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US LLC + Living in the Philippines

frankx1

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Jan 16, 2023
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Hi guys,
Since Thailand made some of their tax laws stricter I think about this setup:

1. US LLC as operative business entity, could hire separate manager if needed.
2. Living in Philippines, pay no taxes because of forgein sourced income. Keep all the money in US and remit only what’s needed for living to personal bank account (which is also not in PH).

How likely is it that PH tax authorities crack down on such a structure because of a potential PE? Especially if it’s something like WY LLC without public record and separate manager?

Working from rented apartment, maybe hiring locals for housekeeping etc (would this be a red flag to them?)
 
Hi guys,
Since Thailand made some of their tax laws stricter I think about this setup:

1. US LLC as operative business entity, could hire separate manager if needed.
2. Living in Philippines, pay no taxes because of forgein sourced income. Keep all the money in US and remit only what’s needed for living to personal bank account (which is also not in PH).

How likely is it that PH tax authorities crack down on such a structure because of a potential PE? Especially if it’s something like WY LLC without public record and separate manager?

Working from rented apartment, maybe hiring locals for housekeeping etc (would this be a red flag to them?)
as likely as everywhere in SEA.
 
Hm, got it thanks. I’m wondering how they should even be able to see which companies are really operating and making money.
If you just send LLC earnings to some holding company and distribute dividends..

Did anyone ever got into problems with such a setup there?
Not that I'm aware of. In this part of the world, as long as you keep a low profile and don't piss off the wrong person, you should be fine.
 
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How likely is that? Sorry, I have no practical experience with that countries (tax wise) so far.
unlikely. Unless you royally piss someone connected off. But then any thing can trigger your downfall.
Also the weirdest thing can piss someone connected off, but once you get the hang out of the places, Id say the field is relatively easy to navigate.
 
unlikely. Unless you royally piss someone connected off. But then any thing can trigger your downfall.
Also the weirdest thing can piss someone connected off, but once you get the hang out of the places, Id say the field is relatively easy to navigate.
But even if you piss someone connected off, would they know you even have a US LLC? Sure, in form 5472 to the IRS you have to say where you live, but the US typically doesnt share this information - especially not with third world countries, not sure about Philippines though considering close ties between US and Philippines.

Do you have to tell the Philippines that you have a US LLC when you get residency?
 
But even if you piss someone connected off, would they know you even have a US LLC? Sure, in form 5472 to the IRS you have to say where you live, but the US typically doesnt share this information - especially not with third world countries, not sure about Philippines though considering close ties between US and Philippines.

Do you have to tell the Philippines that you have a US LLC when you get residency?
nah, but you will have other problems then and some admin stuff is the least ;)
 
Hi guys,
Since Thailand made some of their tax laws stricter I think about this setup:

1. US LLC as operative business entity, could hire separate manager if needed.
2. Living in Philippines, pay no taxes because of forgein sourced income. Keep all the money in US and remit only what’s needed for living to personal bank account (which is also not in PH).

How likely is it that PH tax authorities crack down on such a structure because of a potential PE? Especially if it’s something like WY LLC without public record and separate manager?

Working from rented apartment, maybe hiring locals for housekeeping etc (would this be a red flag to them?)
You cannot "Keep" the money in the US with an LLC. The LLC is a transparent entity and "profits" must be totally distributed and taxed in your country of residence.

Btw PH don't tax foreign income so it will be probably 0%. And they don't have any CFC rules.
 
as likely as everywhere in SEA.
I think the Philippines really stands out.
First PH is not really known to tax foreign corporations. They don't really enforce PE or corporate residence if the clients are abroad.
PH does not have a territorial tax system, but it works out like this since most non-citizens are considered non-resident aliens, even when living there long term.
I know someone living in PH with zero tax for 30+ years.
PH is also not part of CRS.
 
It should be good. Don`t over think it too much. Filipinos don`t.
The important thing is PH is not a part of CRS so I don`t think they receive any info from overseas. Even if they do it is a highly inept country.
Just lie low and don`t say anything.
Territoral taxation for resident aliens but just stay clear of all that.
PE not applicable as the PH applies "the incorporation test" rather than any central management and control considerations. The law around this issue is open to interpretation in different ways and alot would depend on the person doing the interpreting. The core problem is that even if you did "have a PE" you are still unable to get a tax number due to the "incorporation test" legal setup. You will find this issue discussed previously on this forum. Opinions differ.
One risk is payment methods like PayPal and Wise are now run locally from the PH and this introduces a vulnerability if using them.
 
What's the easiest way to get a long-term visa in the Philippines? I'm not talking about constant renewal of tourist visas, I mean real long-term visa.

I read conflicting info about SRRV, it says (on some sources) that the minimum age has been set to 50. Is that true? So what's the solution for unter 50?
 
How likely is it that PH tax authorities crack down on such a structure because of a potential PE? Especially if it’s something like WY LLC without public record and separate manager?

Working from rented apartment, maybe hiring locals for housekeeping etc (would this be a red flag to them?)
It's impossible for them to find out.

Also, No need to hire people and waste money.

You already have the best setup in place.

What's the solution for unter 50?
Get married
 
It's impossible for them to find out.

Also, No need to hire people and waste money.

You already have the best setup in place.


Get married
Dont forget proper marriage structuring :)
 

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It should be good. Don`t over think it too much. Filipinos don`t.
The important thing is PH is not a part of CRS so I don`t think they receive any info from overseas. Even if they do it is a highly inept country.
Just lie low and don`t say anything.
Territoral taxation for resident aliens but just stay clear of all that.
PE not applicable as the PH applies "the incorporation test" rather than any central management and control considerations. The law around this issue is open to interpretation in different ways and alot would depend on the person doing the interpreting. The core problem is that even if you did "have a PE" you are still unable to get a tax number due to the "incorporation test" legal setup. You will find this issue discussed previously on this forum. Opinions differ.
One risk is payment methods like PayPal and Wise are now run locally from the PH and this introduces a vulnerability if using them.
Thanks for the info!

One risk is payment methods like PayPal and Wise are now run locally from the PH and this introduces a vulnerability if using them.
What exactly do you mean with this? That Paypal and wise may report anything to PH? If so, what about hiring nominees and register payments under their names? Maybe a US LLC wont be the best option then but I guess its easier possible with Gibraltar, BVI etc

PH is also not part of CRS.
Would the US normally share data with countries that report under FATCA? Or do they only receive data but never share data themselves because they're the superpower?
 

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