Singapore, the preferred destination for offshore bank accounts

An increasingly high number of rich Westerners are moving their money from their domestic bank accounts into exotic countries such as Singapore or Hong Kong. The exodus is happening amid fears that, after the implementation of the bail-in mechanism, their savings will be confiscated to save the banking system, just like it's happened in Cyprus last year, a state which is itself considered a paradise of offshore banking services.

An offshore bank account, which is officially called a "global bank account", is a bank account opened with a bank located outside the customer's country of residence, according to definition.

Singapore is one of the favorite destinations for those who are looking to open offshore bank accounts, due to the stability and economic freedom it provides, according to the international press.

Singapore holds the second position - after Hong Kong - in the global economic freedom chart, maintained by the Heritage Foundation. Considering that Hong Kong is not an independent state, but a special administrative region of China, we can say that Singapore is the country which has the highest degree of economic freedom in the world.

The score that the small island state achieved this year, in that ranking, is 89.4 points, up 1.4 points over 2013, according to the quoted source.

Romania is ranked 62nd in the economic freedom chart for 2014. The highest ranking member state in the European Union (EU) is Ireland, which holds the ninth position in the chart.

Earnings of companies registered in Singapore are taxed at 17%, and the taxation rate on individual incomes is 20%, according to the official statistics. The value added tax is at 7%.

The weight of taxes in the GDP is 13.8%, whereas government spending accounts for 17% of the GDP, the Heritage Foundation states.

Tariff and non-tariff hurdles on imports performed by Singapore are almost non-existent, the foundation further writes.

Foreign investments in certain areas which are considered strategic by the authorities are forbidden, according to the quoted source.

Opening a business in Singapore takes three days and requires only three steps. There is no minimum requirement for starting capital.

According to the country's statistics institute, the inflation rate was 0.4%, in February, according to the financial statistics institute of the country.

Labor legislation in Singapore does not stipulate any minimum wage, as the wage adjustments are made under the Guidance of the National Wage Board.

Singapore has been frequently praised for its lack of corruption, the Heritage Foundation states, which reports, however, that there are problems when it comes to the transparency of the authorities' decision making process. The government has a very high success rate when it comes to lawsuits, which raises questions over the independence of the judicial system, and the lawsuits conducted against opposition parties or some of their members can even lead to their bankruptcy, the foundation warns.

However, concluding commercial agreements in Singapore is safe, there are no abusive expropriations, commercial courts function well, and the intellectual property regime is considered one of the best in Asia, according to the same source.

The number of subsidiaries of foreign banks in Singapore exceeds 115, out of a total of 122 banks, according to data provided by the Heritage Foundation.

The country's financial system is perceived as solid, and services can be fully provided in English, The International Investor writes.

The opening of a bank account by non-residents is easy, as most banks accept such customers, according to the quoted source.

The publication does mention, however, that it has been told by several readers that the process has been made more cumbersome. In one case, one of the banks in which the controlling stake was Singaporean refused to open the account, after it had initially rejected the application, and the customer disputed the decision.

An institution controlled by Singaporean shareholders expressed its willingness to open offshore accounts, provided the applicant presented a letter of recommendation from their current bank or from another customer of the institution in question.

Some banks also request the tax registration code from the tax authority of the company's country of origin, the quoted source also says.

The account can be opened both on-site as well on-line.

The International Investor writes that it doesn't know whether these cases should be treated as singular, or whether they represent an overall Singaporean trend that is gaining traction.

The minimum amount needed for opening an account is approximately 1,000 Singapore Dollars (about 787 US dollars), according to the publication.

Accounts can be credited electronically or by cash deposit. Singapore has no capital controls, but any individual bringing into the country more than 30,000 Singapore Dollars must declare the amount in customs.

Making an international transfer can take between three and ten days, and the commission charged by the local lenders is 10 Singapore dollars on average, according to The International Investor.

Deposits in the local currency opened with the banks in Singapore are guaranteed up to 50,000 Singapore dollars (approximately USD 39,300). Foreign currency deposits are not guaranteed.

The Nomad Capitalist portal also reports that the opening of offshore accounts in the country is becoming more difficult, due to the pressure coming from Western states. "Since it doesn't want to be isolated from the global financial system, it may begin making an increasing number of decisions that make it less attractive to the citizens of Western countries", the administrator of the portal writes, and he notes that Singapore may start showing more interest in Asian countries and Russia, following Hong Kong's example, which shifted its focus away from American and European customers, in favor of those from China.