Which Country Has The Best Business Bank Account For You?

PUBLICATIONS / Newsletters / 2015 / Newsletter August

Which Country Has The Best Business Bank Account For You?

You need the best business bank account possible in order to run your business smoothly.
In this article we will look at what you might want to consider when evaluating a bank and the country from which it operates before you decide to entrust it with your hard earned funds. Then we will list the countries where you can open the best bank account for your business.
 

Introduction

The offshore financial services industry has seen a tremendous increase in regulation. This increased regulation mostly targets banks. This has resulted in increased paperwork and due diligence requirements. As a result, a lot of banks now have strong restrictions “at the gate”. They simply refuse applicants that have a slightly “risky” business model.
To deal with the actual process of opening this bank account, please read this: Opening Offshore Bank Accounts .
An important aspect of choosing the right jurisdiction is the safety of the bank. The last couple of years a lot of people in the West are beginning to understand that not all banks are safe. In some cases banks have failed. In other cases entire countries suffered financial crises and subsequent bank failures.
 

What Does The Ideal Place For A Business Bank Account Look Like?

There is no exact answer as to where you have to go because every business is different. There is not one country or bank that meets all requirements.
We will therefore present you with a list of things that are important for a business bank account. Then we will discuss five countries and see how they perform.
 
1. Stability
The first and foremost important factor is the stability of the banks and of the country that it is in.
All the countries in our list are places that have a solid pro business government. They do not suffer from huge government debt, they don’t have extensive welfare states to support and more importantly, they don’t see private investors as cash cows of which their wealth can be looted in times of “emergency”.
Another aspect of these countries is that the banks are much healthier than the banks in the Western World. They are much more liquid.
They also should have a good image for your suppliers and customers.
2. Banking service.
What kind of services can you expect and at what price?
All modern banks offering financial services nowadays will provide you with secure online internet banking, accounts in multiple currencies and ATM card services.
But do they offer investment products, a private banker to talk to, and other more specialized services?
 
3. How easy is it to open a business bank account?
The ease of opening a bank account is important. All but a few banks in the jurisdiction mentioned require the entrepreneur to visit in person in order to open a bank account. But some require much more paperwork than others.
There are places where it is getting increasingly harder to open bank accounts (and in some cases impossible) and places where it is still very easy.

Where Will You Find The Best Bank Account?

Based on the requirements mentioned above, we have come to a number of jurisdictions that qualify for opening your business bank account.
The jurisdictions are Panama, Switzerland, Hong Kong, Singapore and Dubai (as part of the UAE).
 
Number 5: Panama
Panama has developed itself as a very solid jurisdiction for financial services. It is the country in Latin America with the most stable pro-business government. We already wrote about here: Panama, Economic Growth. They are one of the very few countries in the world that do not have a central bank. If you are doing business in the Americas, Panama is a great place to open your business bank account.
The banks in Panama are solid and heavily regulated. There has not been a bankruptcy of a bank in Panama for the last 100 years.
Panamanian banks provide all the services that you could want from a bank. You can open an account here with a relatively small initial deposit, making it a great place for starting businesses.
A lot of banks offer investment accounts. Private banking will only be available to the larger depositors.
A big downside of opening a business bank account in Panama is the amount of paperwork that is involved. Besides the standard paperwork of passport copies, utility bills and business descriptions, they will require a secondary ID, personal-, commercial-, and bank reference letters, and personal tax returns and account statements.
 
Number 4. Switzerland
Switzerland has been the most important and famous banking centre in the world for centuries. The country has a functioning direct democracy with healthy competition between different “provinces” called cantons. The country has a sound economy and a welfare state which is limited in scope compared with most other European countries.
Swiss banks are known for their world class customer service. You will always have a relationship manager who knows your business and who you can talk to directly.
The process of opening a bank account requires a significant amount of due diligence. Swiss banks really want to understand your business and the person behind it.
One thing you have to note is that historically Swiss banks are more geared to wealth management. This means that you will have good options if you want to invest your money. If your businesses has a lot of transactions there might be better option because the banking fees are high.
Due to its proximity to the European Union, Switzerland has been forced to adopt a lot of the economic regulation and policies of the EU. For example, the balance sheet of the Swiss Central Bank has expanded six fold since the 2008 crisis when it tried to peg the Swiss Franc to the Euro (which it was forced to relinquish a few months ago). This combined with the regulatory reforms have resulted in the forming of small cracks in the once impeccable image of the Swiss banking sector.
 
