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OFFSHORE SERIES - INTRODUCTION

Woman: Audio Jungle [music]

Warren: Okay, hi, it's Warren Black here. From Wealth Safe and sovereignty, global tax and investment.
And here we’ve got Stephen Petith today with me, internationalized architect ---is that right Stephen? --
- to talk about offshore and generally the new wonderful world of banking and structuring and how it
all works.

Stephen: That's me, Warren. Yes, hi everyone. I'm glad to be on the show today with you, and yes I'm an
internationalization architect. People are asking what that is, and basically you have an architect for a
house, so why not have an architect for internationalization and offshore business structures and
banking and so forth. So that's what I do.

Warren: Yes, sounds like a bit of a proxy name like a lawyer or accountant or something like that, isn’t
it?

Stephen: It does, yeah.

Warren: Now excellent. So look just really today, just a quick introduction to the whole thing and series
in preparation for some herd of series he’s gonna be doing in the new world and the change and what's
going on, so tell me Stephen, I know that offshore and going offshore is a bit of a taboo in the western
media and just the whole brain washing and everything else, so just tell us, why do you think that the
whole thing's such a big taboo with the media and everything about offshore. I mean I'm not saying
obvious, but what do you think's really going on?

Stephen: Well, the whole offshore world is, and it's a bit of misdemeanor, what we need to do is work
out what is offshore. And to be honest, offshore is anything just outside your current place of residence
or current place of citizenship. So, I'm sitting here in Hong Kong at the moment and I live here in Hong
Kong, so for me offshore is the U.S., is the U.K. Is Europe. So offshore is anything outside of where
you currently live. So it's not some dark room on some brilliant island with guys wearing top hats and

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canes and smoking cigars and avoiding taxes and they're all saying I'm gonna take over the world, it's
not that at all. The whole offshore thing, and it's got a bad rep in the media, purely and simply because
the governments and everyone out there keep saying no no no no, we can't have people living offshores,
we can't have people taking their hard-earned money with them, we need to tax it. We want it, we want
it because we're gonna spend it badly. Well that's basically what offshore is.

Warren: So really [inaudible 02:37]

Stephen: Sorry Warren?

Warren: It's a little bit of fear. So really there's just fear for losing their money, basically.

Stephen: Exactly, the media and governments are really good at driving fear. So when it comes to
election time, their number one playbook is fear, fear, fear, fear, fear. And I've had a bit of experience in
this area, I have been a campaign manager for several politicians over the years and then I woke up one
day and cut the other head off and realized that politics is actually bad for everyone and now we need to
get out of the fear cycle. Stop listening to mainstream media, stop listening to everyone out there that
says something's bad and actually go and talk to the people doing it. And this is not always real rich
people, there's a lot of digital nomads, lifestyle entrepreneurs, mom and dads that are taking their kids
and are traveling the world. Everyone now is going offshore and it's becoming more and more
mainstream, it's just that the mainstream media and the governments of the world do not want you to do
it. Because they lose control.

Warren: To me it's a little bit like, like now, I used to buy my books years ago, I always buy them at the
local bookstore, at Dimix or Angus and Robertson or Bunn or something like that or local Borders or
Elizabeth’s bookstore. Now, I probably just recently bought forty books and every one of them I bought
in U.S. from Amazon. And yet years ago that would've been a rare book which I couldn't get anywhere
in Australia [inaudible 04:11]. So to me, I've gone offshore with buying my books. If I set my account
up with a U.S. broker with the options trading I've gone offshore, really.

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Stephen: Exactly. And people go offshore every day they go online. Every day you go online, you're
using Google. That's offshore. And onshore in America of course, but even so most of Google servers
now are based every and anywhere apart from America. They're based in Sweden, they're in Iceland.
Facebook is offshore. So when you're buying stuff online, most of it is offshore. Or what people
deemed as offshore.

Warren: Yeah, so, tell us a little bit then about setting up an offshore structure. Like you hear all these
myths no how hard it is. And I've known myself that you know I've done a lot of structure for clients
that have gone international and that kind of stuff, and certainly things have changed since back in 2000
when you could just open anywhere and walk in and even do it over the internet, whereas now, it's
pretty much face to face. So, how difficult is it really to open up an offshore bank account or even just
offshore structure today. I mean what do you see that's right now and how do you see it going.

