Forum Moderators: LifeinAsia
If you are operating as a small business incorporation in US doing this, you are subjected to all the state, fed, unemployment, 940, 941, quarterly and annual taxes, payroll etc... Seems like a lot of paperwork .. And don't forget the high cost of living here (relative to other countries) .. and the high cost of hiring any talent!
Being in affiliate marketing, I am assuming one is not constrained by boundaries ... And I was told some countries like India offers cheap labor and relaxed taxation and other benefits!.
I appreciate any comments from businesses doing online, affiliate, seo, professional web design, web hosting etc.. (which all could be done without much limits on boundaries!) from other countries especially India ... and how they would see this!
And I was told some countries like India offers cheap labor and relaxed taxation and other benefits!.
Cheap labor, yes. I can almost certainly get done most of the jobs (which are labor intensive jobs) here in India at half the rates at what it would cost someone in the US or UK. Well, almost :)
I am not sure about the taxation since I don't have much understanding of US taxation so I'm not in a position to compare this.
Benefits : Lately, Indian Government is trying to provide huge benefits to overseas companies setting up shops here in India and employing local labor. Several laws have been relaxed and incentives are being provided to foreigners setting offices here in India. I think incorporating a company here in India doesn't cost much as compared to an incorporation in US.
Unless you plan to setup a 100 people & above center, it is advisable to look for a joint venture with an already established Indian company and negotiate a revenue sharing agreement (You will get good deals, trust me).
If you plan to start off on your own, you should setup your center at "Software Technology Parks of India" - [soft.net...]
They come with ready made infrastructure and the officials help you setup your business.
Some of the southern states in India waive off taxes for 2 to 5 years.
I suggest you take a look at [nasscom.org...] to look for partners.
Also, take a look at [nasscom.org...] to check out India's rules and regulations, IT policies and so on.
Assuming the unit is set up in STP, it is 100% EOU - is it true all the income earned outside India is tax free .. meaning you get to keep it all rather than nearly half way splitting with state & fed here in the US!.
You can read the complete policy at
[tidco.com...]
[tidco.com...]
Some changes in the 2002 annual budget that should interest you -
Tax rate reduced from 48% to 40% (incase you are not eligible for a tax holiday)
and
With effect from April 1, 2003, i.e., for the financial year 2002-2003, only 90% of the profits and gains derived by STPI units, EOU units, and units located in Export Processing Zones and Free Trade Zones from exports will be deductible from their total income as opposed to the 100% deduction which was previously permitted.
Did you get that? I'm not very good at deciphering this jargon. Read the full taxation story at
[majmudarindia.com...]
Can you let me know what exactly you are planning? I didn't understand the "100% affiliate marketing" part. Anyway, if it is labor intensive, you should find India attractive because entry level employee (a college graduate who is knowledgeable about computers and internet) is quite happy to take home $200 per month. You can get hold of a biz Dev executive for $500 per month and a CEO for $1500 per month!
I have found this resource which could be of some more help [stph.net...]
It explains how stp scheme works in one particular state ..(Andhra Pradesh), but it should be exactly or almost exactly same elsewhere in the country because STP is a Central Govt. Scheme.
From what I have understood so far, its correct that till 2010 corporate tax is waived. And a foriegn company can indeed setup an independent or a joint venture under this particular scheme.
This is of great interest to me as well so I will try to find out more on this very soon and post it here.
.. only 90% of the profits and gains derived by STPI units, EOU units, and units located in Export Processing Zones and Free Trade Zones from exports will be deductible from their total income as opposed to the 100% deduction which was previously permitted.
If your profit for a financial year is Rs 10 million.
Your taxable income is 1 million.
So @ 40% corporate tax. Total tax is Rs 0.4 million.
So its no longer a complete tax holiday...but still a big portion of your income (90%) is tax free income.
That's what I understand from that.
To me, working hard off and making any money in this economy and having roughly half of it go away to states/feds in the US seems to be a bit too much ... And again don't forget the high cost of talent and high cost of living here in the US ...
Here is the icing on the cake.. What I am doing, for the most part, does not have to be operated from the US ... May be a little travel once a quarter here to meet with the clients should suffice!.
The more I research this topic, the more it makes sense to me ... however I still will be doing more study on this topic and report back here any information that I find
meaning you get to keep it all
Some of the south east asian countries like Malaysia, Thailand and Indonesia have great infrastructure but they lose out on the cost factor. I hear Mexico is good for outsourcing too - but you should be able to tell us more about it since you are closer to Mexico than us.
So @ 40% corporate tax. Total tax is Rs 0.4 million.
Thanks Jaski. Now it makes sense!
But you can save money in your personal/living expenses by moving out of US...if thats the case Mexico is the best bet...near to home and you will not feel like a foreigner...
