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If I worked in Saudi, paid into a dollar bank account by American company, could I evade paying income tax? |
I am trying to pay less UK tax, as I dont think I should be paying it in this circumstance. Ok, first things. Tax avoidance is not a term you want to use in public. Tax minimisation is what you should use when talking about this topic. Any offshore structures you use are only as good as your ability to then keep your own counsel. The UK doesn't have a reciprocal tax agreement with SA as far as I know, so you are technically liable for tax on any earnings you make there (any tax you pay there should be claimed back from SA authorities if possible to avoid double taxation). However, if you are out of the UK for a tax year, then you can avoid paying tax on any earnings outside of the UK (but not necessarily on UK income, say savings and renting your house out). SA is known for tax-friendly employment (you don't pay any under most schemes), but if you are repatriating funds during temporary employment, the issue is not black and white. You'll need to register as not-resident for tax purposes at the Inland Revenue's site. It's a pretty straightforward form and the helpline is good for answering questions. If you are still domiciled in the UK for tax purposes (maybe you are only working for a few months), then you are technically meant to declare your earnings. Whether or not you do is up to you; if you repatriate large sums then you are more likely to face questions than if your funds are spent or remain offshore. As for offshore structures - depending on the value of your income, you might consider setting up a corporation to receive your funds. That way you have an extra level of protection between the revenue and yourself. You would need your employer on board though as they would have to pay into the company's account. This is pretty standard for contractors. Your account need-not be where you work - places like the Cayman Islands are well-known, although jurisdictions such as Belize and Nevis offer reputable company formations plus bank accounts. The bottom line is, unless you are earning significant amounts and repatriating them to the UK, your chances of being audited are slim and even then, the chances of you being penalised are also slim. Speak to the IR, get their official position on your type of situation and get the name of the person you speak too. You don't need to give your name. This kind of set-up would cost you about $1500-3000 a year in fees and should be considered carefully - perhaps if you are interested in setting up a trust for family or investing in overseas property. Matto http://www.barefootinvestments.com... Source(s): Experience and previous advice from offshore specialists. I believe you would need to get an offshore bank account. You pay income tax in the country where you work. If you want to avoid taxes in this country, don't forget to walk around with a big sign saying 'No ambulances for me thanks' I assume you know that if you are outside the UK for one whole tax year, you pay no income tax. No. You will need to report your income, and as such your taxes. You will need to look into paying State taxes; most gov't employees also have to pay state & local taxes to wherever they say is their home. Not sure about the UK, but Americans who are working in Saudi Arabia do not pay taxes to the US gov't and Saudi doesn't tax them either. I was in the military and lots of guys used to like to go to Saudi because of that reason. |
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