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Save taxes in e-commerce?
vanion




msg:646781
 2:44 am on Jul 14, 2004 (gmt 0)


Why don't people relocate their e-businesses to hong kong or other places where the there is no tax on income accrued from aboard? Would it be alright if I m operating my site in canada (have no employees) and host my site in hong kong?What if im hosting the site in US? Would that be considered as operating the business in hong kong so i may avoid the high canadian taxes? In this situation , I would only have to pay for business registration and not taxes on profits. Am i breaking any laws by doing so?

Hope to hear you soon. Please PM if you wish .

Anxiously waiting for a reply,

david

 

Dpeper




msg:646782
 5:41 am on Jul 14, 2004 (gmt 0)

In the US you have to pay taxes on all income as an indvidual no matter where it was made.

Donny

Raymond




msg:646783
 8:58 am on Jul 14, 2004 (gmt 0)

Anyone could easily fool IRS, but you bare the consequences if you get caught.

FYI, you are "supposed" to report whatever income you make overseas.

vanion




msg:646784
 9:36 am on Jul 14, 2004 (gmt 0)

Im talking about income in canada. Then won't i escape this jurdiscation if i just send files to HK and upload it from there? What's the difference between me uploading it from the comforts of my dormitory in canada?

SeanW




msg:646785
 12:44 pm on Jul 14, 2004 (gmt 0)


Under the Canadian income tax system, a person's liability for income tax is based on his or her status as a resident or a non-resident of Canada. A person who is resident in Canada during a taxation year is subject to Canadian income tax on his or her worldwide income from all sources.

(http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.html)

For a government agency, CCRA (or whatever they're called today) has a good web site that answers lots of common tax questions like yours.

Sean

vanion




msg:646786
 4:00 pm on Jul 14, 2004 (gmt 0)

thanks alot sean.

You have been a great help. Any ideas on how to tackle this issue and avoid the tax altogether? Placing it in an independent entity in HK might not mean that Im receiving worldwide income.

David

SeanW




msg:646787
 5:08 pm on Jul 14, 2004 (gmt 0)

What's the big deal about paying taxes? Your goal should be to minimize the tax paid, not avoid paying altogether.

You can claim all reasonable expenses associated with earning your income. You can deduct a portion of rent/mortgage interest, utilities for use of your own home.

I suggest you talk with an accountant...

Sean

vanion




msg:646788
 6:23 pm on Jul 14, 2004 (gmt 0)


thanks sean. I will consider that if in the event i really do have to get a business in canada. But i think that's a slim possibilty. Worse comes to worse, i can ask a relative hired by my coporation in HK to operate my sites within HK.That shouldnt count as worldwide income since the corporation only acts as a vehicle for me to store my wealth. The money will be transferred to a local bank in HK.

David

Rugles




msg:646789
 7:42 pm on Jul 14, 2004 (gmt 0)

You should pay taxes were you live, no matter what the tax rate.
You have have all the benefits of of living in Canada (health care, social security, roads, fire department and on and on), so pay for it.
When someone avoids tax it just means someone else is paying tax for you.

janny93




msg:646790
 9:35 pm on Jul 14, 2004 (gmt 0)

Well, I think that the IRS can not know about your income, if the money are not coming to the USA. We are incorporated in Seychelles, where do we have to pay a flat $100 USD a year and we do have corporate bank account in EU. So it is clean and no taxes have to be paid.

vanion




msg:646791
 4:51 am on Jul 15, 2004 (gmt 0)


Hi Janny,

I will be living in Canada.The problem is would the canadian government consider my business as operating in Canada? Besides that, the canadian government charges a world wide tax on all incomes accrued from aboard. If i set up a corporation elsewhere and dont receive a dividend, it shouldn't be counted as income?

How do you determine where the location of the business is at? By the founder or what? I have no intention of working so hard for the benefit of lazy workers.

janny93




msg:646792
 8:20 pm on Jul 17, 2004 (gmt 0)

Hi Vanion,
I am not a layer, but I just simple assumes, that the profit is not making in the US or Canada, if the company is incorporated somewhere else. It would be hard with some other type of business, where do you need to have physical presence. But internet is whole different field. You are everywhere and nowhere. So just dont bring the money to your country. We do have corporate offshore account and money goes there. You can have internet access or ATM card to that account. It is good to have that account in third country. That bank will require paper that you are paying taxes where are you incorporated.

