Rate/roast my consulting setup

[whatspat]

I'm a specialist business/technical consultant, living in Thailand for many years already, with a moderate personal income, seeking feedback on my current arrangement, and criticism/input on changes to the structure I'm considering.

Personal objectives/strategy:

• Keep a low profile
• Minimize tax payable
• Minimize assets/finances in citizenship/residence countries
• Minimize (automatic) information sharing with tax residence country
• Minimize operational costs
• Retire in ~10 years

Until this year, I used the "next calendar year" loophole to avoid tax on remittances. Now I file and pay tax on income I remit as well as take advantage of remittance of tax-free gifts to my wife. My declared assessable income also covers the small proportion of work that I perform from within Thailand. I'm relying on the lack of enforcement of labor law, as technically working here without a work permit is illegal; however, I'm prepared to accept what I believe to be the negligible risk.

Current setup:

1. Australian citizen, tax resident in Thailand, sole member of
2. US SMLLC (disregarded entity), provides consulting services (mostly short duration at client premises in APAC/EMEA, very rarely inside US, Thailand, or Singapore) and invoices
3. Singapore Pte Ltd (primary customer, unrelated entity).
4. Banking (personal and business) in US.

My understanding is that the reciprocal reporting provisions of the US/Thai IGA are not yet in effect. When they do eventually become effective, I think, but am not certain, that my LLC account(s) will not be automatically reported because they are not held by an "individual", however even if/when my US business or personal accounts are reported, the IGA only covers interest and US-sourced dividends.

While I'm reasonably happy/comfortable with this setup, given the flip-flopping that's going on with the TRD at the moment, and the constant uncertainty of the Thai political environment, I'm considering modifying my structure to try to make it more robust. After looking at several scenarios, my current thinking is:

1. Make the US SMLLC manager managed, and transfer the membership to
2. BVI business company (or similar 0% jurisdiction/entity), probably with nominee director, and myself (and possibly wife) as shareholders.
3. Continue to operate day-to-day through the SMLLC, with BVIBC acting as a holding company.

My understanding is that the BVIBC can fairly easily maintain tax residence in BVI, because it would be classified as a pure equity-holding entity, and therefore exempt from the economic substance rules (or at least can satisfy them simply by having a registered agent/office, which is already necessary). To my knowledge, Thailand currently has no CFC rules, so I don't think a PE would be formed there. I also think that if the BVIBC opens its own bank account(s) in the future, it would be exempt from CRS AEoI reporting due to being classified as an "active NFE".

I'm aware AEoI isn't the only channel for governments to share information, but I see no reason why I should make it easier for them to intrude on my affairs or make myself a target (not to mention that I don't trust any official here more than I can throw them). I'm also reasonably confident that continuing to keep a low profile (and paying a credible amount of tax) will keep the TRD away.

While this will slightly complicate my structure and increase my operational cost, I think it will also make the 0% tax position of the structure more legitimate/clear and eliminate the possibility that my SMLLC becomes taxable in Thailand. I think it will also help me demonstrate that income remitted to Thailand is foreign source, by documenting distributions from the BVIBC as dividends, rather than consulting services income.

Roast me!

 

[JackAlabama]

I'm a specialist business/technical consultant, living in Thailand for many years already, with a moderate personal income, seeking feedback on my current arrangement, and criticism/input on changes to the structure I'm considering.

Personal objectives/strategy:

• Keep a low profile
• Minimize tax payable
• Minimize assets/finances in citizenship/residence countries
• Minimize (automatic) information sharing with tax residence country
• Minimize operational costs
• Retire in ~10 years

Until this year, I used the "next calendar year" loophole to avoid tax on remittances. Now I file and pay tax on income I remit as well as take advantage of remittance of tax-free gifts to my wife. My declared assessable income also covers the small proportion of work that I perform from within Thailand. I'm relying on the lack of enforcement of labor law, as technically working here without a work permit is illegal; however, I'm prepared to accept what I believe to be the negligible risk.

