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Thomas Leary
Posted on: 24/08/2010
Posted at: 08:22:31
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I am a US citizen who formed a HK limited company as my home base for a publishing company. All of the company income comes from the US and the UK directly from distributors. I do not directly sell to bookstores or customers-I let the distributors do all of the legwork. I do not have residence in any one country and move about Asia regularly. The money is usually put directly into my company account in another country where I have established a branch office. I pay myself a (small) salary as the company rep in that other country. Local accountants have advised me on my tax responsibilities in these two Asian countries. I basically pay income tax in the second country (none in HK).
I have been operating under the assumption that my US tax responsibilities are limited to the small salary I am paid. I only own 10% of the HK company shares, and the rest are not claimed by anyone. Whatever extra money there is sits in the company account and I have not taken out any extra over what I am paid in salary.
Is what I am doing illegal in any way? It's not my intention to be breaking any laws, but one strange accountant recently told me that in her opinion my company should technically be paying 30% tax to the US because one distributor is there and HK has not tax treaty. The distributor does not give me any tax forms and says only that they interpret the law differently. I thought that sounded crazy, but I thought it best to get other opinions.
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Turner Little Limited - www.turnerlittle.com
Posted on: 27/08/2010
Posted at: 14:40:44
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The way in whcih you are operating is not illegal, but you would be best advised to put in place a formal relationship with your introducers via an offshore corporate structure in which you have NO ownership or control.
Please contact us for further discussion on email at enquiries@turnerlittle.com or via our web site at www.turnerlittle.com
Company Incorporations in:
United Kingdom, Belize, Delaware, Nevada, Seychelles, Dominica, Hong Kong, Panama, British Virgin Islands, Nevis, Bulgaria and Cyprus.
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Anonymous
Posted on: 03/10/2010
Posted at: 21:25:11
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The advice in the previous post is correct - as an American you are at a substantial disadvantage when if comes to investing abroad - sorry but its true. Vern Jacobs and Richard Duke have written some good guides on this - take a look at http://www.rpifs.com/ hope this helps.
Martin Katz, Chartered Secretary, www.martinkatz.im Isle of Man.
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James A. Lavorgna, J.D., LL.M., CFP
Posted on: 04/11/2010
Posted at: 00:06:08
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If you are a U.S. citizen, you are liable for U.S. tax on your worldwide income whether you reside in the U.S. or not. It is considered tax evasion to not report your taxable income, regardless whether or not you receive tax forms from the payor.
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