Now, we are here to discuss how to structure your business and minimize your tax. Let me point out that I am not here to teach you techniques pertaining to tax evasion. We should pay our tax but we should pay the tax we deserve to pay, nothing more and nothing less.
So now, for those companies that have a lot of business dealing with import and export, this article should be a very interesting article for you.
Corporate tax, which one should I pay?
We agree that for income that you derive from onshore, your home country, you should pay tax. But if it is income derive from overseas, it becomes a choice and not a must to pay the tax onshore. If you sell something out of your country, you should pay your tax as well. No doubt about that as well. If you buy something from overseas and you sell it in the onshore market, you have to pay your tax as well. But now, if I am in Country A and I am buying something from Country B and sell it to Country C. Do I need to pay tax on this gain? Very likely, the answer is no. It is all depending on your home country. If your home country is in US or your country has the CFC rules, likely you have to. If your home country is not US and you are not subjected to CFC rules, then this article will work perfectly for you.
What are the basic ingredients?
In the above-mentioned illustration, we are assuming that Country B and Country C are not tax haven. You are located in Country A and the company that you are using is registered in Country A. If you do it incorrectly, you may be subjected to tax. Where should start? We should incorporate an offshore company, we have no doubt about that. Ideally, we should open a bank account in Country D. We should have nominee shareholder and nominee director as well. If you incorporate an offshore company with "nominee service" with us, you will be given a declaration of trust from the shareholder, an undated letter of resignation from the director and a power of attorney from the nominee director as well. We have all these things covered to protect your interest.
What should you do next?
If you are located in Country A, you buy goods from Country B and you sell it to Country C, you may initiate a purchase from Country B and invoice your buyers in Country C. The price difference will be your profit. You will pay out your purchases to your seller in Country B via your bank account in Country D and receive your sales proceed from Country C via your account in Country D. It is so easy and so simple. Keep the money offshore and you will not be subjected to tax. This offshore bank account will come in handy when you decide to expand your business.