Rate the PT Setup

[yngmind]

Please rate my PT setup, and let's discuss possible issues.

- US LLC
- Non western passport that doesn't impose taxes if you are a tax resident nowhere
- UAE residency
- travel across Asia, the EU, and South Africa

Use fake bills for the banks with the UAE address. If the home country asks where you are a tax resident, you say UAE or nowhere.

There are many variations of my setup, like renting a cheap apartment in the UAE and using it as your address/buying it.

The possible issue I see:
- Your banks will require KYC, and if they see something suspicious, they can close your account.

- Tax forms can be an issue, too. Like a US tax form, you have to claim that you're a resident somewhere and provide your address.
I don't think providing some fake address to the US is a good idea.

- For some people, it won't work because their country will require a tax certificate, which you can only get if you've lived 183 days, but let's imagine my home country has only 183 days test.

My setup is ready to be criticized.

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I'm not a tax advisor, so please don't consider my posts here as tax advice. Always seek a professional opinion.
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Business Bank Account for your US LLC Remotely

 

[Nomado]

Fake bills for banks, isn't that a bit riscky if you get cought?

 

[Clank]

Usually banks accept a bank statement as a proof of address, you can use your‌ UAE bank statement as proof of address.

 

[yngmind]

Yeah, proof of address is easy.

But what about US tax returns

 

[Clank]

as long as you don’t live in the US they won’t make you‌ pay any taxes, provide any address you want.

 

[Don]

You say that your residency is in UAE? What kind of residence permit you have‌ or will get?

Do I understand correctly that to US, you declare that the company‍ operations are based in UAE? Yet, I understand that you don't pay corporate income tax⁠ and acquire relevant business licenses in UAE for the US LLC.

What if any country⁤ asks where the company is a tax resident and where the operations are performed, e.g.,⁣ management?
E.g., if UAE asks this question what will you tell them?

 

[Cloudbanck]

You don't need UAE licenses for a non-UAE company. And there would be no⁣ permanent establishment in the UAE for the US LLC if the owner doesnt stay long⁢ in the UAE, so no corporate income tax. Then it's still up in the air︀ how PE rules are applied in practice in the UAE.

I think this is only an issue with high tax countries which share information︄ with the US bilaterally. They are not going to ask you where the company is︅ tax resident, that's not how it works. They are going to say Hey, you are︆ a tax resident in say France and we see you have a foreign company, now︇ you must pay tax and penalties.

So the key is to not stay long enough︈ to be a tax resident in any country, and especially not in a high tax︉ country.

 

[yngmind]

I will say UAE

 

[Cloudbanck]

An interesting question though is what happens if you stay long enough in the UAE‌ to be a tax resident there and your US LLC gets a permanent establishment in‍ the UAE.

The US doesn't have any tax information exchange agreements or tax treaties with⁠ the UAE. (See https://home.treasury.gov/policy-issues/tax-policy/treaties) There is a FATCA Model 1 IGA between the US⁤ and the UAE though, which could mean reciprocity. But I dont think this reciprocity is⁣ in effect in practice, i.e. it's questionable whether US banks report to the UAE. Also⁢ not sure if it applies to business accounts as well as individual accounts.

So it's︀ a bit hard for the UAE to enforce, both in terms of determining if there︁ is PE, and to get info from the US about the US LLC. But in︂ theory the US LLC (unless treated as a transparent non-incorporated entity by the UAE) should︃ pay 9% corporate income tax to the UAE on profits above 375K AED per year.︄

 

[Don]

Unless the circumstances are quite obvious and they have sufficient proof they cant just slap foreign︃ companies with tax residency, but they can start an international tax audit to investigate further.︄
Obvious circumstances could be "effective management and control" which is a test for corporate tax︅ residence in UAE noting that for legal entities it is generally public information who is︆ the director/manager.
Although the chances are not high that they would go after a PT,︇ it leaves the structure exposed.
If you want to legally operate with a foreign company︈ in UAE, you do need a relevant license.

 

[Konstanz]

They will probably ask for your‌ tax residence certificate from UAE as you say "- Non western passport that doesn't impose‍ taxes if you are a tax resident nowhere"
TRC is proof of your tax residence⁠ elsewhere. And you have to stay 180+ days in UAE to get TRC. It will⁤ not be enough to say "I am tax resident in UAE" for sure..