Stephen: It's definitely gotten harder over the last ten, probably since 9/11. put it that way, since 9/11 it's
got very hard indeed in some circumstances. But once again this is why you need to team up with
someone who can point you in the right direction. You can still open companies yourself overseas, and
still do all that, but sometime you just need a helping hand. Most banks these days are looking for a
referrer, so either someone who has already got an account at that bank to refer you, an agent that has a
good relationship with that bank, or even an inter-banking, so another bank refers you to another bank.
So yes it is getting harder, the things that factor are CRS which come into this year which is Continuous
Reporting Standards. Banks are just overwhelmed with reporting so they're just making it harder and
harder to do it. But they wanna see you, they wanna know that you're, you're not engaged in anything
illegal, or anything that could get, more importantly, anything that could get the bank into trouble.

Warren: Yeah, so you wanted a Cuban cigar smokers sitting in the Cayman Islands secretly exchanging
a drug deal for 10million.

Stephen: Exactly. So if you're doing legitimate business, so if you're running your own Amazon store

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online, you're running an e-commerce store, you're selling music, you're selling your art, you run a
travel blog. All this sort of stuff can be done offshore and it can be done very easily. For instance digital
nomads now, especially travel bloggers, there are some good jurisdictions around the world where
makes it quite easy for you to open, and one of such is Estonia. Estonia has a new residency program
which is designed 100% for digital nomad in a digital economy so people join blogs, people running
small internet stores, app developers, freelancers, and that's all happening and being encouraged by
Estonia. The side I've seen has perished in Chile.

Warren: Yeah, so really I know my honest belief in this I've been saying this to people, is I've been
saying for years it's gonna get harder. I can see that coming up in 9/11. I've now been saying since last
year, I see it getting easier. And I think especially a Trump presidency and having a president who's a
dealmaker at heart and he really is very aware, but the biggest customers walk out from the business
when they're paying too much, but the biggest customers like Ford and General Motors don't just walk
out of America and set up offshore if the price is too much. So he's going around offering to cut deals,
and repatriation of 10%, you know 10% of taxes only if you bring your money back in instead of a plant
there. I see that as a future of government and seeing offshore getting a lot easier in the next five years,
would you agree?

Stephen: Yeah, I think we've reached peak bureaucracy. I think we're now gonna see over the next
several years with the left and the liberal left anyway losing governments around the world. Trump has
been the start of it, Australia where you are in Warren, about to see the rise of the likes of Pauline
Hanson and some of the other libertarian candidates like David and a few others. So definitely pushing
that. France, Italy, Germany, all go to the polls this year and right wing candidates and the candidates
that are really pushing freedom and restriction and lessening the restrictions on global trade and global
money and transfers are all coming through. So yes, over the next five years I think we will see a
lessening. Will it get back to where it was late nineties early 2000s, I don't think so. It may get back to
where it was in 2005 where you could still walk into any bank and open an account. Where you could
freely open a business easy. In Hong Kong here, we're starting to hear that already. We're starting to
hear that some of the banks are loosening up on their restrictions about opening accounts. They still

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wanna see you in person, but it's getting easier and easier to open accounts. Especially if you got a
legitimate business. I think Trump's gonna be a good thing.

Warren: Now, and in fact I've heard that Trump's going to get rid of FEDCA. And I even see, which
will make it much easier with banks and all the compliance. The other thing that I've, yeah I've heard
that he's gonna be getting rid of FEDCA, and just generally he actually wants to make things easier and
I know of US being a tax country and exempted list of Australia and U.K. with them counting taxes I
see inevitably Australia will be forced to because if you’re an Australian citizen and U.S. are capping
corporate tax 15 or even 20% like they said they’re gonna do, well I mean if you're Australian you set
up in Nevada or someone like that and just pay 15% tax and don't repatriate until you have to pretty
much and the way the malls work you'd be pretty fine.

Stephen: Exactly. The tax rights around the world. Australia's one of the highest taxing OECD nations
now. The UK's at 20%, we're still at 30, the US is slowly coming down, Canada's coming down, New
Zealand's coming down. Half of Europe already looking at readjusting their corporate tax rates. But
they're not just looking at corporate tax rates, they're looking at personal tax rates as well. These are
gonna, these are gonna be adjusted over the next five to ten years. So there will be a lot of people jump
up and down and say, you know, all you're doing is supporting the rich and all you're doing is that
you're not doing that at all. If you make the tax system fairer, money stays in the economy and money
can be used by the people that earn it.

Warren: Yea. Sorry, go on.

Stephen: People scream money. You know as the old saying goes money's made around to go around.
That's exactly right. People only hoard money when government’s make it really hard for people to earn
a living and to return them. When it's free, as in the economy's free, business is free, there's less red
tape, people spend their money more and more and more.

