International tax planning compares last Century’s tax laws to this Century’s business. Then, it exploits the differences.
Using your knowledge the 1990s and the beginning of this Century will cause you to pay more in taxes and it can put you out of business.
You have to compete with the future. Blockbuster’s demise is old news from the beginning of this century. Just ten years later, the killer of Blockbuster is dying. Redbox has closed (laid off) 1,000s of it robotic DVD rental kiosks in the U.S.
In 2015, it closed all of its DVD rental kiosks in Canada. Netflix and other video streamers are slaying the king of the DVD rental kiosks. Redbox’s $1 a night became too expensive. Netflix is $10 a month, and you can watch as many hours as you want with 50,000 choices. With Redbox, you had to rush to the kiosks to return the DVD.
American international tax laws were written and were designed for a 1930 economy.
Offshore tax planning compares the out of date concepts in our tax laws to 21st Century business. Then, it exploits the differences. Your tax planner must forget last century’s tax planning and learn this century’s. Even the first ten years of this century is partly obsolete.
If this was 2005, you would not have a smartphone. Yep, no apps. I don’t know about you, but I use my iPhone and iPad for business more than I use my landline and my computer combined.
With the iPhone came the streaming of music. If the computer server hosting the music was located in the Cayman Islands, the income would be foreign source income and not U.S. source regardless of the location of the customer.
Look at banking. Are ATM’s the next to be laid off? Do you want to deposit your checks like this, in the dark watching over your shoulder?
Internet businesses can decide who is going to tax them just by using the cloud.
Or like this- At home with a smartphone app where it is safe. By changing your business, you not only survive, but you can also completely shift your tax profile.
For example, if you distribute a product, spend some time learning about 3D printing or using a fulfillment center. If you have an e-commerce business, consider streaming your product versus providing a mp3 file or a pdf file. Internet tax planning starts with shifting the source of the income.
For some, it is merely a move to Nevada or Texas to escape California or New York taxation. For others, it is outside of the U.S., such as Canada (yes, it is an internet tax haven) or Ireland. By the way, California tax planning and New York tax planning just became more important. State income taxes are no longer deductible.
If you want to brainstorm your idea and dream about your future, then call me, Brian Dooley, CPA, MBT, at 949-939-3414 for a free one-hour consultation with you and your CPA,