Crypto Islands as Double Offshore
Credit: Bitnews Today
There is a small island in the Caribbean … You immediately imagine relaxation, a beach, palm trees. However today in these small areas a really big crypto history is being created.
The crypto business is increasingly mastering the jurisdiction of “dwarf” states, such as Cyprus, Malta, Gibraltar, The Republic of Vanuatu ect. The number of registered enterprises and entrepreneurs owning virtual assets is growing on these territories with every new passing day. Moreover, the example was contagious, and large states already want to create separate crypto offshores in their economic and legal borders as well. For example, in Russia, businessmen turned to the government and legislative bodies with a proposal to create a territory with a favorable tax and regulatory regime for the development of digital business in Kaliningrad (the westernmost point of the country) and in Primorsky Krai (the easternmost one).
“We propose to create a unique economic platform on the territory of the Russian Federation – the so-called Crypto valley, which will be tied to the real territory,” the letter says. “The economy of projects that will be exempt from taxes must be built in such a way so that to stimulate the state’s revenue generation by attracting investments and taxes paying by project partners, banks or investment funds.”
Can we say that the crypto business calls for offshoring?
– From a purely business point of view, we do not look at special territories (Malta, Gibraltar, etc.) as offshore, – commented especially for Bitnewstoday.ru Fabrice ELFASSY, CEO of the game platform. “These are simply territories that allow us to fully operate our business, within a legal framework. Eventually, more and more governments will regulate in favor of blockchain, but the industry does not wait.”
The general director and owner of the consulting company How2Agency Eduards BAGINSKIS agrees with him. “First we need to make it clear that “offshore jurisdictions” in its classical meaning does not work anymore. There were two main advantages of such jurisdictions – First: low or zero tax regime for businesses registered there, which was beneficial for corporate tax planning and often used in asset holding structures. Second: secrecy, hiding the names of the real beneficial owners of the companies for the benefit of personal tax avoidance in their home country. ” he said in an interview for Bitnewstoday.ru
At the same time, the tax secret can not be considered absolute anymore. There is a system of automatic exchange of banking information in the world. In any case, the names and incomes of entrepreneurs are disclosed when opening and using a bank account or doing interbank transactions. In addition, there is also a political component of this issue. Cyprus, as a member of the European Union, disclosed the names and incomes of Russian entrepreneurs from the sanctions lists.
“But these territories have one more big advantage,” Eduards Baginskis emphasized. “Another big advantage is that these territories have chosen DLT/Blockchain sector as their target niche and introduced specific regulation for companies in this business. ” For example, in some jurisdictions licensing of this type of activity is required. This process is rather complicated and not suitable for all enterprises. However, if there is a license, the company can be considered trustworthy. It enjoys the support of the state and causes trust in clients.
And this trust ceases to be just a pleasant option if you are aware of what kind of customers and investors come to the “island” crypto companies actually.
Tax transparency of the world’s banking systems has played a cruel joke with the owners of the credit organizations themselves. They have to deduct huge amounts of taxes in various budgets. But who wants it? And then the cryptocurrency gives a fantastic bonus such as complete anonymity.
Private investments in digital tokens are becoming increasingly popular with large businessmen. The high volatility of the cryptocurrency does not allow such way of preserving the capital to become a mainstream yet, but the trend still exists. After all, the exchange losses are replenishable, but the tax losses are not.
Thus, the crypto islands become offshores in the square.