International Tax Structures The Government Can’t Touch

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Could Hong Kong be your next international tax haven?

Although the quote is from 1991, nearly 30 years ago, it’s still just as relevant as when Kerry Packer first said it at the Print Media Enquiry when asked by a journalist about tax ...

“I pay whatever tax I am required to pay under the law, not a penny more, not a penny less... if anybody in this country doesn't minimize their tax they want their heads read because as a government I can tell you you're not spending it that well that we should be donating extra.”

What a beautiful sentiment. And I’m saying that even though I spent 10 years working on that side of the desk. If anything, that’s what turned me towards international tax structures and away from the Australian tax system. 

I’m not saying that I’m against the Australian government. We live in one of the richest and best countries in the world. But I happen to believe that they demand too much from the Australian public, especially with ludicrous tax rates. 

Did you know, for instance, that Australia ranks as poorly as Germany, Italy, and India for taxing the wealthy? According to a Price Waterhouse Cooper study, if you made $400,000 last year, you were lucky if you got to keep $240,000 of it.   

Isn’t that outrageous? It should get you fired up. It should make you want to do something about the injustice of it all.

But what can you do about it? 

As it turns out, you can do just what you did when you were a kid playing backyard cricket against the wheely bin with your mates. You can pick up your bat and ball and just leave.

 

Friendly Locations For International Tax Structures

Friendly Locations For International Tax Structures

Malta: just one of many international tax structure opportunities

Let me preface the rest of this article by saying this. 

The solutions I present in here are not for everyone. Not everybody can just get up and leave. I do present solutions for you within the context of Australia, like in this article about tax loopholes, or this article about 3 very important tax structures.  

But for a good portion of the people reading this, you may not be aware of just how accessible and easy it is to pick up and move everything offshore to a location where the government can’t touch you and your income. 

One of the easiest ways to do this is to become a non-resident. If you have a primary residence outside of the country and spend less than 6 months in Australia, you could legally reduce your tax bill to nothing. As long as you abide by strict guidelines and are willing to pass the “resides test” that the ATO uses, you could 100% legally have a $0 tax bill this time next year. 

But where do you move? Or where do you move your company? That’s a better question.

And to answer that we have to talk about the tiered system I use to classify the many locations to choose from overseas. 

International Tiers for Tax Structures

International Tiers for Tax Structures

Panama City: Great for tourism and friendly to foreign money

Think of the different locations around the world in terms of a tiered system, a series of tradeoffs between reputation, privacy, transparency, and accessibility. One location isn’t necessarily bad while another location is good. 

It all depends on what you want to trade-off and what your goals are for your company. 

First off, we have the WHITE tier. 

These are locations that everybody knows and loves. Other businesses love trading with companies established in these locations. A prime example of this is Hong Kong. 

Because Hong Kong is an ex-colony, they share many of the same laws and jurisdictions as us. They have a similar structure and territorial tax laws, meaning they tax the profits based on where its derived, not just the money made. I know that the courts in Australia (including family courts) have had notoriously difficult times penetrating companies and entities set up in Hong Kong, a great location to keep the ATO at bay.

On the other end of the spectrum, you have BLACK tier countries. 

Don’t be scared off by the name. 

Although ineffective overall for tax planning, these countries have great regulations that make them ideal for parking assets and investments. Remember you have to think about protection in terms of income made and money stored (in terms of assets and investments). 

Countries like Belize, Panama, Seychelles all fall squarely under this black tier category.

But they’re not ideal for running a business. They carry a certain reputation with bad associations with funding terrorism and illegally hiding money to evade taxes. If you move finances back and forth from these locations, you could attract a lot of scrutiny and concern.    

But I still love these black tier countries for offering an inscrutable system that prevents foreign governments from sticking their noses in. 

Their strict policies keep Western money safely stored and protected with privacy laws that rival Switzerland’s reputation. If you want protection from foreign governments as well as from frivolous lawsuits, these black tier countries are wonderful. 

Finally, in the middle, you have GREY tier countries. 

These countries aren’t yet blacklisted in the global economy. They offer wonderful protection for income and assets. These locations include Dubai, Gibraltar, and Malta. 

To my eye, that speaks of opportunity. I look to these locations for their ease of use, their great international tax structures, and some very enviable privacy laws that keep Australian prying eyes away from your money. 

 

Moving into an International Tax Structure

It’s common for you to hear me talk about tax structures, such as trusts and companies. With the right balance, you can protect your income and your assets using these structures, both here and abroad. 

One of the best examples, in my opinion, is the use of a trust or a foundation. 

The Clinton Foundation has proven this very well, and if you can get an approved foundation set up in America or Australia, it can serve you very well. 

But one of the greatest examples has been using the Cook Islands to set up a foundation. 

The laws regulating the banking and finances of foreign money is very strong. If you can establish a foundation for your business in the Cook Islands, you’re almost guaranteed to be protected from foreign government intrusion. 

From what I understand, there hasn’t been a single example of any foreign government breaching the strict borders of the Cook Islands foundations. 

Let me restate that fact. NO Western foundation or trust based in the Cook Islands has been properly penetrated, as long as it’s been set up correctly.

But to do this, you must meet the criteria. Not just the location where you’re moving but in what you’re willing to do.

And to best determine that, you need to speak to us. We have the experience necessary to determine the best options for you. With an impeccable experience with local and international tax laws, we offer a complete service that you won’t find anywhere else. 

One of the common complaints I get is this: I already have an accountant.  

I get that.

But we are not your typical accountant. 

Think of us more as a specialist working with a GP. We specialise in this area. Some local accountants we even work with to do the local stuff, we do the overseas stuff.

Your normal accountant is terrified of doing something wrong by the ATO. They work through your books, and instead of working for you, they are more concerned with what the government wants. That is, they work more for the ATO than you.

We don’t do that. We ensure everything is legal but still, in the best interests of our clients.

We put your interests first. 

If you want international tax structures, we advise the best options for you. We offer tailored solutions according to your needs, not the needs of the Australian government.

So what do you do?

Easy, Fill in the contact form below. We’ll set up a 15-minute, no-obligation chat to discuss what you’d like to do. From there, we advise the best solutions to move forward. 

Take the first step in securing your financial future overseas and fill in the contact form today.