Tax Optimization Help

[Jerry56]

Hi Everyone,

Details
- Want to keep my personal tax residency in Canada.
- Married with kids
- Income is based on consulting (online) services to Canadians

I am looking at moving offshore, possibly Panama, while keeping my personal tax residence in Canada. Then I would open a new corporation (I currently have a Canadian Corporation) to receive the income from the Canadian clients. I would probably use Wise for this, so they can deposit it with a Canadian bank number attached to the overseas corporation.

The desire is to basically pay almost zero taxes, keep my personal tax residence in Canada, with the understanding that I will have currency exchange fees for the corporate funds.

Questions
- Is this doable and is it the best way to go about it?
- Is there a better place to create the corporation (Belize?), even if I am in Panama?

I am unfamiliar with the overseas tax laws, however, if there is a country that lets me access the corporate finances without it being a taxable benefit--that would be magical.

Let me know your thoughts--I am all ears.

 

[NicolasMaduro]

Nowadays it would require you to actual rent an office in Panama, and to hire local staff. You would need to hire a local director who could run the company on a day to day basis.

So I cant really see how it would make sense for you.

 

[Jerry56]

Nowadays it would require you to actual rent an office in Panama, and to hire local staff. You would need to hire a local director who could run the company on a day to day basis.

So I cant really see how it would make sense for you.

Thanks for the response. I would be living in Panama and conducting my work from Panama. I would just continue to file personal taxes in Canada and corporate taxes wherever I incorporated. I would not pay myself from the Corporation.

 

[NicolasMaduro]

Thanks for the response. I would be living in Panama and conducting my work from Panama. I would just continue to file personal taxes in Canada and corporate taxes wherever I incorporated. I would not pay myself from the Corporation.

Well how are you gonna achieve 0% tax rate when you at the same time want to keep your tax residency in Canada?

 

[Jerry56]

Well how are you gonna achieve 0% tax rate when you at the same time want to keep your tax residency in Canada?

My personal tax rate would be at the Canadian rate, but my corporate would be at 0%. I keep my income low enough in Canada to not have to pay taxes within Canada.

What I am curious about is if it makes sense to put the corporation in Panama or somewhere else as I don't know the tax laws. Eventually, I will want to access the corporation's money, at that time, I will have to remove my Canadian Tax Residency.

1. Is there any way to access the corporate money without having to declare it as a taxable benefit? If not, then I would have to remove my Canadian tax residency--at some point in the future. I could let the funds build.
2. If the corp was in Panama and I paid myself from it, would that count as income made within Panama, causing me to pay tax personally?
3. If the corp is somewhere else, I likely can draw the money out of the corp tax-free--after my personal tax residency is Panamanian.

Questions
- Is this doable and is it the best way to go about it?
- Is there a better place to create the corporation (Belize?), even if I am in Panama?

 

[Golden Fleece]

I can contribute two points:

First, in 2016 Panama enacted accounting requirements for all Panamanian business entities, which makes Panama far less attractive than it previously was for low cost business entities.

New Panamanian accounting requirements for offshore companies | STEP

An expert explains that Law 52 of 2016, enacted on October 27, establishes the obligation to keep accounting records and underlying documentation for any corporation, limited liability company, private interest foundation constituted in Panama whose activities are conducted offshore. Failure to...

www.step.org

Second, there are one or two threads that posed the question as to whether Panama is a zero tax jurisdiction for someone who resides in Panama and only has clients located outside of Panama, meaning that you are actually performing all your work within Panama. This was a topic of lively debate, because there are different types of zero tax countries, and their laws can work differently.

In some countries, it only matters that you have no local customers. In other countries, it only matters where you actually perform your work (i.e., if you perform your work locally even though all your customers are non-local, then that work is taxable). I cannot remember whether this question was definitively answered, but you should be able to locate those threads for more information.

 

[Marzio]

Want to keep my personal tax residency in Canada.

I am looking at moving offshore, possibly Panama,

Which of those is true? Because you either want to keep your residency in Canada or move offshore.

Moving would be the easiest thing but you don't probably want to leave Canada, am i right?