Offshore and fiscal policy - ask an expert

I'm from Canada, but would like to set up a business in a 'tax haven'. I heard St. Kitts is good. How do I get the money to go there and how do I then get it here without committing a crime? Thanks

nokran: I just pm:ed you and are willing to pay for your consulting service. Check the pm for more info.

I'm from Canada, but would like to set up a business in a 'tax haven'. I heard St. Kitts is good. How do I get the money to go there and how do I then get it here without committing a crime? Thanks

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Not all business can be done in tax heavens... What do you want to do? Who are your customers? How would you reach them?

1. Starting from what amount of money per year is recommended to setup such a thing? 2. How much does it cost to setup? How much does it cost yearly? I realize cost varies with each setup/country but I'm looking at a ballpark figure.

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Hum, it really depends on the offshore structure you want, and what are your needs; offshoring don't worth it under $100k revenue yearly. About the cost of such structure, it's roughly from $7k to $xxk yearly, depending again on your needs (from a simple structure to a network).

Do you still pay taxes to receive the money as a regular person? For example let's say there's a unique tax of T% on profit in my country. From what I know the company has to pay the T% at the end of each fiscal year. However, I also have to pay T% to get the money on my name as a regular person. So I end up paying 2*T% in the end. Does a setup in a tax heaven eliminate T% or all 2*T% ?

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Yeap, you still have to pay taxes on personal incomes.. Your company is a 'legal entity' and thus has to pay corporate taxes; and you, as a citizen, has to pay personal incomes taxes. Guys, we are discussing there on legal offshoring: we are not talking about fraud. With offshoring, you'll reduce the tax on corporate profits (from 50% to 90% tax reduction), but you'll still have to pay your personal taxes.

Is it possible to maintain anonymity? To what degree? In other words is it possible to operate the business without being able to be associated with it in any way? Do I loose control over certain things or risk certain things to do that? I'm thinking that from what I have read I can (and probably have to) use a lawyer in that tax heaven to open the business and bank account in my name. Doesn't that mean I give that lawyer control to a certain degree over my business? Is there a contract in place? How am I protected from the lawyer going and taking the money from the bank account or doing stuff on behalf of my business?

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It's possible to maintain anonymity using business representatives, and shareholders representatives. Your risks: being scammed, being used for money laundering, etc.. All is based on trust, so be sure of the experience of the lawyer, the trustfullness of the reprensentatives and ask to set-up an additional contract with representatives.

5. What is required to implement such a setup for me? I'm thinking about documents. Scanned photo ID picture... what else?

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In order to fight against money laundering, you'll be require to meet in person the fiscalist and lawyer, give detailed information on your business, proof of ID, etc. All these information will be keeped confidential, it's just a way to be sure you're not a criminal trying to launder money. If your lawyer don't ask you these informations, beware of a scammer.

I'll answer the remaining questions later.

Obviously I'm interested to learn how to do this legally. Also the following fragment is very interesting. It means most online services for registering a company in a tax heaven are bogus since they only require you to fax/email a copy of your photo ID and stuff. Always found that strange.

The $100k/year figure was unexpected. I was running the numbers with what most online services would charge ($3k/year) and obviously the figures were much lower.

I'm really glad you're helping us here. I've seen many open threads here and on other forums about this subject but it was always just speculations.

Another question I have is about the legal aspects of having a company in a different country. Does that mean the company must adhere only to the laws of that country? I'm assuming this is why most online casino companies are registered in Malta right? So not only you escape the high taxes but you can also use this to escape the FTC and various unpleasant laws in your country.

Thank you and rep+

In order to fight against money laundering, you'll be require to meet in person the fiscalist and lawyer, give detailed information on your business, proof of ID, etc. All these information will be keeped confidential, it's just a way to be sure you're not a criminal trying to launder money. If your lawyer don't ask you these informations, beware of a scammer.

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What do you think about incorporating in the Seychelles? I was advised to do that a few years ago. Is it still a wise thing to do?

It means most online services for registering a company in a tax heaven are bogus since they only require you to fax/email a copy of your photo ID and stuff. Always found that strange.

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You're right. Serious services will ask you to meet in person, and to give detailed explanations on your business before opening a bank account for you - it's a way to be sure that you'll not use your bank account as a money laundering account. Maybe some online services don't care about ethics... But if you (as a customer) share nominee with money laundering firms, you'll risk much more than a fiscal control.
However, some 'tax haven' are quite laxists with the rules: you could create a firm in Seychelles with just a copy of your passport and an utility bill.. But money laundering is still a fraud from the Seychelles (money laundering act is effective).
There is two school of though amongst professionals: those who have a business vision, and those that have a customer vision. The first don't care about customers and just provide quick & dirty services ; it's cheap, effective, but if you've got a problem you're alone. The second school provides consultancy services ; it's a partnership in the long run. Try to ask the maximum of questions to your incorporator / international fiscalist, and require an 'after-sale service'.

The $100k/year figure was unexpected. I was running the numbers with what most online services would charge ($3k/year) and obviously the figures were much lower.

