New Offshore Tax Laws & Tax Residency

New Tax Residence Laws in Nevis; Tax Filing now Underway in Cook Islands
There have been some tax law changes in many of the offshore jurisdictions, including Nevis in the Caribbean and the Cook Islands in the South Pacific. 

The changes have primarily been prompted by the European Union as a means to thwart tax competition. 

Keep in mind, US people are taxed on worldwide income. So, we are talking about no tax due in the country where the company or trust is formed. However, you're still responsible for paying taxes to your local tax authorities where applicable.

So, what does this mean to you if you have an offshore company and/or trust or are thinking about forming one?  

So, Saint Kitts Nevis legislature caved in to the pressure. They passed the Income Tax (Amendment) Act, 2021, which as 1 July, 2021, enshrines the concept of "permanent establishment" in the tax code.  
 
The Amendment determines the circumstances whereby companies would be taxable by the Saint Kitts Nevis tax authorities. Under the Amendment, a company is subject to tax on its assessable income if it has a local "permanent establishment", which includes its "mind and management", a branch, an office, a factory, a workshop or a place of extraction of natural resources. The law applies to Nevis business corporations ("NBCs"), Nevis limited liability companies ("NLLCs") and all other companies regardless of their jurisdiction of registration.
As a practical matter, NBCs. NLLCs and other companies will remain tax-exempt provided they do not have local directors, managers or fall foul of the other prohibitions under the Act.

Webull

DISCLAIMER

The information provided in this video does not, and is not intended to, constitute tax or legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this channel may not constitute the most up-to-date legal or other information. This video and/or description may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the we do not recommend or endorse the contents of the third-party sites. The presenter is not an attorney. Lawyers Limited is not a law firm and none of the information should be considered legal advice.

Viewers of this video should contact their attorney to obtain advice with respect to any particular legal matter and their accountant with respect to any tax matter. No viewer, reader, user, or browser of this video or channel should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this video, channel or any of the links or resources contained within do not create an attorney-client relationship between the viewer, reader, user, or browser and video authors, contributors, contributing attorneys, law firms, or committee members and their respective employers.

The views expressed at, or through, this channel and in this video are those of the individual authors writing in their individual capacities only – not those of their respective employers, the associated company, companies, brands, or company as a whole. All liability with respect to actions taken or not taken based on the contents of this video and channel are hereby expressly disclaimed. The content on this posting is provided "as is;" no represen

[incometrek]

Fantastic! This is the video I requested and you did it. Thank you very much. That makes it clear, Because when Janet Yellen started saying 15% minimum global tax, I was going, 'ok, here we go'. So, thank you a ton! Patrick

[markhazzard]

I love this guy. He's a "rock star" in his profession, imho. :)

[wkwong]

Interesting change. So if we had a Nevis LLC and the bad thing happens, your Nevis law firm will step in as Manager to protect me. In that case, would that be considered doing business in Nevis (and subject to taxes) since the manager is based out of Nevis?

[davedriscoll]

Any plans for doing a video on the best safest places to get a 2nd residency? Seems like most also fear that unknown due to lack of education. Thanks.

[dwlof]

Thank you for doing a video on this subject.

I thought the idea behind economic substance rules was to show that a company was being controlled to some extent in the jurisdiction where it is based ie if it is a Cayman company then it must have a Guernsey based company director / officer. This is to satisfy the OECD and allow the company benefit from low tax in certain locations.

In the Nevis example you give it seems that the idea is that the LLC would not have "Central Management and Control"in Nevis. This is so it can avoid any tax in Nevis. But if that is the case it is my understanding that the company would be subject to tax where ever the "Central Management and Control" is based.

For example if the directors / managers were based in Germany / UK / Austrailia / or Canada (and they were doing no business in Nevis) then it would be subject to taxes in those countries AS it is not controlled in Nevis. Can you please comment on this?

Obviously besides any asset protection benefits people setting up LLC's would want to have it as tax neutral as possible..