Setting Up Offshore Company

[kudroz]

Correct. OECD.org is a good website to find information about Tax treaties, transfer pricing etc.

In our case it is the BVI that did the highest investments and development of products. The Thai part is just a reseller of those products and for good measures also does some renting out of real estate to have Thai customers. The advantage of the Thai company is that it provides a work permit and future possibilities to expand business in Thailand.

Sounds like a winner! It's refreshing to see someone who has put thought, effort into a legal way of structuring his affair to minimize taxation in Thailand. We should discuss these kind of scenarios and how to implement them legally. Congrats

[Naam]

"Generally speaking, a retiree living in Thailand receives pension income. This type of income is sourced in the country it arise and also taxed in that same country. The OECD tax treaty model is clear; pensions and social security payments or any remuneration for consideration of past employment should be taxed only in the country where it arises."

generally speaking... you are presenting irrelevant and generalising bla-bla. the retirees i know (including my not so humble self) do not receive any pensions or social security payments but are "gentlemen of own means". there is also no binding OECD tax treaty model but individual Double Tax Agreements between Thailand and other countries do apply.

"Foreign interest income, capital gains, dividend income and other type of foreign income that is not the "pension type" is taxed if remitted to Thailand in the same year it is earned."

repeating how things are presently handled does not mean they are legal.

"If you rely on the word of someone at the Revenue Department who may or may not be still working there today... and you haven't gotten anything in writing (advance ruling letter from the RD or an opinion letter from a reputable attorney or accountant) you have put yourself at risk again."

thanks for telling me that "two plus two equals four". but if you put on your reading glasses you might be able to read that i am NOT relying on the word of "someone" and neither will i rely on the opinion of a reputable attorney/accountant if this opinion is not backed by laws and regulations.

"One has to question your judgement here. One would think that after going through an ordeal like you have in the past - you would be more careful with your own affairs and advising others."

i don't give advice, i am stating facts. you are the one that repeats the wrong advice "not taxed if not remitted the same year as earned".

"Furthermore, not obtaining a proper advance ruling letter and counsel from professionals - with the amount you've mentioned - is careless at best."

i obtained counsel from two top professionals in BKK (for which i paid top dollars). both stated the same bla-bla "not taxed if..." but with the caveat "that's how it worked in the past and that's how it works presently" whilst admitting the tax laws do not provide any basis.

"You are betting on the odds that you will not be discovered and that the law will not be enforced on you."

why am i betting on the odds? what is there to be discovered? which law might be enforced on me? isn't the money that i bring into Thailand according to you and a bunch of esteemed professionals tax free because i only transfer money which was earned two years before i transfer it? do you think i am too stupid to instruct my banks in a specific way which might be needed as evidence at a later stage without putting the banks in the awkward position to lie on my behalf or forge documents? make up your mind and stop contradicting yourself!

[kudroz]

It's unfortunate that this discussion has turned into something that is totally irrelevant for the OP. I came here with the best intentions and gave respectable advice based on my own experience and dealings with the tax authorities and reputable professionals.

I have no idea how this got out of hand or why. I trust that the people who have read my posts and seen how meticulous I was will appreciate the effort I have put into this. It is really a bummer that it turned that way.

[Naam]

i never understood why most people can't admit that they are wrong if they are wrong. what's the big deal? haven't we all made our fair share of mistakes?

[kudroz]

i never understood why most people can't admit that they are wrong if they are wrong. what's the big deal? haven't we all made our fair share of mistakes?

I've been wondering the same myself. We are all blessed to have you here telling us that the Revenue Code, KPMG, myself, others and the tax courts who have upheld the "remitted in the same year it is earned" (thus creating a jurisprudence) are all wrong. I've cited Section of the Revenue Code and substantiated all of my points with verifiable facts and the law.

You haven't.

Edited May 31, 2010 by kudroz

[Naam]

i am wasting another 30 seconds with someone who is telling me that i am not liable to pay tax because some "professionals" say so and then warns me

quote: "You are betting on the odds that you will not be discovered and that the law will not be enforced on you."

[hansum]

Im after a good bit of amateur advice before paying a professional for a similar situation.

Im English and am starting a contract in Kahzakstan 28 days on 28 days off.

Ive got to work via a limited company to invoice my employer ... ive currently a UK ltd company.

