I read in some news articles that some large corporations manage to avoid large corporation tax in this way. Is it possible to set this up for a small company?

closed as off-topic by Patience, Brythan, Victor, Dheer, Grade 'Eh' Bacon Dec 1 '16 at 18:58

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    I would guess that the legal fees and other overhead to figure out how to make it work make it unprofitable for a small company. – bstpierre Mar 26 '11 at 3:36
  • How would it help you though? If you took any of the money, you'd still be taxed. So you would pay a small corporate tax if you did this, versus the none at all that you're paying now. It would only make sense if you planned to keep large amounts of money inside the company to take for personal use at a future time when you were in a lower tax bracket or something unusual like that. – David Schwartz Nov 15 '16 at 4:36

There are countries out there that are known as tax havens, where they offer companies low or no taxes on earned revenue. I haven't looked into this in over a decade, but recall that countries like the Cayman Islands, Switzerland, Ireland, and Nauru, to name a few fit that tag.

But like bstpierre stated, there's a reason why the IBM's of the world can pull that off easier then us mere mortals. They have the financial clout to make sure they have accountants that dot every i, cross every t, and close every loophole that would give an "in" to the folks at the IRS, CRA, Inland Revenue, or who have you.

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    +1 The scale that these companies operate on is unimaginable. GE, for instance, has over 200 employees producing it's 24,000 page tax return. I believe that the IRS actually has a few hundred employees specifically dedicated to working with them. – duffbeer703 Mar 26 '11 at 22:10

Grass is always greener at the other side of the hill. Tax is only a small proportion of your costs. you could easily set up a small company in a so called tax haven. But are you willing to emigrate? If not, will the gain in less taxes cover the frequent travel costs? Even if you would like to emigrate less tax might be deceiving. I recently had a discussion with a US based friend. In the US petrol is way cheaper then in Europe. THere were many examples in differences, but when you actually sum up everything, cost of living was kind of the same. So you might gain on tax, but loose on petrol, or child care to just name some examples

For big companies who think globally it makes sense to seek the cheapest tax formula. For them it does not matter where they are located. For us mortals it does.

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