation of a business take forever-and- a-day, or will it be handled in an efficient and timely manner? And, of course, is there a competitive fee structure for services provided?
These are all important considerations in your decision making.
Yet, taking everything into account – low tax, asset protection, privacy, price etc – there is one other key area in the selection process which can easily be overlooked; an overused but often underestimated seven-letter word – SERVICE
Why Service Matters
There is much more to handing your most personal information to a corporate service provider and then entrusting them to set up an offshore company or trust on your behalf. For whilst some clients prefer to be much more hands-on than others, ultimately, anyone who has a requirement for offshore services wants to know that their affairs are going to be sympathetically and correctly managed by reliable, professional people. In many cases, for years to come.
This is where jurisdictions can be poles apart – and not just geographically.
A recent article which appeared in International Adviser, discussing the booming financial centre in Mauritius, alluded to that jurisdiction’s “light touch regulatory regime”.
Whilst “light touch” might be seen as an attribute in the eyes of some, when it starts to manifest in the form of poor back-office administration, then this isn’t usually going to be in the client’s best interests. We live in an increasingly globalised age, where regulations such as FATCA and The Common Reporting Standard are recognised and adhered to by an increasing number of international finance centres – an offshore environment where the efficacy of corporate structures, the concept of due diligence, accountability and the proper maintenance of client records is paramount. It’s a world where we would argue there is no longer any place for a “light touch” approach to trust and corporate service provision.
For high net worth businesses and families based on the continent of Africa, who have placed their faith in the services of African CSPs, this is something worth bearing in mind. To us, it’s no coincidence that we are increasingly seeing clients who have become disillusioned, even alarmed, with the level of service they have received from CSPs in that region.
We say this from a position of experience. As an Isle of Man-based CSP, Sterling Trust is proud of the strong business connections we have nurtured for over 20 years in Africa. Indeed, we have clients spread across Kenya, Zambia, Uganda and South Africa. We understand local markets and culture. And we can provide viable, professional support for clients who are based in these countries. Proof that distance is really no obstacle to outstanding service delivery.
Fine, you may say. But surely it will cost me a lot more money to use a CSP in the Isle of Man than it will in Mauritius? In fact, fee disparity is something of a red herring. Today, the gap between CSP fee rates in Africa, in comparison to the Isle of Man, has reduced considerably and is now almost non-existent.
Moreover, the time difference of only 2 hours (in most cases) also makes it easy for African-based clients to deal with the Isle of Man. Coincidentally, this also brings advantages for clients based way to the west and east of the British Isles. That’s because being on London time, in one eight hour period, the Isle of Man is also strategically well-placed to deal with, say, Hong Kong before its evening closure and also the start of the business day in the Caribbean and Americas.
“The quality of service can often be difficult to judge at the start of a business/client relationship,” explained Sterling Trust’s Business Development Manager Andy Cowin. “You might only discover you are getting a consistently good or bad level of service over a period of time. If your corporate service provider doesn’t offer you a regular point of contact, doesn’t provide you with transparency, or if you need to chase people, then these can quickly become sources of great frustration or concern. Worse still, if you are then faced with a large bill that has come out of the blue. The onus should be on the CSP to keep the client informed, up-to-speed and to stay in regular contact. When service levels break down or start being called into question, then it is probably time to consider other options.
“At Sterling Trust, we pride ourselves on being a pro-active, professionally minded CSP with many clients who have been with us since our formation over 20 years ago. If you are unhappy with the service delivery of your current CSP, maybe you are based in Africa and looking to work with an offshore jurisdiction further afield, then we would be delighted to find a lasting solution for you in the Isle of Man,” said Andy.
For further information, please feel free to contact Andy in the strictest confidence on +44 1624 611146 or email andy@sterling.im
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