Warren: Now it makes good sense, Stephen, I mean to me, like in the olden days people used to hide

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money in vaults because of government stealing like Robin Hood when they would do stuff like that.
And I just see that, as a businessman like the difference is when you're a left-wing liberal, you know, I
don't like generalizing but let's say that you're, generally I find that people that have not want to hit the
people who have. But the people who have been educated enough to go a bit like, well, you know,
when we can buy a book, a supply of books for say 100,000 in China, we'll pay 500,000 in Australia or
US. It's a no brainer. And likewise some countries go, if you're gonna have to pay 35% tax in America
or 30% tax here in Australia or 28% over here in Europe or, and we can then go over to Luxembourg
and pay like 1% by the time we finish, well no brainer, you’ve just spent, you know, if you got to spend
500,000 for a good tax adviser well just do it and make a long term investment. So, smart governments,
I'd say like the sovereign individual, the book written by Rees Mogg and Davidson say, they say
eventually governments will be forced to operate more as deal makers rather as dictators. Would you
agree?

Stephen: Wholeheartedly. And that's a good book by the way and anyone who's interested in work
should go and read it. It should be on your number one bestseller list. The, what's gonna happen, and it
probably won't be in my lifetime but it definitely will happen eventually is when people, humans are a
nomadic people. We live in tribes but we all move. So the day of borders and governments controlling
people by lines on a map is going to come to an end at some point. Will I see it? Probably not. Will my
kids see it? Maybe, maybe not. But it will happen. There’s empires that all over the last few centuries,
we’ve all had empires. The Roman Empire, the Greek Empire, the Macedonians, the Chinese, everyone.
There's always been empires. And they all come, go, fold and readjust themselves. Where we are in
today's world is we're at the end of the current empire which is led by America. This empire came into
being in about World War I when America was funding both sides of the war. And they made, America
made it's financial power by basically funding World War I and World War II and then right at the end
jumping in on the winning side. When Europe was absolutely destitute and Japan was destitute America
swept in and said we will refund your rebuilding efforts, and so they dictated what happened during this
last probably 90 years - 100 years. We're now seeing the end of that. We're now seeing the rise of China,
we're now seeing the rise again of the [inaudible 14:39] nations so these are Central Asian nations and
far eastern European nations that are all starting to come into their own and they all have better tax

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systems, corporate systems, than what we're seeing in most OECD nations. We're on an interesting ride
anyway.

Warren: Love it. No it's really really good. So big changes ahead, big times. So yeah just probably the
last, or question I'll ask, before I ask you just on the whole series we're doing, is when you said about
global borders going away and things have been happening which I actually agree with you, so really
more and more, I'm noticing a trend to which people willing to relocate and move offshore. I've noticed
that this year alone I've had more inquiries and had people the last six months of last year are people
about going international, willing to relocate families are just willing to do whatever it takes to not pay
a high tax rates the government’s taking over here or in Australia or people I speak to in America or
England, they're willing to do whatever it takes. I had a client relocate his whole family to Malaysia
from UK simply because he just said I'll do whatever it takes. I'm not gonna pay 40% taxes anymore.
So do you see this as a big thing? Like more and more people relocating and becoming sovereign and
tax residency becoming easier for people to get overseas?

Stephen: Oh hugely. I'm seeing it every day. I walked down to the local Starbucks down here sit down
and talk to someone and there's a family just moved from China because they're sick of the capital
controls in China. Run into a couple of French guys that have moved here to Hong Kong to set up their
start-up. Because it's freeer here. I'm seeing a lot of people are moving not necessarily for tax, tax is a
great secondary benefit. The main benefit most of these people are moving for is freedom. Increasing
their freedom. Being able to take what they wanna do when they wanna do it. And the age of the
internet only has us do it. This family's moving to Thailand, this family's moving to the Seychelles, the
Cayman Islands, the Caribbean, Costa Rica, to bring up their kids in a more healthy more
environmentally friendly way. The whole spectrum of what's happening around the world is how
systems are crumbling, how education systems are a mess in most of the western world, cost of living is
rising at such a fast rate that most people can't afford it. So if you just take those basics and then you
move to, let's say you moved across the river, Bali. Bali's a really good one. So you've got the green
school in Bali, you've got the green village, so you've got all these people that are moving to a more
healthier, a more awakened type living environment. And then on top of that because of them trying to

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restructure their entire lives, they're now earning 100,000 dollars a year but they're keeping 95,000
dollars, they're not having to give 60,000 dollars back to the tax man. So all of a sudden, in one move
that entire family is now being put into a totally different level. They're living like kings.

Warren: Yeah, it's like tax, it's interesting, I've said this recently, it's really not about tax minimization,
it's about having more financial freedom and more money and less interference from governments. So I
have clients who move to Thailand and really they just said, we work less, we do less paperwork, and
we got more money. So really it's much less about taxes, but taxes is obviously an important
consideration in the whole big picture of having financial freedom.

