Comments by "Jeremy Barlow" (@jeremybarlow2291) on "Are International Business Companies in Tax Havens Dead?" video.

You just explained why paying the high costs of starting a UAE free zone company are probably worthwhile. It will cost you 15x as much to obtain the residence permit needed to operate a company from the Bahamas and pass the new economic substance test rules as it will to set up business in Dubai and it is a lot easier to import the workers you need for any tech company in Dubai as a free zone company than it would be in the Caribbean. And the Bahamas won't give you the plethora of double tax treaty benefits that the UAE offers. The UAE's oil reserves make them important enough not to be blacklisted and they have enough useful double tax agreements to operate a Saas through independent cloud operators and subsidiaries in places like Canada, the UK, Ireland, Georgia, Armenia, and Singapore to give an app the ability to service markets all over the world without a permanent establishment or with benefits from transfer pricing studies and royalty regimes associated with those subsidiaries that will give them essentially zero tax treatment, or maybe 1 to 2% tax rates even when that service is being used by people in countries as vast and adverserial as the United States and Russia.
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Bank accounts are the tip of the iceberg. There are also permanent establishment issues, the new economic substance test regimes, the clout to avoid banking issues or not, and the ability to benefit from double tax treaties. Where are your personnel working from is a vital question thanks to the new economic substance tests. Where is the IBC registered to operate is another question. I mean yes you are BVI corporation, but are you only authorized to do business in the BVI, or have you registered as a foreign corporation elsewhere? You haven't? Where are your personnel in the BVI, how many of them are there? Where is your managing director located? Who is that person? What ownership stake do they hold in the company? Do they have checkbook authority or are they merely a nominee director ie are they a sham? Most of the jurisdictions which had IBCs excluding the truly territorial tax jurisdictions, ie Panama, Hong Kong and the like will tax the worldwide profits if the business is actually operating in their jurisdiction, and if you aren't, well where are you registered to do business otherwise? It takes a lot of planning of various parts to avoid taxes as a multinational corporation which is what you personally must become to avoid taxes. Find a video explaining the Double Irish with a Dutch Sandwich or the Double Irish with a Single Malt to begin understanding the kind of thinking that is actually involved. If you are an American add to that complexity GILTI and Subpart F, but also add to it foreign tax credits, FBAR, FATCA, and the foreign earned income exclusion. If you are in the EU -not the UK, Brexit was clearly about their overseas tax havens, but the rest of the EU, get ready for something like the US worldwide tax regime to take effect soon, and understand there are a lot of moving parts to consider. You have to think like a multinational corporation's tax attorneys and tax consulting accountants. You need to be reading KPMG, Deloitte, and PWC reports on various countries corporate and personal income tax regimes. You need to understand how to obtain residency in favorable tax jurisdictions. You need to figure out which countries have favorable double tax treaties with the country where you situate you primary business, and which countries have regimes that will allow you to have subsidiaries with favorable transfer pricing studies to hire employees at the lowest wages and get the best performance while paying the least tax on the profits those companies must show for the services they provide to the primary company. You must figure out which country has the economic might to avoid issues with the EU blacklist. You need to figure out how to get money out of major markets with withholding regimes like the 30% tax the USA imposes on most transfers of money out of the country, except to jurisdictions who benefit from favorable double tax treaties and you must probably find such countries which have favorable double tax treaties with your primary country for your business because they likely aren't the same country. You also need to figure out how to get proper transfer pricing studies done to make sure that the countries in question do not take issue with transfers out of their country of the profits those subsidiaries earned without taxes inside those nations being imposed. You are going to need to understand IP licensing, loans and interest payments for this, or you are going to need to find low tax jurisdictions for this to work. There are a million moving parts to international tax planning, and that is what Andrew is trying to say, without saying it. You can figure this all out on your own if you are a lawyer or an accountant working at an international tax planning consultancy. If you aren't and you have the 120 IQ needed by most to complete graduate school, you can probably figure it out too, but it will take a lot of reading and research. It will probably take hiring translations for various treaties and statutes as well because there will be a lot of languages that laws and treaties you need to worry about are written in that you probably won't be able to read. Hell there may even be treaties in effect as far as one country is concerned that another country disregards that would be a huge advantage to you which you will need to figure out how to use regardless.
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Have you examined withholding taxes and double tax treaties? Have you looked at new economic substance regulations?
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@dlukton GILTI makes it much harder, not impossible, but much harder to keep money offshore without it being taxed, so yes big multinationals with an army of attorneys and accountants will be able to take advantage of some savings, but loopholes are being closed all over the place. The biggest Irish loophole the Double Irish with the Dutch Sandwich and the Double Irish with the Single Malt was closed, and even if it weren't closed, the GILTI tax regime would bring any income taxes below 13.5% currently and 16.5% in a few years up to at least 21% for C Corps and as high as 37% for any individual owner who doesn't make a an IRC 962 election if they personally are considered a US shareholder of a controlled foreign corporation. It is making it much more complex for smaller firms, but it is making it a lot more complex for larger firms too. Between FATCA and CRS, along with the EU blacklist regime and the OECD's efforts to close loopholes and the new economic presence tests which have been adopted for sales tax and vat being pushed into the income tax realm as well, a lot of international tax planning will become increasingly complex, not just for those seeking to minimize their taxes, but also for those simply attempting to comply with increasingly complex laws when they are operating any business connected with the Internet for example. Basically the tax code is becoming an excellent way to stifle free speech.