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In order to lower the risk, you could create a network of firms, and thus structure costs will depend on where you come from (EU / Asia / US).
But if you earn under $100k, it doesn't worth the price for many reasons: it's time consuming, it could be risky, and it has hidden costs.

Another question I have is about the legal aspects of having a company in a different country. Does that mean the company must adhere only to the laws of that country? I'm assuming this is why most online casino companies are registered in Malta right? So not only you escape the high taxes but you can also use this to escape the FTC and various unpleasant laws in your country.

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Yes, a company must adhere only to the laws of that country.
But be careful about one important thing: the residency rule.
Let's say you're resident from France, i.e. living in France more than 220 days a year (depending on countries). If you manage your Malta casino from France, France fiscal administration could charge you for fraud (because you're working in France, living in France, but avoiding taxes in France). So you've to find a 'nominee' to act as manager, and say that you're just recovering dividends from this foreign firm. But there is still a risk... The must is to create a network of firm.

What do you think about incorporating in the Seychelles? I was advised to do that a few years ago. Is it still a wise thing to do?

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There is no 'best tax haven'. A location depends on your customers (btb? btc?), and your current location. In 2011, there were problems with banks in Seychelles freezing money from companies.. The place is still good for a company; but I'm really moving to countries less connoted as tax heaven or to european countries (i.e. not small island). Again, think about your partners and customers: will they care if you charge them from a tax haven?

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How does PayPal play a role in all the tax/fiscal thing? I mean if you have/received money in PayPal are you supposed to pay a tax on that money? Do they have access to the info about my PayPal details and transactions? Do I only have to pay taxes if I retrieve the money from PayPal to my bank account? etc... Please expand on how PayPal fits in the whole fiscal scheme.

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Paypal = a bank account. Same tracability applies to paypal.

Can the money be used to buy stuff in the country I am in? For example buy a car, laptop, pay rent, pay travel expenses, gas, etc. in my country and file them as company/work-related expenses (so I cover them from company money and not from my personal profit)? Those things will legally be owed by the company entity not myself as a regular person right (not on my name)?

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Wow wow, slow down: how would you justify the residency rule?
are you talking about buying a laptop for your personal use in Canada (random country) with the money from your Seychelles' firm?
If you face a fiscal control (again), they will ask you: guy, you're earning $1k a month in Canada, where have you find the money to buy your Gran Torino?
My advice: create a firm in Canada, that will recover as dividend the money from your offshore firm ; you'll be hired by your canadian firm. Your firm in Canada could buy legally laptops for employees, pay rents (if you justify the use) and pay travels (if it's for business and not for leasures). Or use an umbrella company as the meat between you and your offshore firm: the umbrella will hire you.

Do I have to keep the accounting myself? Is the accounting done per the laws of my country, the country where I incorporate (tax heaven) or both?

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If you have a firm in Switzerland, accounting is done according to Switzerland laws. But more than accounting, there are also financial and fiscal reglementations.. Your international fiscalist could do that for you.

Can I keep the accounting myself, or do I need an authorized accountant/lawyer/whatever? Is it complicated to keep the accounting myself? Can you recommend good materials to learn how to do it?

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Trust me, I'm not saying that because I'm an incorporator and because I 'defend my business', but you will lose a lot of time to learn foreign fiscality and accounting, trying to comply with the rules, and do the work. Honestly, it's complicated but possible if you've time. But do you prefer spend time on your business or on accounting?

What are the credentials?

Actually - Do you want to shoot me a PM?

Actually - Do you want to shoot me a PM?

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Obviously, I can't disclose such information in public; feel free to send me a PM with your questions.

got some great tips, thanks

Hi,

This is a great thread..Thanks for all the information.

I have few questions and would appreciate your thoughts on those....

I am from UK and moved to India a year ago to set up a software company. We sell software online and most of our customers are from America.

Now the company is registered in India hence all the payments are transferred to our Indian account from our payment processor. There are many drawbacks of keeping the company registered in India as recently the payment vendor is getting a bit iffy about sending payments to India. Furthermore I am having to do any online payments for purchases via my UK accounts.

Another thing is that I plan to sell the company including the technology and userbase after peaking its revenues.

I have been thinking about setting up a company in Hong Kong or Dubai (purely because its on my way back to UK) and having the office in India as its subsidiary (development office).

Here are some of my questions:

-With a view to sell the company sometime in future, should I setup the HQ in Hong Kong or Dubai?
-I eventually want to move back to UK and run the office in India remotely, how could I receive money in UK without breaking any laws?
-Are investors/buyers interested in buying companies that are based in a known tax haven?

Thanks

KML

Hi Nokran,

I always wondered what were the formal qualifications required to enter your trade?

Not that I nescessarly want to go into it, I just want to know enough not to get fleeced/scammed/etc/etc

Thanks a lot mate. Your replies to the members here were a pretty good read. I'm not yet close to needing such services but I am glad I bumped into this thread because some stuff you wrote here I would have not thought or expected.