Working for own UK company whilst living in UAE

[daniels27]

You have to apply for offshore status in HK. I have heard it is not so easy to get it approved.
In SG, you only have to prove you don't manage the company from SG. Should be much easier.

Yes. Correct. Also Hong Kong won't rule until you file taxes and then may not grant unless you proof tax payment elsewhere. I would strongly advise against Hong Kong for that purpose. There is a reason why Hong Kong agents help the Chinese with BVI companies and no longer Hong Kong.

Singapore is easier. But sure about above post regarding office but Sovereign tells me otherwise.

 

[Xshore]

Also Hong Kong won't rule until you file taxes and then may not grant unless you proof tax payment elsewhere. I would strongly advise against Hong Kong for that purpose.

Is this a new trend? I have friends with approved offshore status, and it's generally valid once approveduntil your situation changes.

 

[daniels27]

In Singapore, corporate taxes are 17%, which is slightly higher than in most other countries. Corporate income tax is based on profits rather than revenue. For example, a company earning HKD5 million (USD 735,000) per year would pay no tax on its first HKD2 million (USD 280,000) but would pay 30% on the remaining HKD3 million (USD 420,000).

Why would Singapore use HKD for tax brackets? Who wrote this? I would seriously question this source. Also the other analysis of Singapore does not align with what Sovereign told me.

Is this a new trend? I have friends with approved offshore status, and it's generally valid once approveduntil your situation changes.

No, not new.

https://relinconsultants.com/hong-kong-offshore-tax-exemption/

The IRD typically won’t bring up a review of a company that successfully claims its offshore income for a number of years (typically 3-5 years), or unless the company’s business significantly changes.

The first Audit Report and PTR (Profits Tax Return) for the company must be filed before the offshore claim for exemption from profits tax may be made. This is the point at which the corporation discloses the total amount of its overseas income as well as the amount of tax exemption it is requesting.

If the IRD decides to review the offshore claim, the type and number of questions they ask will depend on the finalized Audit Report.

The IRD (and most other government agencies) only deals with factual information, so a business cannot base an offshore claim on speculative future events before they actually happen or are completed.

 

[Xshore]

No, not new.

Ok, but I know several that's been through a irs review for the offshore status, and succeeded without proving tax residency /tax paid elsewhere.

 

[daniels27]

Ok, but I know several that's been through a irs review for the offshore status, and succeeded without proving tax residency /tax paid elsewhere.

Yes. Possibly. Depends on the activity. If you offer IT services from UK, they won't let you pass pretty much for sure as they have to play fair to their treaty partners too.

 

[yngmind]

Why would Singapore use HKD for tax brackets? Who wrote this? I would seriously question this source. Also the other analysis of Singapore does not align with what Sovereign told me.

Haha, that's weird indeed. It was written by the Statrys, sine they are in HK, they are using HKD - Hong Kong vs Singapore for Business in 2024

 

[daniels27]

Haha, that's weird indeed. It was written by the Statrys, sine they are in HK, they are using HKD - Hong Kong vs Singapore for Business in 2024

Don't trust them too much on Singapore. They are from Hong Kong. They won't like Singapore for sure.

 

[daniels27]

Yes, how could they rule otherwise.
You can look up the corporate tax residency rules on the Pwc website. It usually says: "A company is resident in country X if it is incorporated there or has its effective place of management in the country."
So even if it is managed elsewhere, the first part of the sentence would still be true, so that company would be tax resident under national law.
You would need a tax treaty to overrule that national law.

Depends on the country. For Switzerland, they can rule otherwise if the company is not effectively managed from Switzerland.

 

[JustAnotherNomad]

Depends on the country. For Switzerland, they can rule otherwise if the company is not effectively managed from Switzerland.

Indeed it seems like Switzerland has rules that are similar to Singapore's. So why not use a Swiss company then?

 

[daniels27]

Indeed it seems like Switzerland has rules that are similar to Singapore's. So why not use a Swiss company then?

I am thinking about it. But in Switzerland, you have to apply for an advance ruling and then, it may still come to some discussions where and if it is managed. Also, they will still tax a bit for having a (mandatory) registered office address.

 

[JustAnotherNomad]

Thank you, really great input! Great to have you here, you've added a lot of value to the forum!

 

[yngmind]

HK is still better, because there is no VAT

 

[JustAnotherNomad]

VAT has nothing to do with this...