Penguin




msg:646793
 2:14 am on Jul 19, 2004 (gmt 0)


sounds good. Should i be hosting my sites in HK or other countries to constituite as having my profits accrued from abroad? been a bit troubled by this as i want my sites up soon to lessen the sandbox effect.

david

SeanW




msg:646794
 2:27 am on Jul 19, 2004 (gmt 0)

IANAL, nor am I an accountant, or have complex enough taxes to warrant one yet. I claim professional income and relevent expenses on top of my salary from my day job, so I am not unfamiliar with these things.

The test I use to decide how to do something is "Could I explain this to an auditor?" I write off equipment and the maximum allowable portion of most household expenses, and have even paid family members to help out, but I don't write off a dinner with my wife where she asks how work is going.

Secondly, and to more directly address the OP, when you incorporate, there is a legal separation between your income and that of the corporation's. If you incorporate in some foreign country with no taxes, your company may avoid taxes. But the money has to get into your hands somehow for you to spend it. There are more tax advantageous ways to get the money out, such as dividends, capital gains, and shareholder loans, but if you start spending the company's income directly it will count as employment income and you'll owe taxes.

Sean

Penguin




msg:646795
 2:43 am on Jul 19, 2004 (gmt 0)


Fast reply :) thanks

But what if the overseas company incorporated is not owned by me , but by a relative? Every month a sum can be transferred to my bank account instead and surely tax authorities would not be able to track this 'income' or 'gift'.

David

SeanW




msg:646796
 2:49 am on Jul 19, 2004 (gmt 0)


Every month a sum can be transferred to my bank account instead and surely tax authorities would not be able to track this 'income' or 'gift'.

Again, IANAL, but
- Your relative might incur a tax hit when they take the money out of the corporation
- Just like everything else, you'll get away with it until you get audited. See my first rule, and try to think of how you'll explain it to an auditor.

You're right, it probably can't be tracked. But audits are often random... :)

TANSTAAFL

Sean

Penguin




msg:646797
 2:52 am on Jul 19, 2004 (gmt 0)

oppz missed out the 2nd point

The problem is , as a HK corporation, would i be allowed to host it in other places than HK? What is it like in Australia? If i on the other hand host it in HK, would my earnings not constiuite as not income from abroad and subjected to taxes?

Thanks alot.

janny93




msg:646798
 4:33 am on Jul 19, 2004 (gmt 0)

The point is know how to spent offshore money. You can not have these offshore funds transfered to your US account. Then you cant avoid the taxes, because there will be income. You need to keep your money in the offshore bank. If you need cash, you will get it via ATM, most of the banks offer high limits payment cards, so you should be OK.
I am not sure about that thing, where is your site hosted...but I think, that it is real mess out there, billions of websites, who would keep track of it? So my opinion is, no money coming to US, you are just a fine.

Rugles




msg:646799
 4:08 pm on Jul 19, 2004 (gmt 0)

>>>>>I will be living in Canada.

Live in Canada pay Canadian taxes, simple. If it bothers you, hand in your passport and move. Ohh, I forgot, that passport is very convenient and useful.

>>>>I have no intention of working so hard for the benefit of lazy workers.

Who are you calling lazy? Canadian workers?

Why the mods did not delete this discussion I don't know. Enough of the Canuck bashing please before i find a place to put this hockey stick.

topr8




msg:646800
 4:32 pm on Jul 19, 2004 (gmt 0)

you need to talk to both a lawyer and an accountant regarding these issues.

bear in mind that professionals who are skilled in these things and are able to set up legal schemes to greatly lessen the tax payable are very expensive.

however as has been noted in threads above, i believe there is a moral issue here as well, if you want the benefits of society wherever it is you live then be prepared to pay the price too.

vanion




msg:646801
 4:34 pm on Jul 19, 2004 (gmt 0)

Thanks alot.

I just went for this free internet business seminar and it was actually full of crap. The guy ended up trying to sell me into this program where you become a business partner ,trying to get 1000 customers (so-called opt in) as your base. Then the business partners sell products through emails to the 1000 000 customers . My brother and I were joking about it on the way home. I am so thankful for you guys for making the forum real useful. Even the guy who thinks im bashing canadians..which im not.

David

Rugles




msg:646802
 5:02 pm on Jul 19, 2004 (gmt 0)

I will accept that, but it sounded like you did.

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