Tag Archives: tax savings

Great Offshore Tax Planning for the Smart Robot or Smart Server

international tax planning, ecommerce tax planning, cloud computer tax planning, offshore tax planning,

International tax planning for eCommerce. As iPhone apps replace ATM’s and streaming videos replace Redbox Movie Rental Kiosks, international tax planning moves into the cloud.

I found myself fascinated by the New York Time’s article on intelligent robots replacing the Chinese factory worker.   As the World changes, Congress insists on keeping international tax laws written for a 1930 economy.  

These ancient U.S. tax laws provide unique for international e-commerce tax planning. Some small businesses place their intelligent cloud computer server in tax-free states such as Nevada.  Others go into tax-free countries such as Canada,  Cyprus (an IRS  beloved low tax haven country) or the Isle of Man.

A small business using a smart website merely place their computer server in a foreign location.  Web sites that provide a service are perfect for international tax planning.  The newest service is manufacturing products on a 3D printer.  

So, how do you save taxes offshore?  And what is the best type of global cloud computer tax planning?  Many tax planning methods are available.

This blog will discuss one strategy on the many.  If you need to up the quality of your tax planning, then contact me, Brian Dooley, CPA, MBT, at [email protected] 

Canada and the Isle of Man are my two favorite tax havens for the web based business.  You might be wondering about Canada.  Just how do you save taxes in a high tax country?  Canada does not see a computer server as a Canadian business.

The USA has complex controlled foreign corporation rules.  Written in the 1960’s, they are from an ancient time.  These laws do not relate to today’s internet E-commerce and robotics businesses.  They allow big international tax savings if you use technology.

For example, the robots in the N.Y. Times article could be located in the Isle of Man (a British tax haven in the North Irish Sea).  The Isle of Man is part of the U.K. electrical system. It has great ports for shipping.  It is freezing.  But I do not think a robot would complain.

Just how do your save taxes offshore?  The basic steps are:
1. Create an Isle of Man corporation.  This will be a “controlled foreign corporation” for U.S. tax law.
2. The Isle of Man company owns your computer server.
3. The Isle of Man company hosts your website.  This website provides services or products.
4. The Isle of Man corporation accepts credit cards for its services.
5.  Management and banking can take place in the USA.  These two items do not affect U.S. taxation.
6. Always get an IRS private letter ruling guaranteeing your tax savings.  

What Every Business Owner Should Learn from General Electric

Tax planning teams create wealth. They get the brain neurons working more creatively. If you are the client, you must encourage this by paying your team for their "thinking time."

Tax planning teams create wealth. They get the brain neurons working more creatively. If you are the client, you must encourage this by paying your team for their “thinking  and brainstorming time.”

Imagine this: your company earns billions of dollars in profits and somehow, you’ve figured out a way to avoid paying taxes on a significant portion of those profits.

Sounds too good to be true, right?

Not if you have a superb tax team in your  corner.

Year after year, mega corporations like Google, Apple, Johnson & Johnson and Microsoft are building up their offshore profits and deferring U.S. taxes. According to a 2013 Bloomberg article, the largest U.S. companies grew their untaxed offshore stockpiles by $183 billion in 2012. Pfizer, for example, had $73 billion neatly tucked away, out of the reach of the IRS.

General Electric’s Tax Strategy: Truly “Imagination at Work”

Out of all the billion-dollar corporations, General Electric leads the pack with $108 billion offshore, according to the Bloomberg report. In fact, G.E.’s bold tax strategy attracted the attention of The New York Times  which reported that G.E. paid no U.S. taxes (G.E. later disputed that finding in the Huffington Post.)

So how are they pulling it off? G.E. and the other corporations that manage to defer U.S. taxes are not breaking the law.  Senator Bernie Sanders investigated and found that half of tax planning businesses pay no income tax.  Those paying taxes were in a 14% tax bracket. 

They’ve simply managed to make the tax laws work to their advantage. They’ve assembled tax teams full of smart, savvy, out-of-the-box thinkers. And more importantly, they’ve made the investment to have their tax teams continually study new ways to save on taxes.

Brainstorming:  G.E. instruction its tax department to brainstorm each time they see a possible loophole (also known as a tax saving strategy).

Your Perspective on Taxes and Your Tax Team

Most privately-owned business view income taxes—which take more than 40% of the profit—as a required cost. G.E., on the other hand, sees income taxes as an expense to manage with the help of their in-house tax experts.

Few business owners have ever worked with a tax team that was able to yield the kind of results as those from G.E. and the other giant companies. Sadly, I meet business owners all too often whose former accountants or tax advisors did nothing out of the ordinary to help them save on taxes. Their advisors never researched new case law or considered restructuring business entities for their clients.

Is your current tax advisor guiding your business and investment model? Is your current tax advisor communicating directly with the IRS on your behalf, seeking private letter rulings? Has your tax advisor ever stopped to study the products you offer and given you some ideas on reclassifying the character of your income?

 Was your tax plan for next completed last year or is it done as your CPA prepares your return?

I cannot stress this enough: an excellent tax team is within your reach. When you stop to consider the immense cost savings of having quality tax counseling, you begin to prioritize your investments differently.

G.E. has a tax team of 900 in their tax department. If they spend $100 million to save $1 billion in taxes, the initial investment is certainly worth the output, correct? Let’s use this same ratio to determine the scale for your business. Ten percent of your profits should be spent on tax thinking.

Here is what’s happening with my wealthy  clients. They allocated 5% of their taxable income to their tax team.  For example, if they are making $1,000,000, the US and state taxes are $400,000.  By allocating $50,000 tax deductible dollars, you only have to save $30,000 to break-even.  With more than a million pages of conflicting tax laws, you have thousands of loopholes. Most of which, you will never find on the internet.

I’d like to hear from you, the business owners. What percentage of your profits are you contributing toward tax planning and what kind of results are you getting? As always, I’m happy to brainstorm tax ideas with you. Call me, Brian Dooley CPA, at (949) 939-3414 for a free one-hour consultation.

How to save Taxes with Virtual Tax Planning in the Cloud Tax Haven

tax planning, saving taxes, cloud tax ,

Saving taxes with the cloud based business requires innovative tax planning,

So little written on tax planning for the virtual world  (today’s artificial intelligence,  e-commerce websites and big data computer systems).

Virtual business tax planning is virtually nonexistent.  Yet, the tax savings are huge for a business in the cloud. Special tax laws allow a controlled foreign corporation to avoid taxes when the cloud server is located outside of the U.S.

For example, placing the computer server in a tax haven can create tax-free income

 Currently, Canada is an attractive tax haven for the international eCommerce cloud business. Other countries include the Isle of Man and Cyprus.

If you live in a high-income tax state, such as California, you might want to place your computer server in Nevada.  This is an easy way to save on state income taxes with the right type of corporation.

Learn how to save taxes with international tax planning at that the California Society of CPA’s continuing education video below.

How do you save taxes in the virtual world?   Well, envision a world with no electricity, no cars and radio.  American international tax laws apply.to this world and not the cloud computer world.

Men born in the late 1860 and 1870 wrote today’s international tax laws in 1939.  Despite the thousands of new tax laws, the international tax laws remain unchanged.   These ancient tax laws provide tremendous tax savings for e-commerce businesses and cloud base businesses.

If you want to learn creative virtual tax planning, call me, Brian Dooley, CPA, for a free one hour brainstorming conversation at 949-939-3414.