Legal tax optimization strategies

Legal tax optimization strategies

A sample of Healy Consultants global tax strategies to help Clients’ include:

  1. If properly structured, the following entities are legally tax exempt i) a Singapore or Hong Kong LLC ii) a New Zealand or a USA LLC iii) a Dubai or Luxembourg LLC;
  2. Subject to local employment laws, our Clients might benefit from hiring temporary or part-time consultants rather than full time employees. While most countries require employers to provide insurance and pensions for employees, consultants might be exempt from such requirements;
  3. In some countries such as Singapore and Hong Kong, it is possible to open a corporate bank account without having to register a local entity. Healy Consultants can assist our Clients to setup these bank accounts with reputable international banks, and advise on how income received in these accounts can be legally tax exempt;
  4. When conducting transactions with the EU, every company in every country in the world can register for EU VAT;
  5. In most countries, dormant companies are exempt from annual audits. However, they may still have annual filing requirements that Healy Consultants will be happy to assist you with;
  6. A foreign owned USA LLC does not suffer USA corporation tax. However, profits generated from this entity are taxable as personal income tax for the shareholders;
  7. Minimize global withholding tax by using a Singapore holding company that enjoys the benefits of 69 double tax treaties;
  8. A foreign company can open a London corporate bank account and not be subject to UK tax if there are i) no permanent establishments in the UK ii) no sales in the UK and iii) beneficial owners reside outside the UK;
  9. It is important our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile. Let us know if you need Healy Consultants’ help to clarify your local and international annual tax reporting obligations.
  • Corporate inversion

    What it is?

    Multi-national Clients significantly reduce their corporate tax burden by relocating the parent company from a high tax jurisdiction to a low tax jurisdiction. Consequently, global income can be booked to the new parent company located in a low tax country (click link). Corporate inversion is a tax strategy adopted by many large USA companies that i) receive most of their income from abroad ii) currently have a high domestic corporate tax rate and iii) are taxed on worldwide income.

    Advantages of this tax strategy

    1. Reduce domestic corporate tax because foreign income is no longer booked in high tax countries;
    2. Corporate profits of the high tax subsidiaries can be further reduced by i) parent company management fees ii) interest payments on loans from the new parent company;
    3. Higher after tax profits means increased EPS, greater cash flows, higher return on equity. Increased share price;
    4. With more free cash flow, the new parent company can increase Group capital expenditure, reinvesting profits into global subsidiaries;

    Disadvantages

    1. With growing global concern for money laundering, financing of terrorism, tax evasion and submerged economy the OECD has implemented laws regulating such tax strategies that restrict companies from artificially relocating global earnings to tax havens. Such regulations are reflected through: transfer pricing, thin-capitalization and BEPS (Base Erosion and Profit Shifting). Consequently, it is critical the new parent company has substance and a legitimate permanent establishment including some members of the Board of Directors;
    2. In such countries the domestic Tax Authorities are increasingly vigilant as to investigate whether a company’s inversion is i) a legitimate business strategy ii) in compliance with current domestic measures (thresholds) and iii) international standards. This may lead to extra scrutiny on a company’s financial records;
    3. If a Government establishes the control and management of the Group continues to be done from the high-tax jurisdiction, then the low tax parent company will be taxed at the original high tax rates;

    How Healy Consultants can help

    Since 2003, Healy Consultants assisted multiple multi-national companies restructure their Group. Specifically, Healy Consultants will assist our clients with:

    1. Legitimate re-domiciliation of parent company to a low tax jurisdiction (click link);
    2. Re engineering the Group corporate structure to make it more tax efficient;
    3. Managing the global accounting and tax obligations of the Group;
    4. Supervising the legal and compliance of the Group structure;
    5. Business mergers and acquisition services;
    6. Supervising debt and equity finance;

Contact us

For additional information on our tax minimization services, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Seth Ochieng, directly:
client relationship officer - Seth