Current setup:

1. Australian citizen, tax resident in Thailand, sole member of
2. US SMLLC (disregarded entity), provides consulting services (mostly short duration at client premises in APAC/EMEA, very rarely inside US, Thailand, or Singapore) and invoices
3. Singapore Pte Ltd (primary customer, unrelated entity).
4. Banking (personal and business) in US.

My understanding is that the reciprocal reporting provisions of the US/Thai IGA are not yet in effect. When they do eventually become effective, I think, but am not certain, that my LLC account(s) will not be automatically reported because they are not held by an "individual", however even if/when my US business or personal accounts are reported, the IGA only covers interest and US-sourced dividends.

While I'm reasonably happy/comfortable with this setup, given the flip-flopping that's going on with the TRD at the moment, and the constant uncertainty of the Thai political environment, I'm considering modifying my structure to try to make it more robust. After looking at several scenarios, my current thinking is:

1. Make the US SMLLC manager managed, and transfer the membership to
2. BVI business company (or similar 0% jurisdiction/entity), probably with nominee director, and myself (and possibly wife) as shareholders.
3. Continue to operate day-to-day through the SMLLC, with BVIBC acting as a holding company.

My understanding is that the BVIBC can fairly easily maintain tax residence in BVI, because it would be classified as a pure equity-holding entity, and therefore exempt from the economic substance rules (or at least can satisfy them simply by having a registered agent/office, which is already necessary). To my knowledge, Thailand currently has no CFC rules, so I don't think a PE would be formed there. I also think that if the BVIBC opens its own bank account(s) in the future, it would be exempt from CRS AEoI reporting due to being classified as an "active NFE".

I'm aware AEoI isn't the only channel for governments to share information, but I see no reason why I should make it easier for them to intrude on my affairs or make myself a target (not to mention that I don't trust any official here more than I can throw them). I'm also reasonably confident that continuing to keep a low profile (and paying a credible amount of tax) will keep the TRD away.

While this will slightly complicate my structure and increase my operational cost, I think it will also make the 0% tax position of the structure more legitimate/clear and eliminate the possibility that my SMLLC becomes taxable in Thailand. I think it will also help me demonstrate that income remitted to Thailand is foreign source, by documenting distributions from the BVIBC as dividends, rather than consulting services income.

Roast me!

So just a few simple things:
so since you cannot work, you should not have work income for that matter.
Only savings or capital income.

Otherwise you will invite the devil into your affairs since you're heavily working without any permit.
Gotta construct it that way I say and keep what you're doing already.

It also doesn't make sense to count on non-enforcement in one area but not in another one, since they take immigration and labor laws more seriously than others.

 

[whatspat]

So just a few simple things:
so since you cannot work, you should not have work income for that matter.
Only savings or capital income.

Otherwise you will invite the devil into your affairs since you're heavily working without any permit.
Gotta construct it that way I say and keep what you're doing already.

It also doesn't make sense to count on non-enforcement in one area but not in another one, since they take immigration and labor laws more seriously than others.

I can't work in Thailand, but I'm certainly not the only one who works outside Thailand and lives here when not working (e.g., many offshore oil & gas workers). Or do you mean from the point of view of the type of income I report on my local tax form should not be "from employment"? I'll check that out and consider for 2025.

Regarding the non-enforcement, I'm quite legal from an immigration point of view (non-O extensions by marriage), at least. From the labor point of view yes, I'm not legal. Options are to form my own company, or to ensure I never do any work from here. I'm close to the latter anyway, so this is probably the best option for me.

Appreciate the thoughts.

 

[JackAlabama]

I can't work in Thailand, but I'm certainly not the only one who works outside Thailand and lives here when not working (e.g., many offshore oil & gas workers). Or do you mean from the point of view of the type of income I report on my local tax form should not be "from employment"? I'll check that out and consider for 2025.

are you such an oil/gas worker and you only can work when physically outside Thailand? Then ok.
But if you work online, id avoid this minefield.