My question to offshore my Australian business

[OffShorian]

Hi everyone, first post!

I have a well established business in Australia and since I do not live there I thought it would be great not to have it paying income tax. So I have incorporated a new company in Hong Kong and opened a new account at a swiss bank.

The Australian business will "rent" the domain name to my Hong Kong company. Customers will place orders as normal but money will be deposited into the swiss bank account of this new HK company. There will be no income tax in HK, no income tax for me in Australia since I am no longer a resident for tax purposes, the only issue that I can't get past is having the company paying GST (10%).

I just wanted to share the plan and see if any of you guys with more experience see any flaws in this process. I am the only director of both the AU and HK company. I thought it would be best to have it setup this way as I will need some "proof of income" if I ever decide to buy a house and get a mortgage.

Today:
Customers pay at site.com.au > site is owned by AU company > money gets deposited via merchant account into AU account (30% tax on income).

Future:
Customers pay at site.com.au > site is owned by HK company > money gets deposited via merchant account into SWIS account (no income tax in HK or Swiss).

Thanks for any comments!

MDS

 

[zohoman]

The Australian business will "rent" the domain name to my Hong Kong company. Customers will place orders as normal but money will be deposited into the swiss bank account of this new HK company.

What is the process of this? I mean how is the money going into the Swiss account?

 

[OffShorian]

What is the process of this? I mean how is the money going into the Swiss account?

I have updated the original post!

 

[zohoman]

Did the Swiss bank asked you to sign a document where you declare you are a Citizen of Australia and that they will pass on the information to your tax auth. ?

 

[OffShorian]

They haven't, but I have provided all documentation proving I am Australian. Since my company is in HK, it doesn't owe money to the Australian government. Not even to KH for that matter as all business is done outside HK. As an Australian, I am taxed on my global income as long as I am a *resident of australia for tax purposes* (which I am not, I don't live there anymore).

So no corporate income tax and no personal income tax too. How is my plan looking? I welcome any kind of criticism!

 

[OffShorian]

Also the merchant can settle funds into a Swiss account just as well as a Latvia account. Are there any advantages in using a swiss bank? I am not going to make millions and it seems an unnecessary complication, Latvia seems to be easier as banks are more flexible.

 

[JohnLocke]

They haven't, but I have provided all documentation proving I am Australian. Since my company is in HK, it doesn't owe money to the Australian government. Not even to KH for that matter as all business is done outside HK. As an Australian, I am taxed on my global income as long as I am a *resident of australia for tax purposes* (which I am not, I don't live there anymore).

So no corporate income tax and no personal income tax too. How is my plan looking? I welcome any kind of criticism!

This is actually a great setup but unfortunately reserved for only a few that actually live as an expat and never live anywhere more than 6 months at a time.

Did you went to Switzerland to get the account opened actually?

 

[JohnLocke]

Also the merchant can settle funds into a Swiss account just as well as a Latvia account. Are there any advantages in using a swiss bank? I am not going to make millions and it seems an unnecessary complication, Latvia seems to be easier as banks are more flexible.

What bank have you opened the account with in Switzerland. All the bansk I have seen there have similar Internet banking at least makes it pretty easy to transfer money worldwide!?

 

[Montecristo]

What bank have you opened the account with in Switzerland. All the bansk I have seen there have similar Internet banking at least makes it pretty easy to transfer money worldwide!?

Actually, Swiss banks are losing its shine. The next better place to me is going to be Panama. Why Panama? Only a few countries are in TIEA, except for that few. Fortunately, Panama is one of the very few. Imagine this, if a Cook Islands company has a Panama Bank account, very good for those who wants privacy. However, this does not mean total anonymous.

 

[negon]

Actually, Swiss banks are losing its shine. The next better place to me is going to be Panama. Why Panama? Only a few countries are in TIEA, except for that few. Fortunately, Panama is one of the very few. Imagine this, if a Cook Islands company has a Panama Bank account, very good for those who wants privacy. However, this does not mean total anonymous.

