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This idea is in my mind for several months or even years - why should I stay with my business in a jurisdiction that charges very high taxes?
My business is building websites and portals. I am not doing it as a service - I do build these sites by myself and for myself.
Each of the sites has a global audience and the earnings are coming from members around the world, Adsense and some affiliate programs. Truly global business one could say.
Why should I pay high taxes in my country for these earnings?
What in the world stops me from setting up a company in Panama, Channel Islands or the Bahamas?
One could say that this is an unpatriotic approach - but I don't care. Global corporations are already doing that extensively - check what companies have a branch in Guernsey.
Do you have kids that need to go to school, Drive on roads, state health care? I can list thousands of reasons to pay taxes and just as many why not to..
Also, depending on the country you live in, where the company is incorporated means nothing since you are still going to be taxed wherer you live when you get paid..
If this is really a concern, talk with a tax lawyer or a good accountant about your options..
But, without knowing what country you live in it's real hard to offer much more advice than that..
I too have grown tired of the rat race and high taxes in this country. I'm just starting out myself having spent years building and maintaining sites for others. I'm not quite standing on my own two feet yet but I intend to one day, and I'd rather not hand over such a huge slice of the pie as taxes. Can one be a global citizen? Three months here, a month there.. a suitcase and a backpack with a laptop. No hang on. A backpack isn't such a good idea these days :-)
Look forward to your response!
For instance, I would like more of my tax money to be spent on local school facilities and bringing the local public library up to the 21st century and less to be spent on blowing Iraqi children's limbs off.
Your country might require you by law to disclose all the details of your offshore business and if not complied with, you might be criminally liable.
Thus legal advice from the local attorney experienced in such issues should be done before incorporating offshore.
Plenty of people, and organizations, try to avoid paying taxes this way. In the end, they all seem to wind up paying financially and/or criminally.
The same goes for Americans living abroad. If you are an American citizen who lives and works in another country - you still must pay federal income taxes to the IRS (on the amount you personally earn) or risk consequences upon returning to the states. That tid bit came right from an IRS rep when inquiring about tax liability for a position in the land down under.
Please note: I am not an attorney and this is not legal advice. Please seek legal advice from a qualified attorney for your specific situation.
I don't buy the sick pay and minimum wage arguments. If I'm making enough money in my own business it's unlikely those issues concern me very much. If you don't have children... the quality of schooling doesn't concern you much. If like me you do have children and send them to private schools the quality of schooling at the govt schools still doesn't concern you much. There are some facilities that will concern you, of course, like emergency medical treatment, low crime rates, freedom of speech etc and for reasons like that people may choose to live in certain places.
However, it is possible to live in one country and not be subject to its taxes on all your earnings. There is a lot of FUD by the Inland Revenue on the issue of off-shore earnings. Consult a good accountant but here's my understanding.
1. Money you earn in an offshore LTD company name is completely tax free in the UK unless you bring that money into the country.
2. Money you pay yourself from the company's books is taxable in the UK even if you don't bring that money into the UK.
3. If you earn the money somewhere that doesn't have a double taxation agreement with the UK you'll pay tax there and when the money comes into the UK you'll pay UK tax to bring your total tax outgoings to what you would have had if the money was earned in the UK
4. If you earn the money somewhere that does have a double taxation agreement in the UK you'll pay tax there and no tax when you bring that money into the UK.
Your mission, should you choose to accept it, is to start an offshore company in a tax haven and bring that into the UK in such a way that it is neither illegal nor liable for UK taxes. There are several good ways you can do it:
1. Get diplomatic status (easier than you think)
2. Have the offshore company donate a sum of money to an organisation like National Heritage and get free palatial accomodation from NH.
3. Have the offshore company absorb profits from a related UK company (which UK company provides you with all the usual expenses, sops, maximum benefits that don't qualify for benefits in kind e.g. a loan of up to £5,000). Easily done: Your offshore company owns websites, your UK company buys advertising on those sites. Your UK company pay the offshore company as much as you want whenever you want up to the limit of profits you need to see "disappear".
Is that legal? Seems like that is money laundering? So you are paying your UK money merely what it is spending to break even right?
Everything is potential money laundering to the Inland Revenue, even the pocket money I give my kids. That's why you want a good accountant who can tell you how close to the line you can sail. If you have a written contract between the two companies dated prior to the period when the advertising charges were made it's normally considered pretty authentic. Falsifying documents (as in backdating them) is a crime but, hey, if the contract was oral it's perfectly legal to put it into writing at a later date. ;)
Caveat: A UK company that consistently just breaks even year after year (or continuously makes losses) will be considered suspect by the IR and the "black economy" team will want to have a closer look. So, it's best to make a little bit of profit now and again.