Australian E-commerce

[Arrow12]

Hi I'm located in Australia.

I currently run online ecommerce store selling worldwide with fulfillment from China (dropshipping)
I need to be able to recieve payments via stripe and PayPal.

Is there a way I can incorporate offshore to save in taxes.

Ive been looking at Hong Kong (8. 25% tax) and Singapore (tax free first $100,000 for start ups)

Hope you can help point me in right direction. Thank you!

 

[Arrow12]

Anyone help to help point me in the right direction

 

[Jezzawalt]

Not as easy as you'd think.

Regardless of where your company is incorporated, you are an Australian resident for tax purposes and Australia tax you on your world wide income. You'll end up paying the difference. By the way its 8.25% in Hong Kong on the first 2 million hkd. And regardless of all this, your company is an Australian tax resident.

I'm in a similar situation and am incorporated in Hong Kong since a few years ago. As of 2019 Hong Kong and Australia share this information.

From my understanding:

Option A: You need to incorporate in a country that doesn't share information with Australia. E.g Seychelles or Panama (tax free) and then invoice your offshore company from your ABN and then pay tax in Australia on all money that you bring into the country. Please note you'll need to pay tax on it all one day if you want to bring it in.

I've been told various different things but the truth is, these websites that do the incorporating and most people on this forum aren't familiar with Australia so I've received mix info until I've been able to figure it all out.

Option B: Form an offshore company in Seychelles, Panama etc and pay no tax and get residency in a country that doesn't tax you on overseas sourced income e.g Malaysia, Panama, Bahamas, Vanuatu.

Option C- pay a s**t load of tax in Australia.

Personally I'm considering option A for a while and then eventually option B further down the track by getting a passport in Vanuatu for 130k usd. Definitely not considering option C.

 

[VanguardFortuna]

For option B, you essentially need to move to Vanuatu/Panama (or even another territorial tax country which leaves your foreign income alone) and have an established domicile there, i.e. sell up and cut ties with Australia, and then live somewhere else. Option B is something I am setting up my current structure for. While I stay in Australia, I continue to pay lots of tax on worldwide income, but the setup is there to bail on Australia and our shitty ATO when it suits my lifestyle (i.e. kids out and working!!). Otherwise the ATO will consider you a resident here regardless of other residencies, if you are visiting too often or still have strong family or asset links.

 

[Sols]

As mentioned, you can only legally avoid Australian tax if you leave Australia or set up your company to be tax resident somewhere else (usually requiring full-time employees, office, warehouse). You can try the secrecy approach but I wouldn't recommend it. Secrecy is eroding, quickly, and Australia is effective at finding tax dodgers. You're looking at penalties far worse than tax if you're caught dodging taxes.

Focus on growing your business, not illegally avoiding taxes. There are probably deductions and incentives you can use to lower your effective tax burden. Speak with a good tax adviser.

 

[Jezzawalt]

Yeah I'm a perpetual traveller with an nz passport, however have spent most of my adult life in Australia but have no assets there etc.

I was thinking to get residency elsewhere, go to Australia for 6 months, nz for 6 months etc etc. Just can't really own any properties etc but well worth it for the savings. I don't have any kids or ties in any country so a bit easier for my situation.

Wouldn't you be better off using option A, bring in now what you need to live etc and then when you move, bring all the offshore money to your new location? I'm considering Seychelles for this.

 

[Jezzawalt]

As mentioned, you can only legally avoid Australian tax if you leave Australia or set up your company to be tax resident somewhere else (usually requiring full-time employees, office, warehouse). You can try the secrecy approach but I wouldn't recommend it. Secrecy is eroding, quickly, and Australia is effective at finding tax dodgers. You're looking at penalties far worse than tax if you're caught dodging taxes.

Focus on growing your business, not illegally avoiding taxes. There are probably deductions and incentives you can use to lower your effective tax burden. Speak with a good tax adviser.

I'm not even an Australian Citizen. Happy to contribute 20k a year or so in tax to live there but my whole global company's income being taxed by them and losing 500k + each year isn't even an option for me im afraid.

 

[VanguardFortuna]

I would think both NZ and Aus would want a piece of that tax if you spend 6 months in either. The 183 day rule is very flexible and if they think you’re here that much each year, you will have a hard time proving residency elsewhere (especially the tax haven you are claiming residency in). If you live in the haven properly, doing a few holidays back to Aus/NZ will be safe.

 

[Sols]

I'm not even an Australian Citizen. Happy to contribute 20k a year or so in tax to live there but my whole global company's income being taxed by them and losing 500k + each year isn't even an option for me im afraid.

If your tax bill is 500,000 AUD per year, we're talking about a multi-million dollar operation. So you should have the income to go speak with a top-tier consulting firm to establish a physical presence with an office and some staff in a tax haven (HK, Singapore, or some dodgy little island).

You would next need to figure out how to pay yourself an income (salary, dividends, loans) in an as tax efficient manner as possible.

 

[AMD]

You would next need to figure out how to pay yourself an income (salary, dividends, loans) in an as tax efficient manner as possible.

don't you think this expansive consultent can help with that too?

 

[Sols]

don't you think this expansive consultent can help with that too?

Yes, of course. It would make sense to use the same tax adviser for your company and yourself.