I agree half the way. Panama has signed several TIEA and also comply to FATCA and they have signed several agreements to exchange TAX information with some of the major European countries. If they are going to execute it I don't know and I believe they don't in fullest.

Like most other offshore jurisdiction they agree to do all this stuff but at the end of they day they don't or at least they forget to report a lot because of the huge administrative burden.

 

[Montecristo]

I agree half the way. Panama has signed several TIEA and also comply to FATCA and they have signed several agreements to exchange TAX information with some of the major European countries. If they are going to execute it I don't know and I believe they don't in fullest.

Like most other offshore jurisdiction they agree to do all this stuff but at the end of they day they don't or at least they forget to report a lot because of the huge administrative burden.

Panama only reveal accounts held by the Americans based on what I know.

Below is the list of countries that agreed on TIEA and I don't see Panama in there.

The following countries will start reporting in 2017: Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos Islands, United Kingdom


Starting to report in 2018: Albania, Andorra, Antigua and Barbuda, Aruba, Australia, Austria, The Bahamas, Belize, Brazil, Brunei Darussalam, Canada, Chile, China, Cook Islands, Costa Rica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Marshall Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, Sint Maarten, Switzerland, Turkey, United Arab Emirates, Uruguay, Vanuatu

 

[JohnLocke]

Where did you get the link from Montecristo, can you post a link please? I'm curious if this really is true

 

[OffShorian]

This is actually a great setup but unfortunately reserved for only a few that actually live as an expat and never live anywhere more than 6 months at a time.
Did you went to Switzerland to get the account opened actually?

Yes I had to, couldn't open remotely.

 

[OffShorian]

Actually, Swiss banks are losing its shine. The next better place to me is going to be Panama. Why Panama? Only a few countries are in TIEA, except for that few. Fortunately, Panama is one of the very few. Imagine this, if a Cook Islands company has a Panama Bank account, very good for those who wants privacy. However, this does not mean total anonymous.

You can't get a mortgage with a bank statement from Panama though, looks too dodgy!

 

[Montecristo]

Where did you get the link from Montecristo, can you post a link please? I'm curious if this really is true

Global Tax Transparency Developments:

 

[Montecristo]

Global Tax Transparency Developments:

Seriously, I am looking for a bank that has no TIEA. If not, I have to set up a foundation to hide.

 

[JohnLocke]

Global Tax Transparency Developments:

It's an old list of countries and information, there is new information available here Global tax policy outlook for 2016 still I can't find Panama on the list below in the small print so you may be right that it's one of the countries that try to keep out of all the changes going on as long as they can.

And then again, here is some new information from May 2016 Panama, Lebanon among recent joiners of global tax info sharing deal: OECD - so I believe they are doing progress.

 

[Montecristo]

It's an old list of countries and information, there is new information available here Global tax policy outlook for 2016 still I can't find Panama on the list below in the small print so you may be right that it's one of the countries that try to keep out of all the changes going on as long as they can.

And then again, here is some new information from May 2016 Panama, Lebanon among recent joiners of global tax info sharing deal: OECD - so I believe they are doing progress.

If going through the system horizontally and we encounter so many countries which signed TIEA. The next better option is beat the system vertically by setup Trust and Foundation to protect the identity.

 

[SirTycoon]

Can you shed some light to me how did you incorporate it to a Hong kong company since its from Australia and why hong kong and not other choices? I'm curious

 

[Montecristo]

Can you shed some light to me how did you incorporate it to a Hong kong company since its from Australia and why hong kong and not other choices? I'm curious

Nowadays incorporate offshore companies (including HK) does not require you to go HK. A lot of online service providers can do so. Why Hong Kong? Good question, did you noticed that so far the best jurisdictions to use as the "front company" are Singapore and HK? You pay some tax but not a lot. You don't need to pay tax if you are not staying in Singapore, your revenue not from Singapore and your money not remit into Singapore. Same thing apply to HK as well. A lot of banks do not treat Singapore and Hong Kong as "offshore company". The nicer words they use are foreign company.