Quote Originally Posted by bambi View Post
I figure someone here can probably point me in the right direction and hopefully some people have experience with this.

I'm considering setting up an offshore company in a low tax country (eg The Bahamas). The aim of this would be for me to do my investment/trading via this company and realise my profits in the low tax country.

Also does anyone know if it is possible to contract to an NZ company using the offshore company. By this I mean instead of me being employed as an employee here in NZ could I contract to NZ employer via my offshore company and then pay myself a smaller salary thereby reducing my overall NZ income?

So anyone got any tips, comments etc?
Bambi

Unless you are about to seek advice from a tax professional what you are talking about doing, is in effect "tax avoidance" & complex to say the least.

You would need to be a resident/tax resident in that country to receive any "tax concessions" from a low/no tax country.

If you were an NZ resident for tax purposes & had an overseas company, there are many pitfalls.

1. Income earned would be taxable in NZ anyway (unless resident in that country)

2. Overseas companies (overseas shareholding > 25%) MUST be audited in NZ.

3. The FIF regime caps the limit to which countries & how much income one can earn under "double tax agreements".

4. Under the IRD criteria, just having property/family/ other investments in NZ would likely deem you an NZ resident for tax purposes.

5. As for the "contracting back" comment, that would most likely be caught under the "thin capitalisation rules", or simply trying to transfer profits/income to a related entity in a lower tax country.

There are many more issues for you to consider before proceeding with this idea, & i urge you to seek a professional opinion from a CA firm.

Some questions you might like to ask yourself.

1. Why am i doing this? (Please dont say to lower tax!)

2. Does this fit within my long term goals/strategy?

3. Where do i see myself residing?

4. Is the money involved worth such a complex structure?

5. Are you aware of the resolutions, costs, & ongoing administration required operating as a company?

6. If what you wanted to do was so simple, lucrative & legal - wouldnt we all be doing it already?

Disc: Ex PwC with a tax background.