Comply with substance requirements by immigration

[mickey]

In order to comply with the latest substance requirements of almost all offshore jurisdictions, I asked myself how to comply with these requirements on my own.

So when I move to an offshore jurisdiction (Belize, Seychelles, BVI, Bahamas, Cayman Islands, ...) in person with a work permit, setup an IBC/LLC and live there for at least 183 days a year, I could easily setup an office, employ myself as director and majority shareholder.
Furthermore I would become personal taxable in this country and "loose" my status in my old high tax country.

As international income of an IBC/LLC entity is not taxable by the offshore jurisdiction (my new home). The company would run without paying any taxes. Only myself as a private person would pay income tax and value added taxes.

Is that a viable setup these days?

 

[CyprusLawyer101]

Yes, if you set up residency to the new jurisdiction where you will set up your company then the concept of economic substance becomes irrelevant.

 

[mickey]

This sounds good, thanks for your reply.

Unfortunately another tax related regulation came up in July 2021. I mean the global company minimum taxation of 15% signed by about 130 countries: 130 countries and jurisdictions join bold new framework for international tax reform - OECD

That's why I fear that these 15% also could affect the typical offshore entities like IBC/LLC. Or are these except due their revenues come from abroad?

The latest amendment of August 2021 (source) says:"The fulfilment of these conditions* directly affects the taxation of a company. Generally, International Business Companies do not pay tax in Seychelles on their income received from sources outside Seychelles."
*Substance requirements

How this goes along the the 15% global corporate minimum tax?

 

[CyprusLawyer101]

Eaxh jurisdiction will apply its own policy and incentives and it does not necessarily mean that 0% tax would be impossible.

 

[fshore]

Some countries will consider you tax resident for several years after you move to a low tax country/tax haven.

 

[mickey]

Many thanks, well that means that IBCs und LLCs are back in the game as long as the beneficial owner is able to move into these countries, right?
Well then Dubai with their IBCs and LLs is an option as well.

 

[EliasIT]

Eaxh jurisdiction will apply its own policy and incentives and it does not necessarily mean that 0% tax would be impossible.

how about to pay maybe 2 - 5% somewhere and be able to use this for documentation for your local tax auth. that this foreign company actually pay tax. Couldn't it help somehow to avoid local taxes?

 

[CyprusLawyer101]

how about to pay maybe 2 - 5% somewhere and be able to use this for documentation for your local tax auth. that this foreign company actually pay tax. Couldn't it help somehow to avoid local taxes?

With a few jurisdictions you could shift the managemrnt and control of the company abroad and pay some taxes abroad while eliminating taxes at your place of incorporation. Similar planning can be achieved with attributing profits to a branch of your company abroad, though this should be demonstrated through correct transfer pricing principles.

With a few jurisdictions you could shift the managemrnt and control of the company abroad and pay some taxes abroad while eliminating taxes at your place of incorporation. Similar planning can be achieved with attributing profits to a branch of your company abroad, though this should be demonstrated through correct transfer pricing principles.

Dors my reply cover you? As on a second look am not sure this was your question.