 

[yngmind]

VAT has nothing to do with this...

It's not about the salary, it's about the discussion hk vs sg

 

[daniels27]

It's not about the salary, it's about the discussion hk vs sg

Yes, but it does not matter. Singapore tax free is only possible for non Singapore revenue, which by definition is VAT free.

 

[JustAnotherNomad]

Yes, but it does not matter. Singapore tax free is only possible for non Singapore revenue, which by definition is VAT free.

A SG company selling B2C to EU or US customers would still have to pay VAT/sales tax in most cases. Otherwise foreign companies would have a competitive advantage.

 

[daniels27]

A SG company selling B2C to EU or US customers would still have to pay VAT/sales tax in most cases. Otherwise foreign companies would have a competitive advantage.

Guys, what is this discussion? The topic reads "Working for own UK company whilst living in UAE", then we are discussing HK vs. SG incorporation for offshore.

When selling to EUSSR, there is no difference between a HK and SG company. When selling to SG, there would be, but this is out of question as this was not the question. But for completeness, if you want to sell to SG, you better take a HK company. This has nothing to do with VAT, but because the SG revenue would be taxed with a SG company.

And yes, when you have a SG offshore company, you probably pay some VAT to your service provide which you may or may not be able to recover. But I do not believe that those make the difference whether HK or SG is cheaper.

 

[Billybob69]

Thank you for the discussion guys, however in the situation I am describing, the UK company already exists, and a new company would only be useful going forward for future business.

If anyone has other ideas how one could in theory have a tax free salary whilst working for a UK company, I'd love to hear it, I think perhaps a jurisdiction which

A) Does not tax FSI
B) Has no tax treaty with the UK
C) Has no CFC rules

May be an interesting option, for example Paraguay, but I'd like to hear other suggestions if there are any. Or if I am missing something vital.

 

[daniels27]

Thank you for the discussion guys, however in the situation I am describing, the UK company already exists, and a new company would only be useful going forward for future business.

If anyone has other ideas how one could in theory have a tax free salary whilst working for a UK company, I'd love to hear it, I think perhaps a jurisdiction which

A) Does not tax FSI

"Foreign sourced income" usually refers to passive income. "Foreign income" refers to active income from abroad. We are talking about foreign income here. The problem is that while there are many countries which do not tax foreign income, they normally only do so if you perform the work outside the country of residence. Furthermore, you are not just working but managing a company, which is a major difference.

B) Has no tax treaty with the UK

I may be missing something, but what is the advantage of this? That UK won't consider the company tax resident elsewhere? You may even fall under this without treaty IMO.

C) Has no CFC rules

There are many of those. But your problem is the place of effective management. @Checkmelater proposed such setup for Qatar
https://www.offshorecorptalk.com/threads/my-new-0-tax-setup-in-qatar.43853/
It may work for GCC countries due to the lack of a PE concept. But no laws does not necessarily mean it is meant to work, you may get problem at some point.

May be an interesting option, for example Paraguay, but I'd like to hear other suggestions if there are any. Or if I am missing something vital.

Yes, something like this. Panama, Paraguay, etc. Even better is to live in 3 countries or in airplanes, where it will most likely work very, very long.

 

[Billybob69]

"Foreign sourced income" usually refers to passive income. "Foreign income" refers to active income from abroad. We are talking about foreign income here. The problem is that while there are many countries which do not tax foreign income, they normally only do so if you perform the work outside the country of residence. Furthermore, you are not just working but managing a company, which is a major difference.


I may be missing something, but what is the advantage of this? That UK won't consider the company tax resident elsewhere? You may even fall under this without treaty IMO.


There are many of those. But your problem is the place of effective management. @Checkmelater proposed such setup for Qatar
https://www.offshorecorptalk.com/threads/my-new-0-tax-setup-in-qatar.43853/
It may work for GCC countries due to the lack of a PE concept. But no laws does not necessarily mean it is meant to work, you may get problem at some point.


Yes, something like this. Panama, Paraguay, etc. Even better is to live in 3 countries or in airplanes, where it will most likely work very, very long.

Thanks for the information. In this case it would be very feasible for the director to live between multiple countries as a tourist, not picking up tax residence anywhere, they are a British citizen. I’ve heard many mixed opinions on whether it is possible to be tax resident nowhere, the UK seemingly allows this but I think getting a salary for a UK company and trying to claim this is asking for trouble…