Options for a Canadian Citizen Who Worked in US and now Looking to Base in a Low Tax Country

[andyjun]

Hi,

I am a Canadian Citizen who left Canada 4 years ago, worked in US on a visa (paid taxes in US), and now looking to exit US and be based in a low tax country.

I expect to receive some significant earnings in 2020 and 2021 from my business and want to make sure I have tax residency in an optimal geo.

Some options I was looking at was Hong Kong, as well as UAE. Because I have friends in these 2 countries.

Do I need to spend 6 months in these countries to establish tax residency ? I thought as long as I have an apartment and utilities there, I can establish residency there while traveling around if I wanted, as long as I spend less time in the other countries vs my residence country.

As I am quite a nomad, and travel often, would really prefer not to have to spend 6 full months in UAE or HK unless I have to.

I've heard Dubai is tricky due to no tax treaty with Canada, but I could get away with it if I have ties there such as bank accounts, gym membership, apt, utilities, etc.

HK looks like it has tax treaty with Canada but you might need to spend 6 months a year there?

Anyone have any inputs on this ?

Also, I might want to return to US or Canada after 2021, so just spend 2 years offshore. Would this be do-able ?

 

[botero]

Both Hong Kong and the UAE have double-tax treaties with Canada. Therefore, the CRA will be more lenient if you decide to keep ties with Canada (e.g. Passport, bank accounts, driver's license).

In regards to the UAE, it is easy to obtain residency (by opening a fz company), however, to become a tax resident, you need to spend more than 6 months in the UAE. Only after spending 6 months will they provide you with a certificate of tax residency.

Based on this article, Hong Kong has similar requirements of 6 months to establish tax residency.

 

[andyjun]

What about this clause:

"Individual who ordinarily resides in Hong Kong (it is generallyconsidered that ordinarily reside in Hong Kong if one has a permanent home in Hong Kong where one or one’s family live);"

If one is living in HK with an apartment etc, would not need to do 6mo ?

Is a Tax Residence Certificate actually required ?

 

[botero]

Yes, that should work, however I would double check with an accountant or tax lawyer in HK to ensure that's the case. I'd be curious to know if a permanent home can be a rental or it needs to be your own property. Also whether one is considered a tax resident immediately after moving into this property.

According to this article the certificate is necessary to claim benefits under the double tax treaty.