Twelve no/low tax countries share data on companies with no substance with UBO's country

[backpacker]

That's very bad news I just read

What news are you referring to?

 

[humus]

No - again - we are not talking here about Tax Residence Certificate.

CRS reporting is unrelated to a Tax residence Certificate.

You need to make yourself familiar with both CRS reporting - the mechanism behind, how it's enforced etc.

Same goes for the Tax Residence Certificate - make yourself familiar with it and not just put everything in one basket.

Practice Example:

John Doe wants to move out of his Home Country (Country of Citizenship). He decides to move physically to Thailand because he loves the beach and food there. John Doe doesn't like the local uncertain legal framework when it comes to running a Company - he doesn't want to have a local Thai part of his local Thai Company and that's the reason why he is looking at the OffshoreCorpTalk Forum. He sees the approach from DLS Dubai and does understand that he can get with this approach a Tax friendly environment for his Company and Finances with a minimum of bureaucracy.

John Doe decides to setup a Dubai Company that grants him the Dubai Residence Visa which ultimately gains him the access to the local banks. Further John does understand the point of the All-Incl. Package of DLS Dubai and that they setup additional to his Residence Visa substance for him to further satisfy the banks which leads to success in the Bank Account opening.

John Doe now received what he was looking for: an operational 0% Tax Company with reliable retail Banking and the minimum requirement of being every 6 months for 1 day in the UAE to keep the structure active.

John Doe doesn't need the Tax Residence Certificate from the UAE as he lives in Thailand - a country without CFC rules - further John Doe is a clever men and knows that he shouldn't live with his Dubai Setup the whole year in his home country (Country of Citizenship) but in the same time he knows that the world isn't about black and white thinking and he does undertsand that moving out of his Home Country doesn't mean necessarily moving the whole year to the UAE.

You can replace Thailand with any country without any CFC rules or a Digital Nomad Lifestyle where you are just travelling the world.

But if John Doe is only visiting UAE once every 6 months, just to keep his visa active, then he is spending his time on Thailand throughout the year. As a result his business is being "carried on" from Thailand. As such, his business income is attributable as Thai-sourced income, and fully taxable in Thailand. Isn't that right?

 

[Mercury]

But if John Doe is only visiting UAE once every 6 months, just to keep his visa active, then he is spending his time on Thailand throughout the year. As a result his business is being "carried on" from Thailand. As such, his business income is attributable as Thai-sourced income, and fully taxable in Thailand. Isn't that right?

Yes, but the reality is: regarding this there is no law enforcement from the Thailand side.

 

[JackieTsan]

For me it's not clear why people are still looking into non-resident Offshore Companies like RAK - latest now with the aboth mentioned information - it's a dead cow.

because probably are in a 0% region when having an offshore somewhere. The problem now is that this *** offshore is asking for 9% tax; so what to do? close it and say to habibis' bye bye or what?

 

[EliasIT]

Sadly Fred has not been around for ages

 

[Roo]

Since March 2021 twelve countries now automatically share information on companies with no economic substance and where beneficial owners are non-resident. I think non-resident folk with companies in the below countries may be in for a letter from their tax man.

Anguilla
Bahamas
Bahrain
Barbados
Bermuda
British Virgin Islands
Cayman Islands
Guernsey
Isle of Man
Jersey
Turks and Caicos Islands
United Arab Emirates

Does this mean that opening an offshore company in any of these jurisdictions will get you reported to your country of residence automatically? Sounds it became useless to open a company there anymore unless you provide a residence in a country where you no longer live.

 

[Martin Everson]

Does this mean that opening an offshore company in any of these jurisdictions will get you reported to your country of residence automatically?

Yes if there is no economic substance and BO is non-resident.

Sounds it became useless to open a company there anymore unless you provide a residence in a country where you no longer live.

Some people use offshore companies for many reasons where it will still serve a purpose unrelated to tax.

 

[Roo]

Yes if there is no economic substance and BO is non-resident.

I guess it still works for people residing in territorial or zero tax countries but that reporting would also make you subject to PE right?

 

[JackAlabama]

Does this mean that opening an offshore company in any of these jurisdictions will get you reported to your country of residence automatically? Sounds it became useless to open a company there anymore unless you provide a residence in a country where you no longer live.

thats why the uae became so popular. It is relatively speaking quite easy to acquire a lot of substance in the form of office space, director, ubo, shareholder having a residence visa and local apartment for a "now a thing of the past" zero tax.

 

[wellington]

Yes, but the reality is: regarding this there is no law enforcement from the Thailand side.

I would never rule out a enforcement drive though - and the thing is Thailand increasingly is doing a few things that should have anyone thinking they can skirt around and nothing will happen.

- filing extradition and red notices (even for petty things).
- charging money laundering on anything and everything.
- opting for prison terms opposed to fines.

 

[JackAlabama]

I would never rule out a enforcement drive though - and the thing is Thailand increasingly is doing a few things that should have anyone thinking they can skirt around and nothing will happen.

- filing extradition and red notices (even for petty things).
- charging money laundering on anything and everything.
- opting for prison terms opposed to fines.

where has that been increasingly noticed?

 

[Martin Everson]

I guess it still works for people residing in territorial or zero tax countries but that reporting would also make you subject to PE right?

You need to look at specifics or each countries PE rules.