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The foreign earned income exclusion & the Dubai digital nomad visa for less than $300 as long as you are earning more than $50k a year & can work from anywhere. Getting a corporation that can pay you without having to pay social security withholding taxes is a bit more tricky.
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This is the kind of thinking that has to be done in regards to any international tax strategy. You have to find the exceptions to the exceptions for your specific use case. I mean the EU blacklist is very short right now because most former IBC jurisdictions have adopted economic substance tests or similar criteria that keep them off the OECD radar, or the benefits accrue in countries with some kind of clout to avoid OECD's ire like the UAE, but if you aren't looking for the next Double Irish with a Dutch Sandwich for your specific need, you will not find it.
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GILTI made that far more difficult to achieve for most US multinationals.
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@utube7917 Google is your first friend. Start looking at PDF files that Deloitte publishes annually for most countries. They are called Deloitte Highlights. They will be labeled by year, 2019, 2020, etc. Start looking at the Price Waterhouse Cooper's website again Google is your friend. Look up a country and withholding tax. You will find standard withholding rates on the Deloitte Highlights, but PWC's site will usually tell you country specific withholding rates. This begins showing you which countries have tax treaties with other countries. Google the two countries' names and double tax treaty. In many instances you will be able to easily find the double tax treaties of the parties. Some times they are harder to find. The IRS has them for the US. Ireland has a good collection of theirs. The Republic of Georgia does well providing text of theirs, Singapore & Hong Kong both do a good job of providing their double tax treaties. Canada does a good job of providing theirs. Countries that are unexpected tax havens are places like Malta. You should read their tax treaties, and look into information on tax residency, tax domicile and articles or videos about how it is seperated. The usual suspects locations like the Caribbean have almost all been forced by the EU blacklist & restrictions on their banks to adopt economic substance rules that make things tough. You should read a few articles on how territorial tax works & you should review how it works specifically in Panama - pay attention to how Panama's management & Control Rules work in regards to taxation. You should read or watch a video about the Double Irish with a Dutch Sandwich. You should read up on the Single Malt & realize that the EU & Ireland & Malta have implemented some rules to shut those loopholes down & read how to get around the efforts to close the loop holes. I highly recommend close scrutiny of Malta's tax treaties en masse. Google and read a few articles more academic the better about "web servers as permanent establishments." Read the OECD postion on the webserver as permanent establishments. Carefully read the permanent establishments sections of double tax treaties. Look for subtle differences. Compare Barbados US tax treaty with the Barbados Canada one closely. Countries that could be big players in any strategy using some of the complicated structures that may need to be deployed are Singapore, Hong Kong, Malta, Ireland, Luxembourg, Barbados, Laubuan companies in Malaysia, read the Australia Malaysia treaty to see how troubling Laubuan can be to some of the Tier A countries. The UAE of course & their tax treaties. Google free zone companies & read various statutes on Georgia Free Zone & Virtual Zone companies. Google economic substance act or laws in Cayman Islands, BVI, Barbados, Anguilla, Turks & Caicos, Bahamas, Bermuda. Google how to get a bank account for an XYZ company for any country you are interested in deploying as part of a structure. Today this is often the hardest part. Getting a bank account for operations & payment. Next start thinking about work permits & residency in countries you would want to or need to operate from. I mean getting a work permit for your Thailand Representative Office of your Philippine subsidiary of your UAE holding company for your Singapore company that is managed & controlled from Malta not to mention work permits & residency visas for Malta, Thailand, & the Philippines while finding a resident director for that Singapore company who lives in Singapore could present some challenges, not to mention the costs of maintaining the UAE company. Work permits for the people you need to operate that Cayman Islands company you were thinking about may be tough after you read the economic substance laws. Do you have a university degree? That Saint Kitts citizenship may have some added benefits under the CARICOM Freedom of Movement & Establishment rules & laws. You may want to think about how big the CARICOM workforce is & the benefits of Barbados vs the Caymans if you really want that Caribbean lifestyle. You may also want to carefully read Barbados's tax residency rules for companies. Read a few of the Companies Acts in the various old school tax havens. I mean compare Bahamas & Cayman or BVI to Vanuatu. I mean what constitutes doing business where. Can you hold a board meeting their without having to register?
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@utube7917 For me figuring out which countries have treaties with countries with AWS regions that likely clarify using those services do not create a permanent establishment has been important. Reading the Singapore statute on Permanent Establishments was helpful too. I have been approaching the question of how to structure the business of a SAAS app that has to also provide royalty payments to it's users who sell digital products through the site in the most advantageous way. This means a lot of thought will be required for how to structure the business to maximize tax benefits for the owners, but also the customers who will sell through the service. It adds to the complexity of everything. It also means Transfer Pricing Studies will likely be an inevitability. So yeah read up on Transfer Pricing Studies. If you want to operate a simpler service business then other issues pop up. I mean a consulting company is not the same so you may need to operate in a low tax jurisdiction like Hungary or Barbados rather than trying to structure around a territorial tax regime or permanent establishment issues. I mean is the added cost of an employee in the BVI, Caymans, or UAE more valuable than the 1 to 5% tax rate in Barbados? Is it worth more than the low costs of employees in Hungary & the 9% tax rate? Is it worth more than the low cost of employees in Laubuan in Malaysia & the 3% tax rate? All of these questions are dependent on where you are operating & how.
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