What is Offshore?
Fundamentally?
A label we’ve given specific jurisdictions - Bermuda, the British Virgin Islands, the Cayman Islands, Jersey, and Guernsey.
The better question is: What connects these places?
If you ask Google, it’s as simple as putting an asset in a jurisdiction that isn’t your own. Which would include me having a bank account in the US or owning a house in France (I have neither by the way)!
If you ask a journalist, they will tell you it’s about tropical islands, secrecy, and no tax.
Both are equally unsatisfying answers.
Yes, most offshore jurisdictions are islands (the Channel Islands may be surprised to be labelled tropical).
Yes, most offshore jurisdictions have low to no rate of tax (although that is changing).
But, in terms of secrecy, they are often no more opaque than many countries around the world. Gone are the days where KYC isn’t the first thing a professional service provider asks for and a lawyer gets to shrug their shoulders when asked “but who owns it”?
The truth is, what offshore was, has changed and is continuing to change.
But one thing is constant, being a focal point for global business.
Built on business
Early on, offshore jurisdictions recognised the value of attracting global business to their shores. Without natural resources and with small populations, they focused on being as business friendly as possible.
They took the best bits of the world’s top financial centres - Delaware, London, New York, Hong Kong - and used that as a platform to attract global business. But they also recognised they couldn’t stay static, they needed to be flexible, adaptive, and open-minded.
This means offshore as a place, and as a term, is constantly changing and evolving.
As the world changes, so do businesses, and the offshore financial centres have recognised if they can react the fastest, they can stay ahead of the curve, and provide certainty in what is often an uncertain world.
Law is updated and passed quickly.
Regulations are devised and created, not to ringfence business and stymie growth, but to give a clear path to follow.
The professional services sector is one that works hand in hand with the government, and with each other, in order to keep offshore competitive and attractive.
The courts are business savvy and in touch with global trends and decision making.
Business as the lifeblood
This is all to say that business and global finance are at the heart of, and are the lifeblood of, what offshore jurisdictions are. In Cayman alone the financial services sector is estimated to account, directly and indirectly, for over 60% of the jurisdiction’s GDP.
This means that they have to put it first and it means they have to be reactive to global business needs, more so than is the case “onshore” - just ask the digital assets sector.
So while the individual elements of what make offshore, “Offshore”, may have changed and are continuing to change, what stays consistent is the focus.
A focus on being the place to do business.
