AI is trendy at the moment. I am sure people are going to ChatGPT and asking for offshore tax advice. Is it like taking advice from a man in the pub? I thought I would ask ChatGPT.
I met a man in a pub and he gave me some bad offshore tax advice. What did he say?
I am new to ChatGPT and missed the obvious flaw in this question. ChatGPT said it didn’t have access to personal experiences or conversations so didn’t know what the man had said to me. But it suggested that I get proper professional advice.
Not to be discouraged I asked
What might he have said?
While again recommending getting advice from a tax professional, it also set out typical bad advice. The shocking part was how often I come across these claims in practice.
1. Undisclosed Income: The person might suggest hiding income in offshore accounts to avoid taxes. This is illegal and can lead to severe legal consequences.
2. Shell Companies: Advising the use of offshore shell companies to conceal assets or income might be mentioned. This is often associated with tax evasion and is illegal.
3. Misrepresentation of Residency: Incorrectly claiming residency in an offshore jurisdiction to reduce tax liability in your home country is a common but unlawful tax evasion strategy.
4. Unverified Tax Havens: Recommending obscure or unverified tax havens with promises of complete tax immunity may be mentioned. Such advice might lead to financial losses and legal issues.
5. Complex Transactions: Suggesting overly complicated and convoluted transactions involving offshore entities, with the intention of evading taxes, could be problematic and raise red flags with tax authorities.
While I am not entirely sure what an “unverified tax haven” is, the general thrust is absolutely correct.
I had to ask more.
Give me some offshore tax advice
It refused telling me to get professional advice.
What offshore tax advice might I get
Again, ChatGPT told me that it is crucial to consult with a qualified tax professional for advice tailored to my circumstances. But some valid considerations might include the following ideas:
- Tax Efficiency: Offshore structures can sometimes be used legitimately to optimise tax efficiency
- Asset Protection: Some individuals consider offshore trusts or entities for asset protection purposes
- Estate Planning: Offshore trusts can be used as part of a comprehensive estate planning strategy.
- Business Operations: Companies may establish offshore subsidiaries for legitimate business reasons, such as accessing new markets, benefiting from tax incentives, or optimising supply chain logistics.
- Diversification: Some individuals consider offshore accounts or investments for portfolio diversification purposes.
Finally, I asked ChatGPT to write an article about the above experience. The article was wordy but the conclusion is worth quoting
“In conclusion, the hypothetical scenario of seeking offshore tax advice in a pub serves as a reminder that reliable financial guidance is best obtained from reputable professionals. While AI can contribute valuable general insights, it is not a substitute for the nuanced expertise of human experts. Making informed and legal decisions about offshore tax planning requires careful consideration, due diligence, and consultation with qualified professionals who can navigate the complexities of international tax laws.”
I couldn’t agree more.
Cheers.