BVI vs UAE (Freezone)

[offshoreavatar]

Hi
I'm finding the BVI & UAE Freezone comanies to be both great solutions for an ecommerce business.
But the UAE is a lot more expensive when it comes to annual renewals.
Was just hoping for peoples opnions on this.
Is the UAE now seen as more respectable maybe?
Banking isn't an issue these days with Transferwise / Worldfirst etc. So I don't think it's that.
Thanks

 

[CaptK]

The UAE is not seen as a Tax haven in the same light as BVI.‌ You will find it easier sending and receiving money from the UAE then from BVI.‍

Bank account opening is easier plus access to PSP's and additional services.

 

[offshoreavatar]

Thank you CaptK.

That's helpful. If I was only concerned with government regulations (e.g. not‌ general public current opinion) what problems would that cause?

The thing is with Transferwise /‍ Worldfirst etc Business accounts banking isn't an issue.

For anyone ever reading this that might⁠ be thinking similarly. CFC tax issues become an issue if in certain countries not implementing⁤ flag theory type strategies etc. I wasn't aware of this until a bit more reading⁣ just now.

 

[JustAnotherNomad]

It’s usually not about CFC rules, but about‍ the company’s effective place of management as well as permanent establishment. Always talk to an⁠ accountant from your own country first.

 

[offshoreavatar]

Thank you JustAnotherNomad.

It's probably not going to be an issue for me as I'm‌ moving to Thailand. But I do find it interesting so..
It's interesting that you might‍ be able to structure things in a way to mitigate this but my reading leaves⁠ me to beleive for the current country I'm in it all leads back to the⁤ person.
Yes thanks, I have a few appointments lined up today & tomorrow.

 

[JustAnotherNomad]

Probably depends on what you do. I’ve heard that the‍ Thai authorities usually turn a blind eye, as long as you don’t compete with any⁠ locals. But it would be wise to talk to a Thai tax lawyer about the⁤ details, at least if you want to move there permanently.

 

[offshoreavatar]

Oh right I see. Yep, good point but that shouldn't be applicable here due to‌ selling in other countries. The products sold are only sold elsewhere in other countries. It's‍ all online also, drop shipping methods.

 

[JustAnotherNomad]

I would talk to a lawyer anyway just in case. But I think you’ll be‌ fine. If you do, please let us know what they told you, I’m sure it‍ will be relevant for others here.

 

[offshoreavatar]

Will do. Thank you.

 

[HKS]

Banking for UAE based companies, especially Free-zone locations is not easy. Even with Transferwise.
We operate a similar structure and I am aware that our nature of business and resident‌ location in Europe has been the asset to ensuring the account does not face blockages‍ or greater scrutiny. (fingers crossed ) So far it has been OK for a few⁠ years.

BVI has reputation issues and that itself may create banking issues for you wherever⁤ you go.
I would take advice from (NON UAE) based professionals about your nationality, residency⁣ in Thailand as you are planning, together with the UAE Freezone and Transferwise banking..
It may be OK at first but like most institutions they are reviewing rules frequently. Transferwise⁢ I expect have policies they implement.
I know when I ask then very specific questions︀ I get feedback very quick and detailed.. Better than other banks we have dealt with︁ in UAE and UK.
We also work in a drop ship way but larger items︂ to many countries. So we understand the outline structure your aiming for.

Your products which︃ you sell will also have an impact on the total mix, so this is where︄ real good advice tailored to your needs is important.
You have been given a lot︅ of information from others on the forum and my 2 cents worth.
You need an︆ expert and go into greater detail beforehand otherwise things could get delayed and become a︇ costly exercise.
UAE as a whole does have more compliance with global business and banking︈ as you will read in many places on the forum.. But things are not always︉ consistent..
They also make it harder and costly to close a business, in case you︊ face issues later on, You can read more about this on the forum pages ..︋ There are many options so take your choice according to the advice already shared.

Cheers

 

[offshoreavatar]

Thanks Hanif.

Ah I think I undertand why people think banking is an issue. They‌ think the income is going in and out of the UAE / BVI etc.
Banking isn't an issue because I don't need any money going in or out of the‍ UAE. It all goes into accounts in different currencies in the business name which several⁠ companies offer (there are many more than Transferwise now).

