This is a post to try and get some of the people that are posting in the Going offshore to escape the CFTC about tax issues the advice they are looking for.
In most western countries tax laws are very similar, and as a result general guidelines will work.
NOTE: I am not giving personal advice, nor am I a registered tax advisor/accountant in your local jurisdiction.
To reduce your personal tax liability there are only 2 options:
Reduce your income
Move to where the tax rate is lower
There are several ways to do the former:
Make less money (if that is your goal why are you bothering to read this?)
Make ‘your’ income that of a business and only then pay yourself what you need out of that, preferably as fully franked dividends
Make other investments that offset your gains
As for the later there are many countries that are lower tax domiciles, and have various rules regarding residency and citizenship.
For example some members of the U.A.E. will grant residency with any land purchase, but a nation like Andorra will require proof of wealth and a ‘donation’ before even considering your application.
If you do become a resident for taxation purposes of a country other than that of your passport also note your time in the country of your nationality will be limited or your taxation body will adjudge you a local resident and ignore your ‘offshoring’ so keep this in mind.
There are a fair number of people in ‘tax exile’ in various countries around the world, and if your income is great enough then the cost of moving and gaining residency in a low tax domicile can be very good for your net income. To do this however you will tend to break bonds to family and friends so one needs a healthy emotional state to do this.
In summary; Do not evade tax, it is illegal and will be punished but to deliberately pay more tax than needed is foolish
I am also not a pro in this but I was looking for different advices.
I was lloking for opportunities: You can establish company in the following countries: Seychelles, Belise, British Virgin Island, Panama, etc. By this You can make 0 tax on the trade You made. You can get Your money to Your original country like anonym card, going there and have the money in cash etc.
You can also have Your money back by buying a property in Your country with the offshore company.
Also You can have residence in swiss, panama, or other countries and by this You can also reduce Your tax paying.
What you are advocating here is illegal in most countries and as a/the business owner your local tax law will regard you as liable for the tax in your domicile.
To have any chance of ‘avoiding’ prosecution for this you would need to set up a company without your name on the board, or as a shareholder and then trust others to run your company and your money without you having any legal recourse to it if they distribute it amongst themselves.
The property would then belong to the company and in many countries there are ‘benefit’ taxes where a gift from a company to an individual can be regarded as income and subject to tax.
In regards to Belize – It states that there are no capital gains taxes for residents OR non-residents in Belize. It seems like it’s a lot easier to go trade there, and avoid having to set up shell companies, buy real estate, etc. Is there any more light you can give this one, I haven’t found much else on it.
Sorry Vicious, most of my research has been done towards the Middle Eastern and European potential domiciles, not towards the American ones. I can see no issue with using an American country, but having lived in Australia, Asia and Europe that is where my research was centred and I have contacts and friends.
I started this research a few years ago, but with the company I owned trading in a physical location this restricted the potential gain. With the Forex market requiring nothing more than a computer and an internet connection I have started planning in this regard again.
Currently residing in Australia a trading account of over $1.2m with be the point that I would consider it to be a ‘worthwhile’ move as the annual taxation on a 5% monthly return could buy a residency in some places. This would then allow much faster compounding of gains if they are not being halved due to tax. Cost of living also has to be taken into account with this, but that is another issue that has to me made as part of the research before you more around the world.
No 1, Reducing your income is not as silly as it sounds.
This is not advice! But what would be the outcome if?
If your silent partner (mr taxman), wants say 50% of your profits, you have to make twice as much to make up for his share. That means you have to work twice as hard and take alot more risk to pay his share! Scarey stuff!
But you will have all sorts of deductions you can offset against your tax liability, including tax free threshold, super, depreciation, etc. This will vary between person to person.
So the less profit you make above your deductions, the less you pay your partner(mr taxman) The less tax you pay, the less risk you are taking, as you do not have to make the extra 50%.
Point being, if you make less, you do it with a much better risk reward ratio?
Also look at Self Managed Super?
Offset your income with buying properties? You only pay capital gains when (if)you sell?
You can even buy things with debt attached to them you could offset?
This is just general, but before you do anything, see a [U]smart[/U] accountant who can advise you.
etc.