Anyway i will be living in Thailand on my time off .... ive already filled out the P85 form for leaving the UK .... but as i'll be the only employee of my company i'll be paying company National Insurance for employing myself and also NI in the salary im paying myself .... also i believe that if i return to the UK within 5 years i maybe liable to pay all that tax i avoided whilst away backdated

So where would be my best bet to set up a company (ie offshore or in a tax haven) and what are the pitfalls i need to look out for ... advice by people in a similar situation would be more then welcome.

Do you really need to invoice through your UK ltd company? - ask the company you work for as I know from experience that this may not be necessary or there may be a way around it. Could you not just get your earnings paid straight into a Thai bank account? I appreciate that if you think you may return to the UK at some stage then you may want to keep up your NI payments etc. I don't intend to!!

Sorry, i can invoice from a ltd. company anywhere in the world so basically i need to know where i best to do this and how to go about it ... so that big brother UK govt dont know about it but what im doing is legal.

You can do it with a company in Seychelles or BVI. In your case you can do it legally because you will be performing your work, presumably, on an offshore oil rig which has special arrangements with the government or your employer is doing the tax withholding and what you're getting is not taxable. You setup your offshore company and invoice the company who hires your service monthly.

What you want to make sure is that you become a non-resident of the UK. If you will be keeping a house/car or have kids/spouse in the UK it can be tricky. You want to show that your natural abode and your residential ties are stronger in another country than the UK. A long term rent, a long-term visa and purchasing a car could go a long way to demonstrate your intent of living here and not going back to the UK. This is dealt on a case by case basis depending on the particulars of your circumstances.

Thanks for the advice .... is it easy to set up and run a company in the Seychelles or BVI on ones own, as ive seen lots of websites offering services for this but im not overly comfortable with trusting someone who's set up a website offering these services as pretty much any chancer can do as theyre doing.

[kudroz]

Thanks for all the PMs that I have received, it's sad that we have to continue the discussion in private - but keep them coming and I will do my best to answer some of your questions and help you out. I am obviously not in favor of shady stuff like like Naam's cronies who are, as he eloquently said in the context of tax enforcement, keeping no record in their homes and and sending instructions to their banks in an utmost secure way.

Cheers!

[kudroz]

Thanks for the advice .... is it easy to set up and run a company in the Seychelles or BVI on ones own, as ive seen lots of websites offering services for this but im not overly comfortable with trusting someone who's set up a website offering these services as pretty much any chancer can do as theyre doing.

It is relatively easy. They will ask for some documentation to confirm your identity. They will generally ask for a certified copy of your passport, utility bill and a bank statement. The best is to search for an attorney in those jurisdiction or a registered agent who are doing incorporations there. As a general rule I avoid the resellers and prefer to deal with the people over there. If you want some references I would be glad to provide some by PM (I am not affiliated or making any commissions from this).

[Naam]

I am obviously not in favor of shady stuff like like Naam's cronies who are, as he eloquently said in the context of tax enforcement, keeping no record in their homes and and sending instructions to their banks in an utmost secure way. Cheers!

you don't give up little poor boy? just adding some unwarranted smear instead of admitting you wrote some bull before? diversifying does not work! anybody can read and judge the kind of contradicting rubbish you posted. by the way, according to your former "advice" those "cronies" aren't doing any shady stuff. all what they are doing is protecting their assets in case there is a change in tax collecting procedures according to prevailing law which "professional advisors" cannot rule out. and i am sure that you would be very much in favour of similar "shady stuff" if you owned a tiny fraction of the value those "cronies" own.

[kudroz]

I am obviously not in favor of shady stuff like like Naam's cronies who are, as he eloquently said in the context of tax enforcement, keeping no record in their homes and and sending instructions to their banks in an utmost secure way. Cheers!

you don't give up little poor boy? just adding some unwarranted smear instead of admitting you wrote some bull before? diversifying does not work! anybody can read and judge the kind of contradicting rubbish you posted. by the way, according to your former "advice" those "cronies" aren't doing any shady stuff. all what they are doing is protecting their assets in case there is a change in tax collecting procedures according to prevailing law which "professional advisors" cannot rule out. and i am sure that you would be very much in favour of similar "shady stuff" if you owned a tiny fraction of the value those "cronies" own.

