A WORD ABOUT FOREIGN CORPORATIONS Today it is not uncommon to find blue-collar wage earners with offshore bank accounts, asset protection trusts, and secret mailing addresses. Not because they are dealing in the international marketplace or doing anything illegal, immoral, or unethical, but rather because they fear lawsuits, divorce actions, or other problems. As our "world" becomes smaller, and few businesses are local or even strictly national, there is an increasing need for internationalization. We think, plan and work with an eye toward expanding our horizons both at home and abroad. The use of a corporate vehicle as a means of this expansion is nothing new. What is new and what must become second nature to businesspeople of all types is the idea of "foreign" corporations. No longer will a domestic corporation satisfy one's needs. The average business person today is far more sophisticated than the business person of even ten to fifteen years ago. Corporate structuring and planning have achieved higher levels of complexity than ever before while the need for anonymity remains strong. Entrepreneurs must keep pace and be constantly on the look out for new ways to profit. One way is to have a clear understanding of the characteristics of foreign corporations and how they may be put to advantageous use. Foreign corporations are used outside of the place of incorporation for a seemingly endless variety of activities including trading, trade financing, holding assets, manufacturing and tax minimization. They are often used for trading with or in countries where satisfactory local commercial or corporate law is deficient or absent. Joint ventures often use foreign corporations when the participants are from different countries and prefer to incorporate in a jurisdiction neutral to all of the parties. Foreign corporations can also serve to isolate or separate activities, assets or profit centers for tax, accounting or liability reasons. Where assets are cumbersome or expensive to transfer, like patents, copyrights, or trademarks, it is sometimes feasible to have such assets held by separate corporations allowing the individual to transfer the shares in the corporation rather than the asset itself. In some cases, a foreign corporation, recognized as a citizen or national of the place of incorporation, may confer a trade advantage or may help avoid a disadvantage. It may also be used as an integral part of a trust structure. Certain countries, moreover, seek to make it attractive to incorporate in their jurisdiction, even when activities are to be conducted elsewhere. In fact, there are so many "tax efficient" jurisdictions that an initial problem for most users is how to select from the available options. When selecting a place to incorporate, most professionals emphasize the following criteria: 1. The legal and political attitude of the jurisdiction toward commercial activities; 2. Features of the corporate law that facilitate incorporation and continuing management; 3. The level and speed of service obtainable in and from the jurisdiction; and, 4. Cost. Generally, a desirable jurisdiction should be one that is politically neutral, follows a policy of free trade, does not interfere with the commercial activities of corporations established there, and is politically acceptable to other countries and places in which the corporation may be trading. Formal diplomatic recognition as well as commercial recognition and acceptability are important. Commercial recognition is a feature of an offshore jurisdiction that is earned. Use of a jurisdiction in financial transactions allows banks to become familiar and more comfortable with its legal system and forms of corporate documentation. In order to take advantage of the "real" privacy and asset protection vehicles in the offshore community, you need the advice and counsel of someone who knows and understands what you need and how best to use it to serve your intended purpose. One of the best sources of help in setting up offshore corporations is an American certified accountant who has a large practice in Panama. Marc Harris holds a master's degree in business administration from Columbia University in New York, and completed the certified public accountancy examination at the age of 18. He is believed to be the youngest person in the U.S. to pass the examination. He opened his Panamanian firm in 1985, after being a consultant with the accounting firm of Ernst & Whinney. His services are highly recommended because he is able to create and administer offshore corporations with complete compliance with U.S. laws. Often an American client uses a tax-haven based advisor who knows the local laws but is not familiar with American tax law requirements and technicalities, and the client eventually gets into trouble, so Marc Harris has a unique ability to bridge the two worlds for his clients. Although based in Panama, he can create and administer corporations and trusts that are registered in all of the popular tax havens. For more information write to The Harris Organization, Attn: Traditional Client Services, Estafeta El Dorado, Apartado Postal 6-1097, Panama 6, Panama.