View Poll Results: How big does a Cayman Island Corporation have to be for US tax purposes?

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  • One employee in a little office.

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Thread: How big does a Cayman Island Corporation have to be for US tax purposes?

  1. #11
    Sage

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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by OhIsee.Then View Post
    But, what if the company that creates, e.g. manufactures, the product sells it to a Cayman Island division that invests in the product. Then the Cayman Island division marks it up just the right amount and sells it to the US division of the company. Then the US division sells it for the highest price it can making just a small profit. So then the Cayman Island makes almost all the profit. Anyway, how big would that Cayman Island division have to be if that was happening in the example you were giving us? Note, again the divisions are completly seperate companies by law, they just are owned by the same people at the top.
    That is a question of law, you would have to take that up with a tax lawyer or corporate lawyer. Taking Legal advice from someone posting on the Internet is a bad idea.

  2. #12
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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by DVSentinel View Post
    That is a question of law, you would have to take that up with a tax lawyer or corporate lawyer. Taking Legal advice from someone posting on the Internet is a bad idea.
    I'm not asking for your advice. It's just a poll on peoples understanding of Cayman corperations and US tax law. What is your understanding?

  3. #13
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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by OhIsee.Then View Post
    I'm not asking for your advice. It's just a poll on peoples understanding of Cayman corperations and US tax law. What is your understanding?
    I'm the one that voted.

  4. #14
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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by DVSentinel View Post
    Not making a profit, not for sure that is going to catch on as a tax evasion scheme.
    You might be surprised. If the USA company is employee owned and pays their owner/employees very well it can operate at breakeven and the owners can be very happy with the situation. They pay tax as individuals but the company itself pays little to no tax.

    think, not for sure, but I think what he is asking is your opinion on what the US government should recognize. For example if the "company" licensed in the Caymans only has an office and one employee but does a large amount of business through it's US devision, should the US government be going after them for Tax Evasion? Since basically, the company isn't real there.
    How is it not real? You don't need any employees based there to establish a real company. Employees can be located anywhere. There are many administrave companies in these kinds of locations who's business is to provide a valid address and take care of the local requirements.

    In our case, the USA based distributor takes possession of the product outside the USA. We have no USA income and therefore are not obligated to file USA taxes.

    I don't know how many actually use that scheme, but frankly I like it. It allows a company to only be taxed on profits earned in the US instead of total profits as I understand it. Maybe a tax lawyer or corporate lawyer can give you more information.
    A lot of companies similar to ours use these techniques. Its pretty straight forward if the company has the right structure.

    .

  5. #15
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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by TOJ View Post
    You might be surprised. If the USA company is employee owned and pays their owner/employees very well it can operate at breakeven and the owners can be very happy with the situation. They pay tax as individuals but the company itself pays little to no tax.

    How is it not real? You don't need any employees based there to establish a real company. Employees can be located anywhere. There are many administrave companies in these kinds of locations who's business is to provide a valid address and take care of the local requirements.

    In our case, the USA based distributor takes possession of the product outside the USA. We have no USA income and therefore are not obligated to file USA taxes.

    A lot of companies similar to ours use these techniques. Its pretty straight forward if the company has the right structure.

    .
    Ok, I will keep that in mind, where is the best place to do it?

  6. #16
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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by DVSentinel View Post
    Ok, I will keep that in mind, where is the best place to do it?
    Best place? Depends on you needs. Why do you ask?

    .

  7. #17
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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by TOJ View Post
    Best place? Depends on you needs. Why do you ask?

    .
    Because I have quite a few ideas in my head for products. If I ever actually get them working, there is a potential for me to actually own a company. I really don't like the current tax setup in the US and definitely don't like the current government stance towards business and profits. So my idea was to get it started, then sell it off to a "holding" company overseas. I own that holding company but since I am not that concerned with money, I would use it to distribute the profits into holdings in other companies. Basically, create a new holding company for each investment, keeping them isolated from each other so the failure of one does not take down the other. By keeping them in a secure overseas environment that is tax friendly, and not paying dividends on the holding companies shares, I should be able to bypass any additional losses to capital gains, only corporate taxes from the "held" companies are forfeit, not another tax when those profits are sent back to investors (me) since the held companies would also be registered off shore. Also if I expand internationally, my companies only get taxed by the US on those holding/profits generated in the US. This should also protect those holdings/companies from any abuse or misuse of Dodd-Frank.

  8. #18
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    Re: How big does a Cayman Island Corporation have to be for US tax purposes?

    Quote Originally Posted by DVSentinel View Post
    Because I have quite a few ideas in my head for products. If I ever actually get them working, there is a potential for me to actually own a company. I really don't like the current tax setup in the US and definitely don't like the current government stance towards business and profits. So my idea was to get it started, then sell it off to a "holding" company overseas. I own that holding company but since I am not that concerned with money, I would use it to distribute the profits into holdings in other companies. Basically, create a new holding company for each investment, keeping them isolated from each other so the failure of one does not take down the other. By keeping them in a secure overseas environment that is tax friendly, and not paying dividends on the holding companies shares, I should be able to bypass any additional losses to capital gains, only corporate taxes from the "held" companies are forfeit, not another tax when those profits are sent back to investors (me) since the held companies would also be registered off shore. Also if I expand internationally, my companies only get taxed by the US on those holding/profits generated in the US. This should also protect those holdings/companies from any abuse or misuse of Dodd-Frank.
    I suggest you do some preliminary research then retain a law firm that specializes in off-shoring. If you are a USA citizen, you may want to consider renouncing.

    .

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