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
This question appears to be off-topic. The users who voted to close gave this specific reason:
- "Questions about accounting are off-topic unless they relate directly to personal finance or investing from an individual's perspective." – Patience, Brythan, Victor, Dheer
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.
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.