Mr. May mentioned corporations; I'd like to hear comments on a concept.... Let's suppose an offshore corp. is established somewhere; perhaps Grenada, perhaps Belize, or where ever. You work for this corporation; the corporation produces a product or service. Now, here is where the potential seems to be: the corporation generates bills from the offshore location. Customers pay to the corp., mailing to the offshore location. Constructive receipt, then, is offshore. My understanding is that corporate earnings are subject to the host country's tax, NOT U.S. tax. And, tax waivers are not difficult to get from these other countries. If one wishes to take some risks, the corp. then makes a loan to the individual, at a fair market rate of interest. This would be in addition to whatever miserly wage the corp. paid to it's employees. Of course, the person would be obligated to declare a forgiven loan as income; they would be on their honor to do so, since there would be no paperwork.... Any thoughts? Or is there a gigantic hole in my thinking? Regards....
C'punks, On Tue, 1 Mar 1994, David L Womack wrote:
. . . Let's suppose an offshore corp. is established somewhere; perhaps Grenada, perhaps Belize, or where ever. You work for this corporation; the corporation produces a product or service.
Now, here is where the potential seems to be: the corporation generates bills from the offshore location. Customers pay to the corp., mailing to the offshore location. Constructive receipt, then, is offshore. My understanding is that corporate earnings are subject to the host country's tax, NOT U.S. tax. And, tax waivers are not difficult to get from these other countries.
Yup. And a variation of this is what's called double invoicing. It's one of the things that made Hongkong great.
If one wishes to take some risks, the corp. then makes a loan to the individual, at a fair market rate of interest. This would be in addition to whatever miserly wage the corp. paid to it's employees. Of course, the person would be obligated to declare a forgiven loan as income; they would be on their honor to do so, since there would be no paperwork....
Congratulations, you have re-invented a time-honored service of offshore banks and incorporation services. Of course, there never has to be a forgiveness of the loan. It can just be rolled over forever. Or, the recipient can use his "loan payments" as a means of ex-patriating more money. I'm really quite impressed with your thinking on this. Though many sophisticated varients of these techniques have existed for years, it is quite an accomplishment to invent them independently. Unlike some knee-jerk hand wringing (mixed metaphor?) I have seen on this list, you have identified the transactional essence present in successful transnational thinking. Again, congratulations. S a n d y
Sandy Sandfort <sandfort@crl.com> writes:
On Tue, 1 Mar 1994, David L Womack wrote:
then, is offshore. My understanding is that corporate earnings are subject to the host country's tax, NOT U.S. tax. And, tax waivers are not difficult to get from these other countries.
Yup. And a variation of this is what's called double invoicing. It's one of the things that made Hongkong great.
Now, knowing all this, every reader of this list should be **deeply** suspicious of any official "trade deficit" figures. Lyle
participants (3)
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dwomack＠runner.utsa.edu -
Lyle_Seaman＠transarc.com -
Sandy Sandfort