Treasure island

Anguilla, with a population of 10,000, is a small, quiet island in the north-east Caribbean known primarily as an upscale but tranquil holiday destination. Much less well known is that for many years the island has been a tax haven. The low-key approach means the island's offshore finance industry has developed without the hustling image of other centres, giving service as opposed to discount prices. In late 1994, the trust and company ordinances were modernised to the extent that Anguilla is considered equal to most other jurisdictions.

The island is attractive as an offshore centre not only because of its modern legislation but also its political, economic and social stability. As a British dependent territory the well-regulated financial business is conducted in English. With no corporate or personal income taxes nor gift, capital gains, inheritance, asset or estate taxes, it provides a good opportunity for various strategies in financial planning – for both individuals and business as well as for those wishing to provide service to the offshore market.

Although the Eastern Caribbean dollars is the official currency, the US$ is used in most transactions. With no foreign exchange controls, the two local and two international banks easily meet the financial needs of the offshore world.

New legislation provides for an international business company that is similar to most incorporated companies created by articles of incorporation. As in the US and Canada, shareholders' lists are not a public record and only one shareholder and director are required. Bearer shares may be issued. The corporation can conduct any legal business except banking, trust, insurance and Anguilla company management services.

The Companies Ordinance follows articles of incorporation and other modern concepts but is still tied to old English law, with the shareholders' register a matter of public record. Also covered are 'companies limited by guarantee' and 'companies limited by a guarantee and shares'. The latter allows for two groups being involved who have different interests. It can be used where a trust may be desired but not effective. A limited liability company, which is governed by an ordinance of the same name, is a partnership/ concern cross with either a perpetual or limited life.

The new legislation also includes updated partnership laws that contain the modern concepts needed to function in the offshore financial world.

While maintaining trust fundamentals, new trust legislation provides flexibility through expanded definitions of old concepts and wider powers of variation. It also permits direction from 'protectors' and 'letters of wishes'. The power to accumulate has been reinstated and the rule against perpetuities abolished. Forced heirship trusts can be accommodated, as can immigration trusts.

Along with its accepted legislation, the island has an offshore industry with members noted for their innovation – resulting in several offshore companies being listed on a Canadian stock exchange; exploitation by business of the Internet; and product, software and intellectual property development. With its strict confidentiality laws, Anguilla is ideal for the active business.