3 ms·

I'm honestly quite surprised that someone hasn't already set up to offer "Tax Havens As A Service" long ago. Click a button, pay $100, and you're incorporated i

I'm honestly quite surprised that someone hasn't already set up to offer "Tax Havens As A Service" long ago. Click a button, pay $100, and you're incorporated in what's commonly known among the .01% as a "tax-proof structure". Why hasn't this been done yet?

pjc50 6y ago
Like most "exploits as a service", this only works if your volume is small enough to not make it worth shutting you down. The 0.1% get their privileges by being small in number and well-connected enough to deal with legislative retaliation. Once everyone starts bending the rules the rules bend back. This happened in the UK: it was very common for IT contractors to set up companies to get preferential tax rates, until the "IR35" reforms targeted that. Lots of the Crown Dependencies and Overseas Territories make their livings from tax avoidance; the Paradise Papers caught out a lot of celebrities using their services. https://www.theguardian.com/news/2017/nov/14/after-successive-offshore-scandals-are-there-signs-of-change-in-isle-of-man https://www.theguardian.com/news/2017/nov/14/after-successiv... Look down https://thebanks.eu/compare-countries-by-banking-sector https://thebanks.eu/compare-countries-by-banking-sector and do a rough division of size of assets by size of country, and you can estimate which countries have the biggest tax avoidance industries. Nearly a trillion Euro sitting in the Cayman Islands? Bank soundness "n/a"? Seems legit. Jersey (pop 97,000) and Guernsey (pop 67,000) more assets than Romania (pop 19,000,000)? Seems legit.
- mikro2nd 6y ago
  I don't think it's solely/mainly a question of volumes/numbers and being sufficiently well connected, though no doubt it is a factor. In my experience the 0.01% are privileged to play by the book, but have an advantage over the rest of us in having access to a whole library of books to choose from, and the money to hire experts in book-selection and lackeys to manage the whole affair on a day-to-day basis. That's the stuff a Tax-Haven-As-Service outfit would have to solve behind the scenes. Most of these tricks involve entities-in-cahoots across multiple (usually at least three) jurisdictions, so I imagine it might take quite a LONG time before the various legal authorities in all relevant jurisdictions get sufficiently coordinated to have effective regulations in place. The evidence that this is the status-quo is that it exists, and has not, to date, been "solved" by any one government. Unfortunately it's just too expensive a solution to justify itself for us proles. eta: Also Alderney (pop. 2000-ish)
  - jjeaff 6y ago
    I have looked into what it might take to pull off some of these tax avoidence strategies for an average, upper middle income person. And the issue isn't just the knowledge, it's that you need a certain size before things actually start to meet the threshold of what the IRS and other foreign tax agencies consider legitimate. One specific issue I remember running into was the strategy of offloading intellectual property to an offshore entity. That entity needs to have staff and be at least doing something in regards to the business. I don't think you could get by just having an employee less or even shared entity holding the intellectual property. Because just an empty shell company is going to be seen purely as a tax avoidance play with no other purpose.
SilasX 6y ago
Yes! I remember that being suggested in the Panama Papers discussion and adding that it’s an ideal startup idea. https://news.ycombinator.com/item?id=11418909 https://news.ycombinator.com/item?id=11418909
- mikro2nd 6y ago
  Question still remains: why hasn't it been done yet? ;)
  - SilasX 6y ago
    Yeah I'd love to know the experiences of anyone who has explored this. Edit: Ah, one thing I didn't think of in my praise of the idea, is that this services doesn't give you a moat -- anyone can copy your forms, structures, etc. for getting the scheme set up.
emmelaich 6y ago
A guy here in Aus does pretty much that. https://inqld.com.au/insights/2020/09/22/how-a-gold-coast-jet-ski-dealer-launders-cash-for-international-arms-dealers-and-drug-cartels/ https://inqld.com.au/insights/2020/09/22/how-a-gold-coast-je...

pjc50 6y ago

Like most "exploits as a service", this only works if your volume is small enough to not make it worth shutting you down. The 0.1% get their privileges by being small in number and well-connected enough to deal with legislative retaliation. Once everyone starts bending the rules the rules bend back. This happened in the UK: it was very common for IT contractors to set up companies to get preferential tax rates, until the "IR35" reforms targeted that. Lots of the Crown Dependencies and Overseas Territories make their livings from tax avoidance; the Paradise Papers caught out a lot of celebrities using their services. https://www.theguardian.com/news/2017/nov/14/after-successive-offshore-scandals-are-there-signs-of-change-in-isle-of-man https://www.theguardian.com/news/2017/nov/14/after-successiv... Look down https://thebanks.eu/compare-countries-by-banking-sector https://thebanks.eu/compare-countries-by-banking-sector and do a rough division of size of assets by size of country, and you can estimate which countries have the biggest tax avoidance industries. Nearly a trillion Euro sitting in the Cayman Islands? Bank soundness "n/a"? Seems legit. Jersey (pop 97,000) and Guernsey (pop 67,000) more assets than Romania (pop 19,000,000)? Seems legit.

mikro2nd 6y ago
I don't think it's solely/mainly a question of volumes/numbers and being sufficiently well connected, though no doubt it is a factor. In my experience the 0.01% are privileged to play by the book, but have an advantage over the rest of us in having access to a whole library of books to choose from, and the money to hire experts in book-selection and lackeys to manage the whole affair on a day-to-day basis. That's the stuff a Tax-Haven-As-Service outfit would have to solve behind the scenes. Most of these tricks involve entities-in-cahoots across multiple (usually at least three) jurisdictions, so I imagine it might take quite a LONG time before the various legal authorities in all relevant jurisdictions get sufficiently coordinated to have effective regulations in place. The evidence that this is the status-quo is that it exists, and has not, to date, been "solved" by any one government. Unfortunately it's just too expensive a solution to justify itself for us proles. eta: Also Alderney (pop. 2000-ish)
- jjeaff 6y ago
  I have looked into what it might take to pull off some of these tax avoidence strategies for an average, upper middle income person. And the issue isn't just the knowledge, it's that you need a certain size before things actually start to meet the threshold of what the IRS and other foreign tax agencies consider legitimate. One specific issue I remember running into was the strategy of offloading intellectual property to an offshore entity. That entity needs to have staff and be at least doing something in regards to the business. I don't think you could get by just having an employee less or even shared entity holding the intellectual property. Because just an empty shell company is going to be seen purely as a tax avoidance play with no other purpose.

SilasX 6y ago

Yes! I remember that being suggested in the Panama Papers discussion and adding that it’s an ideal startup idea. https://news.ycombinator.com/item?id=11418909 https://news.ycombinator.com/item?id=11418909

mikro2nd 6y ago
Question still remains: why hasn't it been done yet? ;)
- SilasX 6y ago
  Yeah I'd love to know the experiences of anyone who has explored this. Edit: Ah, one thing I didn't think of in my praise of the idea, is that this services doesn't give you a moat -- anyone can copy your forms, structures, etc. for getting the scheme set up.

emmelaich 6y ago

A guy here in Aus does pretty much that. https://inqld.com.au/insights/2020/09/22/how-a-gold-coast-jet-ski-dealer-launders-cash-for-international-arms-dealers-and-drug-cartels/ https://inqld.com.au/insights/2020/09/22/how-a-gold-coast-je...