I just started researching this tonight.. as I am bored and markets are closed tomorrow.. Here is where my mind has wondered to.. all of this is legal by the way.. US companies use this to avoid paying billions in taxes.
Being tax season.. and the ridiculous amount of capital gains tax I have to pay (I'm sure it's chump change to quite a few) I started thinking about opening an offshore account and using an international broker to trade US markets.
First step: Create Offshore Bank Account
I have selected Belize as the destination for my offshore account (so far) Belize is recognized as a great tax haven. There are NO capital gains taxes in Belize foreign or domestic. Many huge US corporations and wealthy US citizens use Offshore Belizean Banks to reduce US taxation. It is a controversial topic to some.. but I've always believed if you can't beat them, join them. Belize has also been a stable democratic country for some time and they use a fixed rate of 2 BZD = 1USD and the topic to adopt the USD as official currency has been brought to the table more than once (though in an Offshore Belizean Bank you will never convert your currency to BZD)
The process for setting up an Offshore Belizean Bank account is pretty straightforward and secure. The first step (it seems) is to setup the bank accounts in the name of an International Business Company (IBC) which gives you absolute secrecy and protection (anonymity is paramount in offshore accounts) "A Belize IBC is exempt from all forms of taxation and assets are fully protected from confiscation orders or similar actions by foreign governments." There are no annual company returns to furnish and directors and shareholders remain anonymous (no financial reporting?) Setting up an IBC sounds intimidating but it isn't.. It mostly seems to be the first loop to jump through in the tax evad.. I mean tax reducing.. loopholes. Offshore Belizean Banks offer a one-day offshore incorporation service with their law firm in Belize with your IBC documents couriered right to your doorstep anywhere in the World. Most demand (checking) accounts require $1,000 - $5,000 minimum balance. Boom. Offshore account setup and funded. Right?
Next step: Use International Trading Platform to Trade US Markets
Not much research has been done here on my part.. currently still researching step one.. stopped mid-way to write this thread and get some thoughts down before they flew out of my coo coo nest.
But my understanding of how this process would work goes like this.
Setup an International trading account funded by the Offshore Belizean Bank account and IBC registered in Belize. Seems to easy.. where's all the red tape and loopholes?
What are some reputable International Trading Platforms?
*I have been referred to Interactive Brokers. http://www.interactivebrokers.com/en/main.php They trade on all the exchanges I am looking for except OTCBB.
Are there any International Trading Platforms that trade OTCBB?
Can I open a mainland discount brokerage account with a major US broker in the name of the offshore IBC and still be tax exempt?
*As I understand it, it will be treated the same as any other foreign company trading on the US or any other mainland market with no capital gains tax to pay.
As mentioned in step two, where's all the red tape and loopholes?
Can funds be transferred from the Belizean account to a US account and still not be subject to taxation?
Any other information that can be provided will be greatly appreciated.. and like I said.. I just started researching today and will be updating as I find more information.
Edited by Rymo - 2/22/11 at 7:00pm