I will have to read up⁤ on account blockages as I'm not doing anything illegal. I'm just a drop shipper (in⁣ its most simple form) so at this point I have no idea why I would⁢ get my accounts blocked.

Why would companies stop banking with me if my company is︀ in the UAE?

Yes, definitely will be speaking with various professionals. If anyone has any︁ recommendations please let me know! 🙂

Appreciate the advice, thank you.

 

[crsp]

My guess is they'll tell you‌ that, due to domestic and DTT Permanent Establishment rules, you're due to pay corp' tax‍ in Thailand. Not saying you can't get away with dodging the issue but...

 

[HKS]

Hi,

The reply from 'crsp' underlines the many complexities which affect offshore structures and banking.‌
Your ethics and perspectives are never taken into account by authorities and banks..
Your structure‍ covers many countries and seems simple in today's world.. Sadly not so straightforward as we⁠ all might wish things to be.

I don't work professionally in this field, there are⁤ many here online who do.
And after some research you will get a better understanding⁣ of what advice you need to seek.

 

[boomy]

I know a few guys relocated to Thailand, they don't even signed up there‍ with the authorities and live tax free for several years already!

 

[offshoreavatar]

Sorry I somehow missed these notifcations!⁠
Do you mean CFC rules? I was under the impression Thailand didn't have any.
I thought DTT was more in relation to personal income?
(Also all of the income would⁤ be deferred to the next year).

Definitley don't want to dodge anything in any illegal⁣ sense. I know this can be done all by the book I'm just learning how⁢ at the moment.

 

[offshoreavatar]

Thanks Hanif. I've⁢ spoken with a few international tax agents so far.
The best solution so far seems︀ to be a Nevis IBC. Works with my banking partners (World First & Transferwise), Paypal,︁ Amazon, eBay etc.
I'm finding it difficult to find people to be honest so please︂ feel free to message me with any recommendations.

 

[offshoreavatar]

Thanks boomy, although that is pretty interesting I'm definitely not that type of person.

I really do love Thailand and would want to contribute and pay taxes. I'm simply trying⁠ to put myself in a position to pay the way I want to. If at⁤ all possible! With the amount of knowledge and advice out there it does seem very⁣ possible.

If anything it makes me want to pay taxes more, coming from one of⁢ the highest taxed countries in the world to a country that recognises digital nomads /︀ the need for countries to create a system for people who earn purely online and︁ can be located anywhere etc. They are hurting their own economies not catering to this.︂ The internet has been around for many many decades now and there still isn't anything︃ that has been done for this. How is someone who gets taxed 30% company tax︄ & nearly 50% personal income tax supposed to compete?

 

[JustAnotherNomad]

CFC rules are mostly about passive income. It’s so that you‍ can’t hire one guy as the “director” of your license company in the Caymans who⁠ then bills your company millions in “licensing fees” to shift profits into a tax haven.⁤

What he meant is permanent establishment/place of management rules. That’s different. It’s about where the⁣ company is actually operating. With the license company, you could always claim it’s actually operating⁢ in the Caymans since there’s an employee and you don’t need a lot of staff︀ to manage licenses. That’s why CFC rules are needed to hinder tax evasion. But when︁ you only register your company in the Caymans and you really do everything from your︂ home country, it’s very easy for them to say that the company is only registered︃ in the tax haven country, but all it’s operations are taking place in your home︄ country - so it should be taxed as a local company. This is the norm︅ for high tax countries that tax worldwide income. With countries with territorial taxation, you’d have︆ to check how they handle it. They could do it just like high-tax countries (I︇ believe Singapore does this for example), or they could be really lax (like Panama).

 

[offshoreavatar]

Hi JustAnotherNomad, appreciate the response but I’m pretty sure everything you described is CFC. Place︈ of management is what CFC is about. Where the company is controlled from.

 

[sinos]

Even if someone actually implements a structure that has the licensing option, my question is︈ what about UBO and bank accounts. Ultimately I will be the UBO and funds will︉ end up in an account controlled either directly by me or through a trust. That︊ means the licensing aspect will be of no use, and the caymans company will also︋ come under CFC rules. After CFC, economic substance and CRS, accountants aren't just ready to︌ work with offshores. Its very difficult now and race against time, one by one all︍ the countries will get into CRS. The only option is to physically relocate.