 

[Cloudbanck]

But when it is just one person⁣ with a laptop "effective management and control" is not obvious at all. And for a⁢ US LLC it is not public information who is director/manager (the IRS knows though).
Do you have any source for this? From︁ what I can find a foreign company needs to set up a branch or representative︂ office in the UAE, if it wishes to conduct business in the UAE - and︃ then licenses are required. But what we are talking about here is a foreign company︄ that conducts business outside the UAE, so no branch or representative office is needed. Guess︅ one could argue that since it is effectively managed and controlled from the UAE license︆ requirements apply, but I dont see anything confirming this.

I practice it seems the UAE︇ treats such cases as if the owner of the US LLC is an employee based︈ in the UAE of a foreign company. That's for example how it works with remote︉ worker visas.

 

[yngmind]

it will, because UAE doesn't issue⁣ TRC for my country, even if I've stayed 183+ days in the UAE.
So, I⁢ normally say to the banks that UAE doesn't issue it for my country, and I︀ give them my emirates id.

 

[Konstanz]

They issue now "domestic certificate" if you stay 90 days with some conditions or⁤ 180+ days. Even if country is not on DTA list
How you can say you⁣ are tax resident in UAE while you are not tax resident even according their local⁢ laws?

 

[Don]

Important points for this structure would also be the location of your clients. Do you‌ have any clients in US or UAE?
Some countries will not consider such entity invoices‍ as deductible for corporate tax purposes or apply withholding taxes since it doesn't have tax⁠ residence certificate.

 

[yngmind]

US yes

 

[Don]

Disregarded entities don’t have to pay any income‌ taxes in US unless the Foreign Owned SMLLCs are generating income that are FDAP or‍ effectively connected to US Trade or Business.

 

[yngmind]

I'm aware of that.

So, seems like my setup is⁠ legit, there are some possible issues, but I think I will be able to solve⁤ them.

 

[scooterguy]

I have a question about your setup: doesn't the UAE residency result in increased unnecessary‌ costs? I'd understand this if your business was set up as a UAE FZ, but‍ this is not the case.

Why not just do the US LLC + travel around⁠ the world part?

And for dealing with foreign banks, you can just use some residency⁤ in SEA.

For instance, you can easily and cheaply get 12-month visas in places such⁣ as Thailand (ED visa, Thai Elite, etc.), Laos (business visa), or Vietnam (multiple entry visa⁢ or student visa), and you can also even more easily rent modern/luxury apartments for $300/mo︀ (both to use for banks and to actually use yourself).

You can also use those︁ visas to get bank accounts as a resident of those countries, for increased diversification and︂ for even more proof of your residency there if foreign banks ever request it (bank︃ statements).

This will all save you the costs and headaches of having to rent in︄ UAE. The stuff you can get for "cheap" in UAE is depressing, even if you︅ don't plan on using it; just visiting those cockroach-infested places will take years out of︆ your life. Plus, you'll have to deal with Ejari, registering with DEWA, etc.

None of︇ that BS in SEA; you get your apartment in 2 days and it's an apartment︈ where you will actually want to spend time in. And as long as you don't︉ spend more than 6 months in any of those ASEAN countries, even if you have︊ visas, long-term leases and bank accounts, you won't have a tax liability.

Thoughts?

 

[yngmind]

That sounds good. I have a freelance visa, which is 3-4k a︋ year, so it's not a big deal.

I didn't plan to rent in the UAE.︌ I've rented in the past and have my old Ejari. I can change the lease︍ date there lol.

Yeah, I think it's a good idea to get a visa in︎ SEA.

I can go to Thailand for 90 days visa-free, and the visa runs works,️ so I think I can even live on a tourist visa in Thailand.

In my‌ opinion, UAE looks more legit since I'm a resident there, but in SEA, I'm a‍ tourist, even with a Thai Elite - I'm a tourist.

Have you guys seen the⁠ new Indonesia kitas prices? We should create a new thread about that.

There are some⁤ good updates about Malaysia my second home as well.