You're wading into deep water, here. Be very careful.
Originally Posted by TrevDawg
Here's a Forbes article that's well worth reading. It touches on several topics related to your question about setting up an offshore corporation.
This excerpt from page 3 of the article addresses your question directly (but too briefly to be of much help) ---
FBAR issues for forex traders
Over the past few years, many forex traders went offshore, not to cheat on income taxes, but to get higher leverage than in the U.S. and to avoid the NFA’s 2009 hedging rule requiring first-in/first-out trading (FIFO).
New CFTC regulations (effective October 2010) over the off-exchange retail forex marketplace reversed this trend. The CFTC blocks foreign banks and brokers from doing business with Americans unless they follow the U.S. regulations and register with the appropriate US regulator.
Some Americans insist on keeping a foreign broker to retain 200:1 leverage and spread betting, rather than succumb to CFTC rules capping leverage at 50:1 on majors and 20:1 on minors plus FIFO. Some are tempted to set up dummy corporations or hide the accounts — a big mistake!
The Forbes article was written by a CPA, with the assistance of a lawyer and another CPA, so it's probably accurate, as far as it goes. But, you really need to seek a professional opinion on your specific situation.
There are tax attorneys who specialize in tax issues for traders. And there are tax attorneys who specialize in tax issues for Americans who hold foreign assets, or who own or control foreign corporations or trusts, and for expatriate Americans. You really should invest in professional advice at this level, before embarking on a foreign business venture.
An American-born friend of mine moved to Canada years ago, married a Canadian, became a Canadian citizen, got a Canadian passport, let her American passport expire (although she retains dual citizenship), worked at several jobs, helped her husband start a business, bought some real estate (jointly with her husband), started a family, and basically forgot about the United States. She had (and has) no assets in the U.S. She has never had a problem entering or leaving the U.S. on her Canadian passport.
For almost 20 years, she has filed no U.S. tax returns and has paid no U.S. tax. It never occurred to her that she was, in any way, under the jurisdiction of the United States. She was stunned when she was told (by friends) that her obligation to pay U.S. tax on her "worldwide" income never went away.
At this point, she appears to have the following options: (1) turn herself in to the IRS, and pay a nightmarish amount of back taxes, interest and penalties, (2) stay out of the U.S. for the rest of her life, and continue to ignore the U.S. and their tax laws, (3) continue to travel to and from the U.S. on her Canadian passport, and hope that while inside the U.S. she is never identified as a deliquent taxpayer, by some cross-check of government data-bases, or (4) relinquish her U.S. citizenship (a step which the U.S. government makes exceedingly difficult, and can even prevent in cases where tax avoidance is the primary reason for the action).
That's not the sort of predicament you want to get yourself into.
The orgy of regulation in this country is not going to end --- at least, not while the present ruling class holds power.
As for Chris Dodd and Barney Frank, all we can hope for, in the short term, is that they both will follow in the footsteps of Edward Kennedy, who made the world a better place just by leaving it. That wouldn't repeal their infamous DODD-FRANK BILL, of course. But, it would prevent future legislative abominations from these two reprobates.