Why the United States of America is Considered the Biggest Tax Haven
Does it seem paradoxical that the Country with one of the most intimidating and draconian tax system on its citizens and resident aliens, and pushes regulations against tax havens and tax avoidance, is in fact, one of the biggest tax havens, allowing foreign nationals and residents to use the United States as a tax shelter?
As Judged Learned Hand once said: “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”
Disclaimer: nothing in this article shall be considered a tax, financial, or legal advice. The content herein is just the opinion of its author, exercising his freedom of speech. You must get the advice from a licensed attorney, accountant, or financial advisor.
Ranking 2nd in the most financial secrecy jurisdictions index, the United States allows foreigners to use Limited Liability Companies to not pay income tax in their country of citizenship or residency. This works because LLCs are considered pass-through entities, meaning the LLC profits are not taxed at the entity level, but they are declared when the owner of the LLC files his/her personal tax statement at the end of the year.
A Single-Owned LLCs fully owned by a foreigner is considered a Disregarted Entity (DE) for tax purposes, and the Owner is not supposed to pay taxes on the LLC income as long as it not U.S. Sourced, like any other tax havens requires so in order to profit from the tax exemption.
Before forming an LLC in the United States there are several things to consider such as which States offers me the best LLC according to my needs, and the yearly compiance at the Federal and State level.
One of the Federal requirements, before the Internal Revenue Service, is to report any transaction between me as the owner of the LLC and my LLC, for example if I have a car under my name and I sell or donate this car to my LLC, this information is reported, as well as any loan, agreement such as Use License, etc. This is just an information statement, not a tax statement.
My book, “Offshore States of America: how an international tax lawyer uses U.S. LLCs to not pay income taxes” is available for on sale on Amazon, and it covers with much more details everything I need to know in order to and before opening my LLC, such a yearly Federal and State compliance, opening a Bank Account, Asset Protection, Privacy, Profit Shifting, some international tax concepts you need to be aware of when carrying your offshore activities, and much more.
You can find my book here: https://www.amazon.com/dp/B088N7LGT7
About the author: Corporate and International Lawyer from Nicaragua, Central America. Speaks English, Spanish, French, Italian, and Russian, learns Chinese Mandarin. Offshore Services Provider.