A very fine line differentiates tax evasion and tax avoidance. So if you think excessive and unjust taxes is keeping you from being truly wealthy, you need to be careful in the strategies you are using to cut down your taxes.
Ways to Avoid Paying Unmerited Taxes
There are safe ways you can avoid paying unfair taxes. Most of the giant international commercial conglomerates have their uncountable offshore companies in the Bahamas, the Cayman Islands, Hong Kong and other tax haven countries.
If they can do it safely, you can do it as well.
The Most Popular Use of Offshore Companies
Most offshore companies operate as a trading company. The original company might be an exporting or importing business operation and its owners created another business entity in an offshore area.
This newly created offshore company would take orders from its customers, and have the goods delivered from the manufacturer or place where the goods were bought. The profits accruing from the net amount of the sales minus purchase price can be recorded as low tax or even tax free income.
For this kind of trading company, it is important for the owner to select an offshore area which has a well-established and fully functional communication and shipping systems, for its operations to succeed.
In the Asia-Pacific region, one of the best offshore areas is Hong Kong. There are many attractive features that Hong Kong has in terms of being an operational base for an offshore company.
The Plus Points of Hong Kong
Hong Kong sits on a prime piece of real estate – it is nearest to the largest consumer market in the world – Mainland China. In fact, China is the present administrator of this city state ever since the British turned over its controls in June 30, 1997.
Although Hong Kong is legally under the government of the People’s Republic of China, because of its special economic status, it was permitted to carry on with its usual British common law system, and that includes the way it conducts its business.
This is for an economic reason: Mainland China needs Hong Kong to continue its revenue generation, and Hong Kong is bent on maintaining its function as a financial hub in the Asia Pacific region. Both entities profit in this unique relationship.
Benefits to Offshore Trading Companies
The greatest benefit to offshore companies in Hong Kong is the potential to reach the largest consumer market in the world. Even if a trading company can only reach 1 per cent of the more than 7 billion people in China that would be approximately 70,000 people right off the bat.
The income an offshore trading company could realize will not be subjected to as much tax compared to the tax it will be required to pay in its native country.
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