A Freight Forwarding (ie International Goods Transportation) Business lends itself well to an Offshore Corporate Structuring Plan.
Here’s how it can/will work:
- You set up a nil tax/tax free Offshore Company (“IBC”)
- The customers place orders online and they contract with/pay the tax-free IBC to forward freight/transport goods for them
- Payments from customers would be banked and held offshore free from tax
- The IBC should be seen to be managed and controlled from Offshore (ie a nil tax jurisdiction) and owned by a tax haven resident party/shareholder
- The tax-free IBC would subcontract the actual job of forwarding/transporting the freight to an onshore operation (which could be your local/current business)
- The difference between what you receive from the customer and what you pay the actual transporter (ie your gross profit) is earned/held by a tax free Offshore Company and (if you structure/administer things correctly – see below) should not be taxable onshore ie where you live
For such a plan to work there are in essence 4 boxes you will want/need to tick ie:
1. You will want to ensure that the Offshore Company (“IBC”) is incorporated in a country which does NOT have a Tax Information Exchange Agreement (TIEA) with your home country.
2. You will want to ensure that management and control of the IBC is seen to be taking place from “Offshore”. This will entail having a (tax haven based) Nominee Director to act as Director of the IBC (which is a service that OCI provides) plus you will need to ensure that all key decision making and document signing actually takes place Offshore.
3. If you live in a country which has a Controlled Foreign Corporation (“CFC”) law you will want to set up a Private Foundation to own the Company ultimately
4. To prevent the existence of the IBC’s Bank Account coming to the attention of local authorities (a) you will want to open the company’s bank account in a country which is NOT a signatory to the MCAA and/or (b) you will want to set up a Seychelles Foundation to hold the shares of the IBC (because Seychelles Law uniquely provides that the legal AND beneficial owner of any asset held by a Seychelles Foundation is the Foundation itself).
Local laws can have an impact. Hence you should seek local legal and financial advice before committing to set up a Corporate Structure such as that described above.
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