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Thread: Is the grass Greener off-shore ?

  1. #1
    Gold Member daveob's Avatar
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    Is the grass Greener off-shore ?

    Hi All

    Need some advice and suggestions please.

    Hopefully I can get some ideas and pointers so that when I go see the accountants, etc, I will have some idea of where to start.

    Am considering moving my company off-shore to either British Virgin Islands or Seychelles, which as far as I know are both tax free locations. If not, there are others.

    But tax is not the main motivator for this. My company ( one man operation - no other employees ) is in the business of supplying data to clients. The cost of the data that I buy accounts for about 30% of revenue. If I change from a local SA company to an international company, I can reduce that figure to about 10% ( due to pricing structure of the data provider ). So an extra 20% profit is the motivator here.

    In addition to the costs that would be saved, I understand that these off-shore havens do not require accountants, book-keepers, tax returns, etc, etc. ( All the kr&p that we spend countless hours sorting out ).

    So here's my idea / questions :

    Can I set up an international company, and just be an employee of that company ( as I am for my existing cc ) ?
    I would then be paid in US$ from the off-shore company direct to my SA account.

    My local clients each pay their monthly subscriptions ( direct deposits or via debit orders ) into a local based bank account ( a non-resident account owned by the off-shore company )
    Each month I transfer a lump sum from the local to the off-shore accounts.

    Would this attract any fees from SARS, considering that it is merely collection of funds for an overseas company ?

    How would I bring in lump sums from the off-shore account to myself ? As I am an employee, would that be a 'bonus' that I would receive ? Would it attract more tax than my usual paye ? Is the paye for income from an overseas company the same as for a local salary ?

    As an off-shore company, would I be liable to pay VAT on purchases ( considering that the purchases would remain in SA and be forwarded to client who purchase from the off-shore company ) ?

    Would I be required to charge my clients VAT on the services that the off-shore company supplies to them ?

    I know this is probably a minefield, and that the cost os registering an off-shore company is around R 15,000 but I am looking to reduce my costs by that amount in a single month alone. The added benefit of storing funds ( US$ or Euro ) elsewhere in case things get too problematic locally is also a plus side.

    After clearing the tax on my existing local cc company, I can close that down and concentrate on making profits instead of servicing red tape.
    Watching the ships passing by.

  2. #2
    Silver Member Graeme's Avatar
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    Offshore Banks

    A word of caution - I moved a lot of investments offshore about 6 years ago, but I soon discovered that offshore banks (Isle of Man & Channel Islands) are not regulated by a Central Bank (like our Reserve Bank) and as a consequence can pretty-well do as they like. The two banks' behaviour became so outrageous that I brought the investments back home. Fortunately I caught the good side of the rates of exchange so I did not get burned, but take a little advice from me and get something binding in writing about bank charges and protection of capital from any bank you may choose to deal with in these offshore (tax free) environments. The two I dealt with were scoundrels!

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    daveob (17-Jun-08)

  4. #3
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    is off-shore greener

    Hi Dave
    I worked for a company that placed people off-shore and there are no tax breaks for SA citizens in this regard anymore. SARS will still demand their pound of flesh in any way they can. Even friends who have gone for just six months came back and SARS demanded R30k from them for the time they were away. The only thing you can do is bank offshore with a reputable bank, invest in property offshore (local market is dropping fast) or buy gold/jewellry and/or stash it in a Swiss bank account.
    Although I have heard that working in the Caymans is heaven - a bit lazy though as there isn't much to do. You could also try Monaco and look after the rich and famous.
    Oh by the way, Asking if offshore is greener is really the wrong question. South Africans need to be tougher and not expect greener but understand that opportunity is everywhere if you know where to look. Expect challenges but also expect to overcome them.
    Best wishes.

  5. #4
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by daveob View Post
    After clearing the tax on my existing local cc company, I can close that down and concentrate on making profits instead of servicing red tape.
    I've heard some interesting theory, but I'm afraid I can't help you with any practical how-to's. However, I'd love to hear it if you find the way to achieve that.

  6. #5
    Email problem Karenwhe's Avatar
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    You do not have to have a company, or yourself involved you can use a trading trust.

    I wrote about this to a question Duncan had a while ago about off-shore payments.

    Its' pretty easy once you get the hang of things that you do not need to own anything or control anything but only work the "thing".

  7. #6
    just me duncan drennan's Avatar
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    Quote Originally Posted by Karenwhe View Post
    I wrote about this to a question Duncan had a while ago about off-shore payments.
    Here is that thread.
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