Would this tax setup works?

[Yakooza]

Hi,

I was wondering if I have a company in Dubai and a company in the US. For the income.
Then register a company in one of the tax-free islands. Then few times a year I invoice those two companies in the US, and Dubai as "Consultancy" or "Services" with my other tax-free company. and so take the profit.
Would it work to waive the tax or pay a only very small tax?

Thanks

 

[Sols]

Unless you live in a tax haven: no.

 

[daniels27]

Even then,‌ he would have to live in the very same tax-free island in order to have‍ economic substance there as his s**t is among the regulated ones.

Now comes the problem:⁠ all those island tax your income once you are resident. They just call it different⁤ like social contributions but you cannot escape with dividends.

 

[Yakooza]

So when they don't know the second company is yours. How they can tax you?‌
Of course, you take a salary and pay tax on that one.
Then invest it‍ as real estate in another country. Saying that is heritage or etc.
Wouldn't work?

What setup would actually work then?

 

[daniels27]

I do not get the‍ questions. But:

You cannot lower taxes in country A by setting up another company on⁠ island B and invoicing service from the island. This is a regulated activity and subject⁤ to economic substance rules. You would be sanctioned by the island B. They won't tax⁣ you, they sanction you.

Investing in real estate does not lower taxes anywhere as it⁢ is not a business expense.

Heritage and fake heritage only creates potential tax and source︀ of wealth issues.

In your situation, you would have to run the business with the︁ company on the island and at the same time live in a country where this︂ would not create a permanent establishment.

 

[Yakooza]

What setup would it work?

 

[Sols]

Three options:

1. Maximize tax incentives,‌ deductions, and rebates locally. Hire a good accountant. Don't waste time and money on an‍ offshore company. Don't risk back taxes, penalties, and perhaps even jail time.
   
2. Move to a⁠ tax haven.
   
3. Form a company somewhere else, set up genuine substance there (ideally a local⁤ director, some employees, and an office), and only pay yourself dividends.
   

It's 2024. Forget about⁣ secrecy. Tax authorities are wise to how things work, and they get more and more⁢ information all the time. CRS, FATCA, TIEA/DTAA, EUSD, data leaks, snitching, court orders, reverse burden︀ of proof, unexplained wealth orders, audits , the tax man's arsenal is deep and deadly.︁

If you don't like the taxes where you live, stop living there.