Stephen: Yeah, yeah, and taxes aren't, I don't like to use the tax minimization, I use capital efficiency.
Because what you're doing is you're looking at an entire picture and using what capital resources you
have to the most efficient way possible. And if you wanna spend, you know, a thousand dollars a week
on a place to live, well you can do that. But if you wanna also go and spend 200 dollars a week on a
place to live, well you can do that as well, so that's using more capital more efficiently. If you're stuck
in Sydney you'd basically have no option but to spend 1500 dollars a week on a place to live. It's just
ridiculous. The way we're seeing, I'm seeing people all the time, and now I'm kind of paying it here in
Hong Kong and working to it now is I work in Hong Kong. But I'm working out a place that costs a
million entirely. And that's, it's probably one of the most expensive places entirely to live. But it's about,
I get a four-bedroom place with a pool. I've got all the services that I want under the sun down there,
and it costs me less than 250-300 square foot apartment in Hong Kong probably costs. And I wake up
every day and it's beautiful sunshine.

Warren: Makes sense, doesn't it. I see, and before we enter that Stephen, just quickly take two minutes,
can you just summarize, we're gonna be doing three, like obviously, further making interviews like this
video, and we're gonna be covering offshore banking in the best banks. We're gonna be covering
offshore banking in the best jurisdictions and then we're gonna be covering international residency as
the three main topics. So can you just quickly summarize in let's say two minutes just the kind of what
we're gonna be, what you'll be sharing and sum it up. Like you know a few sneak tidbits or exciting

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things that's out of the box in these things. What would you say...

Stephen: Yeah, I'd be happy to, Warren. International banking is, as I've said, as we've said before, it is
becoming harder but it's also becoming easier. Especially when you, when you think, if you think about
what you wanna do around business banking and residency in 3 levels. We have a white level, we have
a gray level, and then we have a black level. And the way I look at it is the white level is what you
wanna do when you're interacting with your customers, you're trying to use your credit cards on a day
to day basis so you wanna book your airline tickets, your concert tickets and all that sort of stuff. The
grey level is this level. And also the white level gives you basically no privacy by the way. Credit card
companies are scanning your information. Banks are reporting it and everything. So you've got a trade
off ease and privacy. The grey level, you're a greater level, a next step up in privacy. But it's also where
all the institutions work. So you're starting to work where the Goldman Sachs, the JP Morgans the
Donald Trumps, the Mitt Romneys, the likes of all the Warren, I've just forgotten his name, Rupert
Murdoch, that's where all these guys work and that's where all these guys play. So once you start
dealing in that level, you're setting up your business inside the grey zone, and the grey zone is countries
that aren't tier 1, so they're not the US the UK or outside Germany. They're sort of more greyish. So we
are talking Hong Kong, Singapore, even once you're in the know, these are really what labeled to there's
sort of a very light grey. So jurisdictions. And then after that, so you set up [inaudible] your
opportunities open, way open up more. Because the institutions, the fund managers, the big banks, the
guys that are setting up and listing stock market companies, these guys are used to dealing in this grey
area. This is where you get your big money financing to go and do big projects. This is where you get to
work totally offshore. So if you were doing a deal for one of the big major banks, they would say okay a
little structure and SPV and it has to be, and I use the words “has to be” in one of these jurisdictions.
Cayman Islands, British Virgin Islands, Seychelles, Mauritius or something like that. Because they
know that it's less red tape and it's the easiest way to get things done. Then we move into the black.
What I call the black then this is where you gain the most privacy. Plus it's also where you gain the best
asset protection for your family. And this is where, when I'm doing and working with stuff. This is
where we tend to set up family offices. So these are in places like Belize and Panama, Cook Islands,
Mauritius, and the likes where you've got the ultimate protection and privacy. It's a lot harder to get

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bank accounts for those, but you're not dealing and transacting on a day to day basis. So we're doing
stuff in a way that you're protecting for the long haul, you have more of a twenty or a thirty year plan in
this level rather than a 20 or 30 week plan in the white level. And that is the way to structure, a more
holistic approach. Some of the things we'll also cover is Warren mentioned the best places to live. The
best places to bank and the best places to set up your structures. Most of the offshore world will say it
depends, but in at the current world there's really only a narrow band of prices at the moment that fit
into my philosophy of white, grey, and black. So we'll look at that in more depth as we go forward.

Warren: Well thank you Stephen, I appreciate your time, and I look forward to and we look forward to
starting the series. And everyone we will be, if you just go, on the page, you'll be able to find links to
the series and further ones we'll be doing on offshore structuring and offshore banking and tax
residency. Thank you.

Woman: Audio Jungle [music]

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