There’s a bunch of taxes you’ll have to think about when you’re starting a company offshore or at home.
De facto, all entrepreneurs have to face these nine types of taxes on a permanent basis. That’s why it’s better to plan now how to reduce your income tax, so you won’t wind up overpaying. Even if you aren’t going to set up a business offshore, you will still have to pay some of these taxes.
By the end of this article, you’ll know all you need to about:
Income Taxes, Income Levies, Payroll Taxes, Wealth Taxes, Sales Taxes, User Fees, Sin Taxes, Property Taxes and Stamp Duties.
Income Taxes
This is the first and the most known type of taxes. They may start on a federal level (in the US), but also on a state and even city level.
Some countries don’t require entrepreneurs to pay the income if they don’t meet certain requirements. Understanding the exact tax system of your country will aid you in the process of reducing your income tax.
Income Levies
These ones are not common, but do appear with a certain periodicity. Occasionally, some countries might introduce them in order to suck out more of your income money. Now you know why it’s important to pay attention to this tax when you plan on opening a business.
Payroll Taxes
A lot of people actually pay more in payroll taxes than in income tax. In different countries, there are different types of taxes for healthcare, universal service charges and your retirement or old age medical care. This might mean you’ll have to send a lot of money out the door in order to invest in your health and future.
Wealth Taxes
It implies that the amount of all of your assets has to be converted into taxes. The tax amount could be half a percent or even a full one percent of your income. What’s the point of this tax? Even if you aren’t working for your money, the government must take a piece of it.
Sales Tax
It may be called VAT, SST, GST or the consumption tax, but it anyways means paying a ton in sales taxes when buying goods. Different kinds of sales tax make you pay a lot of money, that’s why it’s good to shop in places with lower taxes. Some Internet research and comparison can help you save a lot of money in sales tax.
User Fees
User fees are the kinds of taxes that come up when you have to pay a toll to drive down a road.
Cutting down on the tolls and other user fees is going to play a huge role in reducing your taxes.
Sin Taxes
Do you smoke? Do you drink alcohol? Then, you should be aware that you might pay much more in taxes (depending on where you choose to live). For example, Muslim countries require you to pay more for alcohol. Other countries have implemented similar taxes for cigarettes. So, before choosing a country for business, see that it is okay with your “sins” in terms of taxes.
Property Tax
If you’re planning on buying real estate in another country, you need to know what’s going on with the local property tax. Some places don’t have property tax (at least for expats). Some require extremely low income tax, but make you pay very high property tax. Thinking about finding a country that has a low or even zero property tax is compulsory when opening your new business offshore.
Stamp Duty
This one is related to property tax. When buying property, some countries charge you to transfer it. Then, when you’re selling it, they’ll charge you again to transfer away. Even if you’re just renting, the legal structures require you to have a stamped rental agreement. Some charge you 10% of the value of the whole year’s rental agreement just to get a stamp. Without this super stamp, you lose most of the legal benefits. It might even extend to what it costs to leave the country at the customs.
Any entrepreneur has to take into account a large number of taxes. You might even be the one who might have paid all of the mentioned above taxes over the course of your lifetime.
There’s a lot of things to consider when finding places where it’s easier and cheaper to do business and to live.
If you’re planning on taking your business idea offshore, or just opening a company in your home country, make sure you consider all of these taxes before starting the whole thing!
