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Tax havens only for the rich

Legacy Phuket Gazette

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PHUKET: The annual report published by tax relocation specialist Bradley Hackford has recently named the top ten jurisdictions for 2014.

They use five criteria in total, which include quality of life, security, geographical location and accessibility, as well as the quality of the economic citizenship program. Sadly, for most, the achievable tax savings make the high sticker price of establishing a tax home in these places unjustifiable.

However, a high-net-worth individual living internationally, who has been paying a high tax bill every year by default because arrangements set up prior to becoming international or due to the laws of their home jurisdiction, these places could indeed offer a legal way to save a fortune in taxes while spending the bulk of the year in Phuket.

The list includes Switzerland, Dubai, The Channel Islands, The Caymans, Mauritius, Panama, Bulgaria, Monaco, Andorra and the Bahamas. Keep in mind that for Americans, establishing a business or residency in one of these places would not be enough to escape Uncle Sam – obtaining a passport and revoking US citizenship would be required.

For everyone else, setting up a business or establishing a personal residency can drop your tax rates down as low as zero per cent in many of these places. The catch again, is that dealing in sums of millions to play this kind of legal tax avoidance game is usually necessary, when it comes to personal taxation.

Often an investment of more than a million dollars is required to gain personal residency, which doesn’t make much sense for a tax bill in the thousands. Of course, there is also the prestige that goes along with a place like Monaco, but like most of us here in Thailand, we are more interested in the laid back attitude Thailand has to offer.

For companies, if they are doing business internationally and not sourcing revenue inside the Kingdom, even small fish can take advantage of low or non-existent corporate tax rates. This gives tax planning opportunities to everyone, as profits can be re-invested into the business without drawing a salary or choose under which limits to draw, therefore deciding which bracket to fall into.

While the use of these offshore jurisdictions has historically been associated with cheating and many of their now defunct secrecy laws, there are perfectly legal uses for them to avoid unnecessary taxes. Since most foreigners here are technically classified as non-resident (ever wondered why retirement and marriage visas are called non-resident-O visas?), they are not taxed on foreign income. Even if permanent residency is achieved, Thailand still only taxes income generated inside the Kingdom.

Unfortunately, most are not in a position to have the kind of problems the ultra-rich have, but it’s nice to know that if that crazy mobile app being dreamt up takes off, things can be arranged so the least amount of hard-earned cash goes toward taxes as possible.

The old saying that the rich get richer while the poor get poorer isn’t actually true but it’s not far off. The poor 20 years ago did not have iPhones and flat screen televisions, but it is apparent why the bit about the rich getting richer will likely continue to remain true.

David Mayes MBA lives in Phuket and provides wealth management services to expatriates throughout South East Asia, focusing on UK pension transfers. He can be reached at 085-335-8573 or david.m@faramond.com. Faramond UK is regulated by the FCA and provides advice on taxation and pensions.

— David Mayes

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

Keep in contact with The Thaiger by following our Facebook page.

Never miss out on future posts by following The Thaiger.

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Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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