Filipino citizen and US LLC or UK LLP

[esquire]

Hello guys,
according to your knowledge, is a Filipino citizen able to create a tax-free setup by opening a US LLC and/or UK LLP to sell outside the Philippines territory?
Is it instead possible that the LLC would be considered as a domestic company, with the obligation of paying the full corporate taxes as any other domestic company?
If not, in case this setup could work, what would happen when the LLC funds would go to a personal bank account in US? Would that be taxable in the Philippines?
Thank you!

 

[Sols]

according to your knowledge, is a Filipino citizen able to create a tax-free setup by opening a US LLC and/or UK LLP to sell outside the Philippines territory?

Your citizenship is only one of many factors that affect the chances of getting something like this set up. Banks and payment processors may be wary of your company, if it has no presence or substance in US or UK.

Is it instead possible that the LLC would be considered as a domestic company, with the obligation of paying the full corporate taxes as any other domestic company?

If we look at the letter of the law, your foreign company would have what's called a PE (Permanent Establishment) in the Philippines. All income attributable to that PE in the Philippines would be subject to corporate income taxes like a local Philippine company.

However, enforcement is unreliable and unpredictable. It's very possible that no one would ever notice. But if someone did, your structure wouldn't hold up if questioned.

If not, in case this setup could work, what would happen when the LLC funds would go to a personal bank account in US? Would that be taxable in the Philippines?

Yes, it would be considered personal income of some sort and taxable in the Philippines.

While there are many tax benefits to the Philippines for foreigners, citizens unfortunately don't qualify.