It's okay Naam

[kudroz]

I am obviously not in favor of shady stuff like like Naam's cronies who are, as he eloquently said in the context of tax enforcement, keeping no record in their homes and and sending instructions to their banks in an utmost secure way. Cheers!

you don't give up little poor boy?

Your very rich friends have it your way and can hide from the government. No need for personal attacks Naam, that's not very nice. For the record my advice to the OP is absolutely correct, fatual and based on legally accepted principles. You on the contrary have given some bad advice in your post here - I called you on it in my post here and you've been belligerent since. Heck, you even went as far as saying that the OP would be "brain amputated" careless to tell the authorities about his assessable income. It's like telling him not to follow the law (reporting requirements of the Thai Revenue Code) in order not to pay taxes. You have made quite the reputation for yourself in this thread!

Edited May 31, 2010 by kudroz

[AnnyLing]

Losers like kudroz are quite embarrassing !

[electau]

Currently you are an employee of an Australian company and receive a salary, which would have income tax deducted and complusory employer funded superannuation.

If you relocated to Thailand and you would become a self employed contractor you would invoice your employer for work carried out.

Your employer would then forward a cheque to your address, or credit your bank account in Australia.

It would be suggested that you contact the Australian Taxation Office and obtain clarification.

The ATO has a definition of an employee as far as income tax is concerned.

You may still be regarded as a permanent resident for taxation purposes.

And any income (as defined) you receive and deposited in a Thai bank would be taxable in Thailand.

[TravelerEastWest]

Naam,

As I said before I respect your interest in practical real life results.

So here is a practical suggestion:

Do not go to Thai lawyers instead take your pick of one of the international CPA firms. Talk to a tax partner before your meeting and request that they give you a copy of their research memo when you meet.

The memos go something like this:

Issue:

Law:

Review the law

Summary.

The key point is that the law will be there and if it is not then I will be the first to say that you are correct.

You will be billed for the partners time and a lesser amount for a staff person or manager to do the actual research if it is needed.

Interestingly finding the law is the easy part. Understanding the issue is what you are paying for.

[Naam]

"So here is a practical suggestion: Do not go to Thai lawyers instead take your pick of one of the international CPA firms. Talk to a tax partner before your meeting and request that they give you a copy of their research memo when you meet."

i'm not sure what you are trying to tell me Traveller. lawyers, international CPA firms, a high ranking official from the tax department and a "learned" Thaivisa member conveyed the same message, id est "standard practice is that no thai income tax is levied if money is not transferred into Thailand the same year it was earned."

i fully agree that the above mentioned is the standard practice because i have six years experience, don't pay any income tax, but claim that there is no such provision/exemption in thai income tax laws and regulations and everybody agrees with me but a "learned" Thaivisa member keeps on with his irrelevant bla-bla, insults my thai friends

quote: "I am obviously not in favor of shady stuff like like Naam's cronies "

who agree with me and try to be on the safe side with their offshore holdings, but the "learned Thaivisa member tells me in one sentence "you don't have to pay taxes"

and mentiosn in another sentence

quote: "You are betting on the odds that you will not be discovered and that the law will not be enforced on you."

conclusion? your guess is as good as mine!

[rewopnadia]

"Posted 2010-05-24 12:43 I am an IT consultant who works for an Australian company. I spend a lot of time in Thailand and work remotely from there.

I am looking at moving to Thailand more permanently. I want to set up my own company and subcontract back to my employer in Australia. I have been thinking about setting up the company in Thailand but someone advised me that it may be more tax efficient to set up company in Singapore?

My gross salary would initially stay the same if I set my own company. I would just invoice the company in Australia monthly (instead the way it's done now where I'm paid a salary from the company).

Any advice on this subject is greatly appreciated,

Regards,

Aidan"

________________________________________________________________________________________________________________________________________________________________________________________

This is the OP - thanks for all the advice which I've just read........I will review in more detail again when I have time. Here are my initial thoughts and also some clarification on my specific situation:

I will be considered a "non-resident" for tax purposes in Australia as I will be living in Thailand for the majority of time (currently with a non-immig O or B type visa).

As I will no longer be living in Oz, I want to avoid paying their high taxes particularly when I'm not even a resident or even hold a visa for there!(I'm an Irish citizen). The reason for the offshore company is so that my earnings from the work I will do for the australian company is not considered "Australian sourced income" and therefore subject to Oz taxes.