Number 3. Singapore
Singapore has become somewhat like the new Switzerland in Asia. The place is booming with financial activity. That is no surprise; Singapore’s economy has been ranked as the most open by the World Economic Forum and first place in “ease of doing business” by The World Bank. It is a stable jurisdiction with a government that is one of the few in the world that has managed to produce surpluses in the last decade. It is a safe haven for investors for storing their wealth in its banks and precious metal in its vaults.
In Singapore, opening bank accounts has become more difficult for non-residents the last couple of years. In addition to a passport and proof of address, it seems likely that you will require letters of introduction and more information on where your funds are coming from. In some cases banks demand considerably more information, such as exhaustive details on source of funds.
One important aspect of Singapore is that it is a low tax jurisdiction, not a no-tax jurisdiction. Also, the fees for company incorporations and banking or on the higher end. This makes Singapore a destination for serious businesses that need the highest level of service and the most solid image.
 
Number 2. Hong Kong
Hong Kong has been an incredible success story thanks to its laissez faire economic policy.. Although the “management” of Hong Kong as been turned over to China in 1997, not much has changed in the business friendly climate.
Hong Kong banks are ideal to use for businesses trading in Asia, international consulting businesses or businesses with a lot of online activities. For online payment processors Hong Kong is the preferred solution. There are no other options that offer the same amount of options beside the US and parts of the high taxed world.
Contrary to the banks in Switzerland, in Hong Kong in most cases you will experience a more impersonal approach because you will deal with a customer service desk.
Just like Panama, Hong Kong has a territorial tax regime. This means that a company doesn’t pay corporation tax on income with a non-domestic source.
Business bank account opening in Hong Kong has become more difficult for businesses with no operations in Hong Kong last year. Make sure you have your business model clear before you meet the bankers. Also the signatories on the bank account will have to visit Hong Kong.
Know that if you operate a business in Hong Kong you will have very strict bookkeeping and reporting requirements, with auditors often wanting to see original invoices and such.
A lot of the banks in Hong Kong are part of globally operating banks like HSBC. These banks are exposed to the international financial markets and what happens in places like the US and Europe. To deal with that risk one could consider going for a local bank rather than for what sounds familiar.
 
Number 1. Dubai
Dubai has exploded the last decade. And next to shopping malls and luxurious hotels, it offers a superb business climate.
Entrepreneurs flock in their thousands to Dubai every year to start businesses in a low regulatory and zero tax environment. World class banking services are part of what Dubai has to offer.
The most important aspect of a business bank accounts in the UAE is that it is easier to open compared to any other jurisdiction. You do need to visit in person but all you need to bring is your passport. There are usually no utility bills, proofs of funds or reference letters required. The compliance department usually takes a couple of days to review the account so the opening time is really quick. In addition, there are very little rejections. The biggest advantage of a Dubai based bank account is that the banks are used to dealing with large amounts of money, in contrast to the traditional offshore banking havens.
This makes Dubai the easiest place to open a business bank account in the world.
Banks in Dubai are subjected to strict regulations.. They have a very high capitalization rate. This means that these banks are solid. Also, most banks are local banks which means they have relatively less exposure to the international financial centres like the other jurisdictions.
And although Dubai has a zero percent tax regime like traditional tax havens on small tropical islands, it is an international business hub with a cosmopolitan image and is not on any grey or black list.
 
If you start a business in Dubai with a business bank account you will experience a lot of freedom with no taxation and limited reporting or audit requirements.
Also, since recently has Dubai come up with an estate planning tool that will give you a lot of freedom in choosing your heirs. We wrote about it here: Dubai Will Registry.
Funds held in the UAE are also much safer from freezing orders then in EU countries. Funds in bank accounts in most European countries can be frozen easily by governments and anyone making an allegation. Business and personal accounts in many EU countries can be frozen in a matter of days without presenting evidence to a court. Now Europe-wide freezing orders will facilitate this across borders. In the UAE, on the other had, anyone with an allegation has to prove their case in court first. Its called “the rule of law”. The single greatest advantage really of Dubai is its respect for property and earned wealth.
 
Downsides of banks in the UAE is that they offer a limited number of investment products. Also, they offer less possibilities of accepting online payments in comparison to banks in Hong Kong.
 

Best Business Bank Account – Conclusion

In the current regulatory environment and the excessive leverage of the banks in the Western world, a few places remain faithful to their principles of free market capitalism, protection of property, and the safe keeping of your hard earned wealth.
Panama, Switzerland, Singapore, Hong Kong and Dubai are the best places in the world to open your business bank account.
 
If you have any questions with regards to this article or would like to open a bank account in Dubai, please Contact Us.
 
You might also be interested in:
 
How Does Banking Work? An explanatory article on modern banking and how it came to be.
 
Do you want to open an offshore bank account for your business? Then first read the article Opening Offshore Bank Accounts – Things To Consider.
 
Is there still bank secrecy? Are your details being kept safe? Find out now… What Is Automatic Exchange Of Information?

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