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Thread: Most Efficient Structure to avoid Tax in South Africa

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    Most Efficient Structure to avoid Tax in South Africa

    I am planning a venture where all the income will come from Europe. I was thinking to incorporate a company in Lithuania in Eastern Europe. I want to structure it so that the company pays taxes in Lithuania and then withdraw from the after tax profits to South Africa to spend here.

    Will that money be taxed again as dividends? I think so.

    Now I was thinking of incorporating another company in a low/prefferably no tax country like the Cayman Islands and transfer the profits there.

    Then I can use a bankcard from that bank to withdraw cash and purchase items in South Africa. In that way I will only pay indirect taxes.

    It is of course more complex than this, but is the principle sound?

    What are the caveats? Am I missing something?

    Regards

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    Incorporating in Lithuania is a bad idea, because there is no double taxation agreement between South Africa and Lithuania.

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    Dave A (24-May-11)

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    Platinum Member sterne.law@gmail.com's Avatar
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    Get chosen for the SA cricket team or Rugby world cup. Stay out of country for 60 days and collect the tax break!!
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    Gold Member daveob's Avatar
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    You can set up an international trading trust with a Lloyds TSB bank account in the Isle of Man.

    Sell your services and get paid online via credit card using a specific online merchant that allows trusts to sell via their portal.

    Then you use your bank card to draw cash at an atm. You have control of your account using internet banking and with 24/7 telephone banking to give instructions to transfer funds to other accounts if you need to. In addition to the Stirling account, you can also have a Euro account and a US$ account at no extra charge, and each account has its own atm card.

    If the trust is set up correctly, and in the right place, there are no taxes anywhere.

    Down side is the initial setup which would set you back some. A few years back it costs about R16k to R20k.
    Watching the ships passing by.

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    So if I leave the country for 2 months, I don't pay tax here? I will pay full Income Tax in Europe though. This might sound stupid, but I have no problem with paying there, even if the tax rate is higher, because then I know I am not subsidizing the Ferarri's and Lamborghini's of the ANC croonies.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by apprepcen View Post
    because then I know I am not subsidizing the Ferarri's and Lamborghini's of the ANC croonies.
    You wouldn't be subsidising local education either
    The trouble with opportunity is it normally comes dressed up as work.

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    BusFact (26-May-11)

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    Quote Originally Posted by Dave A View Post
    You wouldn't be subsidising local education either
    How much (what %) of what I pay goes towards education? I still owe the schools that my kids went to about R30 000. So who do I subsidize? I am interested in a few things:

    First, not the most important, but one that I am very curious about. I would like a step by step account of how the following people among others became billionaires:
    Tokyo Sexwale
    Patrice Motsepe
    and Kenny Kunene

    If I think a reasonable person will agree that it was in a way that is fair, I will change my viewpoint in a snap.

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    Site Caretaker Dave A's Avatar
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    Oh - I'm not arguing with you - just pointing out that not all the money goes on Ferrari's and Lambo's. Some of it is spent on stuff that is genuinely worthwhile.

    Education? Isn't that running at about 35% of the total budget? Something like that. I know it's a fairly big slice.
    The trouble with opportunity is it normally comes dressed up as work.

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    Dave, I understand what you are saying. I have been over all the economic and moral arguments in my head, maybe a 1000 times. After I stripped away all the BS from the arguments, this is what remains: I personally cannot stand the open display of excess by the ruling party in the face of all this poverty. I cannot speak for others, but I suspect they feel the same. If anyone wants to call me a racist, feel free to do so, but I tell you now that you are wrong. I can assure you that if a white government did the same, I would react the same.

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