I know I should set up a thai company legitimately and get work permit etc, but for now I'm a one man operation who can sit at a pc in a room with an internet connection and that's all I need, so don't feel I have to worry about the authorities in Thailand for the moment.

My simple view of things (and I realise tax law is never simple), was to set up a company in a place where they have low taxes and invoice the company in Australia from that company a/c and have them pay it into a bank a/c where I'm not subject to tax on the money that goes into it.

This is what one of the posters (Naam)wrote:

"......use a Singapore domiciled fiduciary service (dozens to choose from) and negotiate the fees to set up and handle a real tax free offshore corporation registered e.g. in Brunei, BVI or dozen other locations. initial cost varies between USD 2,500 and 5,000; annual fees USD 2,000-3,500 (both depending on the services you require). your corporate account in Singapore -to which your remuneration is transferred to from Australia- will not be taxed as you are not conducting any business in Singapore but the headache of working in Thailand without a work permit is yours...."

This seems to me to be the way to go - again thanks for the advice.......

[TravelerEastWest]

"So here is a practical suggestion: Do not go to Thai lawyers instead take your pick of one of the international CPA firms. Talk to a tax partner before your meeting and request that they give you a copy of their research memo when you meet."

i'm not sure what you are trying to tell me Traveller. lawyers, international CPA firms, a high ranking official from the tax department and a "learned" Thaivisa member conveyed the same message, id est "standard practice is that no thai income tax is levied if money is not transferred into Thailand the same year it was earned."

i fully agree that the above mentioned is the standard practice because i have six years experience, don't pay any income tax, but claim that there is no such provision/exemption in thai income tax laws and regulations and everybody agrees with me but a "learned" Thaivisa member keeps on with his irrelevant bla-bla, insults my thai friends

quote: "I am obviously not in favor of shady stuff like like Naam's cronies "

who agree with me and try to be on the safe side with their offshore holdings, but the "learned Thaivisa member tells me in one sentence "you don't have to pay taxes"

and mentiosn in another sentence

quote: "You are betting on the odds that you will not be discovered and that the law will not be enforced on you."

conclusion? your guess is as good as mine!

I am saying that it appears that the practice is based on Thai law not just this is the way it is done. I cannot read or write Thai so I am not going to even begin to quote statutes. My suggestion on talking to a top tax accountant was because I thought that you wanted to finally get an accurate law based answer.

If you are relaxed with things as they are then you can forget my suggestion.

I can assure you that really good tax accountants do not advise based on thats how things currently work without reference to the law. Sometimes CPAs take a position on which they lose but they take a position based on law and good tax CPAs rarely lose. The reason is that the private sector gets the best and brightest who earn more than revenue officials that is why you can usually trust CPAs over revenue agents/officials.

[Naam]

I can assure you that really good tax accountants do not advise based on thats how things currently work without reference to the law.

please read again what i posted several times. the parties i contacted did refer to both, id est "currently income tax is not levied if... bla-bla not transferred in the year earned bla-bla... but the law has no provision to justify how things are currently handled."

"Talk to a tax partner before your meeting and request that they give you a copy of their research memo when you meet."

what location would the thai taxman suggest that i shove the "research memo" when he comes knocking at my door to claim back taxes?

[TravelerEastWest]

I can assure you that really good tax accountants do not advise based on thats how things currently work without reference to the law.

please read again what i posted several times. the parties i contacted did refer to both, id est "currently income tax is not levied if... bla-bla not transferred in the year earned bla-bla... but the law has no provision to justify how things are currently handled."

"Talk to a tax partner before your meeting and request that they give you a copy of their research memo when you meet."

what location would the thai taxman suggest that i shove the "research memo" when he comes knocking at my door to claim back taxes?

I carefully and with interest read your posts.

I am saying that if you meet with a tax partner at an international firm who does not produce Thai law and repeats the above statement then you are 100% correct.

I am also saying that the odds are very high that Thai law will be cited very clearly in the memo/meeting.

Further the CPA firm will represent you if you have a tax problem.

Good tax CPAs rarely lose against the governement - why? Because they know tax law better than government officials. This is a fact in almost if not all countries.