International Business€¦ · Introduction #2 •Intended Audience –U.S. citizens living and...
Transcript of International Business€¦ · Introduction #2 •Intended Audience –U.S. citizens living and...
International Business Chris Rusch, MBA, JD
Law Office of Chris Rusch, APC www.RuschLaw.com
Tax Introduction
Other Benefits of Relocating Offshore
How to Select Your Country of Operation
Country of Incorporation Guide
Banking Guide
Introduction #2
• Intended Audience
– U.S. citizens living and working abroad
– International business owned by U.S. citizen(s)
– Focused on foreign corporations for international
business and not asset protection
•It does not matter which country •Does not need to be the country in which you are working.
•Currently $91,500
•Take it out with the FEIE or use the corporation to defer tax
Business Structure
Tax
Basics
Retain
the rest of the
income in the
offshore
corporation.
Form a
Corporation in
any tax free
country
Draw a Salary
equal to the
foreign earned
income
exclusion
Foreign Earned
Income Exclusion
The most important
tool in the ExPat’s tax toolbox is
the Foreign Earned Income
Exclusion (FEIE).
For the 330 day
test, it does not
matter where you
are…just not in
the US. Also, you
may use any 12
month period.
If a husband and
wife are operating
a business, each
can draw a salary
of $91,500
A resident is
someone who
moves to another
country and
intends to make it
their home.
If you are a resident
of another country,
or you are out of the
U.S. for 330 of 365
days, you can earn
up to $91,500 in 2010
free of US Federal
income tax.
EXAMPLE
Form a Panama
corporation.
Operate a
business selling
to people
outside of
Panama.
•Therefore, it
should come
from an
offshore
corporation
other than in
your country
of residence
•Take a
salary, and
retain
earnings free
of U.S.
taxation.
Brings jobs,
payroll taxes,
sales tax,
etc. to
Panama.
Form a
corporation Why?
Most
countries will
try to tax your
salary.
Some
countries do
not tax “foreign
source”
profits
What does TAX FREE mean?
Country of Operation
• Country Check List (business)
– Tax Issues
– Time Zone
– Banking
– World Image
– Cost of Labor and Office Space
– Availability of Labor (Language)
– Availability of Professionals (CPAs & Lawyers)
– Quality of Telecom and internet…don’t sound like you
are in a banana republic!
– Availability of computer equipment
Country of Operation
• Country Check List (personal)
– Can you learn the language?
– Is there a community you will fit in to?
– Can you adapt to the culture / speed of life?
– Can you adapt to the weather?
– Is the country accessible by air in 1 day?
– Can you live with the security concerns?
Your Text
Your Text
Your Text
For and Against Panama
Panama
City
Expensive office
and apartment rent
Humid, Humid,
Humid!
Typical “big city”
traffic and pressure
Your Text
Your Text
Your Text
Your Text Cost effective and
educated labor pool
Does not tax foreign
source income
Strong world image
Accepting of
international people
For
Your Text Excellent Internet and
Computer Systems
Against
Your Text Same Time Zone
as the US
Labor Pool
Most businesses moving abroad, including
programming, internet, and call centers want tech
experience.
• Even my business here is looking for tech people
– India has produced over 75,000 IT graduates and
20,000 are English-speaking.
– The Philippines turns out 380,000 graduates
annually, but only 15,000 IT
– China's tech schools turn out 50,000 annually with
English gaining in importance.
Employee Costs
• India costs have increased from $5k to $12k P/A for
technical staff, while back-office salaries range from
$3,500 to $7,500.
• Philippines tech salaries range from $5k to $10k P/A and
back office from $3k to $8k.
• Russia IT salaries range from $6k to $10k.
• China IT salaries range from $3k to $8k P/A.
• Ireland Tech salaries range from $25k to $35k, making
Ireland unattractive if primary objective is cost savings.
Higher costs
vs. Better
Quality
Americans
deal with
Latin accent
much better
•Office rents in the
city about the same
as the US. Will come
down.
•Recent graduates
are making $900 to
$1,600 per month, vs.
$5k to $6k in Los
Angeles
•Top people make
$2,300, which
compares to
$120,000 in Los
Angeles, with 5-7 yrs.
Cayman vs.
Panama
Costs in
Panama
Dell and Citi
moving to
Panama from
India.
HUD / Freddie
and Fannie
returning to the
US
Client Examples
Three
Options
Privacy World
Image
Transparency
Where to Incorporate
It Does Not Matter Where You Incorporate
As Long As There Is No Corporate Tax.
•95% transparent with
the IRS and US Govt.
•Largest offshore banking
center with 350 banks and
deposits worth more than
US$1 trillion.
•Second largest captive
insurance base after Bermuda
with assets worth $20 bn.
•The Cayman Islands trust
sector is thought to manage
more than $500 bn.
•95% privacy from US Govt.
•Only exception is major
crime
•Has recently stood up to
US SEC and IRS
•Most cost effective
•Least reporting / maint.
•Nevis will not be the weak
link in your structure
•No local banking available
Cayman
Islands Nevis
Country Incorporation Guide
•Best financial services in the world
•One-third of all internationally
invested private wealth is (was) in
Switzerland.
•Best combination banking, audit
and related services.
•Private banking plentiful
•Business banking hard to get
•Focus is investment not operating
accounts.
•Best choice where cost is no issue.
•Min account size $500k to $1m.
Switzerland
Country Incorporation Guide
•Experienced offshore
trust administrators
•Leaders in personal
asset protection
•New corporate laws to
compete with Nevis
•Diversify personal $
and business in to
different jurisdictions.
•Privacy to match Nevis
but less tested.
•Small banking sector.
•Belize banks do more
due diligence to keep
correspondent accts.
•Recommend if
operating in Mexico or
Latin America
Cook
Islands Belize
Country Incorporation Guide
•Door to China
•One of the most developed
securities markets
•Hong Kong imposes no
withholding tax, sales, tax,
capitals gains tax, net worth tax,
or VAT
•Individual employment tax is 16%
but there is no tax on investment
income or capital gains
•Strong financial sector
•Current corporate rate is 26%
•Resident companies are only
taxed on income earned within
Singapore or remitted to
Singapore.
•Non-resident companies are only
taxed on Singapore source income.
•Corp requires 2 resident directors,
no bearer shares & audited
financials.
Honk
Kong Singapore
Country Incorporation Guide
Protecting Against Banking Stupidity
• Example: Multibank Account Closing
• Example: MultiSecurities Account Closing
• Guard against changes in bank policy or lapses
in judgment. When a bank closes an account,
they usually issue a local check in the name of
the account holder.
Labor Pool
Protecting Against Banking Stupidity
• Two accounts at different banks in each country
where you do business.
• Develop a good relationship with your primary
bank!
• I recommend only Uni Bank in Panama and
Caye Bank in Belize.
www.RuschLaw.com
Appointments are available to discuss your
international business options