Question about business in tax havens around world

[Will]

Hi there,

I am wondering if anyone can explain to me a few things about businesses registering in tax havens around the world (such as Guernsey in the UK Channel Islands)

I noticed bookdepository.co.uk (and .com) are run by The Book Depository International Ltd, St. Peter Port, Guernsey. Obviously, the warehouse(s) are not located on Guernsey and I doubt they have any employees on the island, though why do they register their business in Guernsey (obviously for the tax breaks), and other businesses in the UK do not?

I have dual UK and Aussie passports, and some of my family lived on Guernsey and so I have known about it as a tax haven for a long time. I inquired and found it is not that big a task to register your business there, so I am thinking there must be a reason that some businesses avoid it?

Would be great if anyone knows a few reasons why some businesses would not get an advantage out of trading out of a tax haven?

Thanks for any info!

Will

[Felicity_Sapphire]

Hi Will,

While I have no experience with clients operating out of tax havens, I do know that the Tax Office are cracking down on Australian Tax Residents with assets and income from offshore and are particularly targeting tax havens.

You just have to have a look at the ATO website to see how much they are focussing on it at present.

Felicity

[MattR]

The ATO currently has Project Wickenby under way and is having some success...lets see how Paul Hogan gets on with things.

The Federal Budget before last had quite a significant capture all clause for Australian Tax Residents who earn foreign income - basically its all assessable here in Oz ~ as always there is fine print and exceptions.

The tax act does attempt to capture income (of Aust Tax Residents) from any untaxed sources, such as Saudi and UAE - however, if people don't declare things, the ATO misses out.

Hence Project Wickenby and others are an attempt to caputre this revenue.

[Will]

Thanks for your replies.

Yeah I understand it can get pretty technical when earning money overseas. I was more interested in it due to the business tax breaks more than personal tax breaks (registering the business there, not so much my own bank account).

I have emailed the owner of a good sized online business who has set their business up in a tax haven and they have said they will get back to me with a few tips on why some do and others dont.

Thanks for your help

[MattR]

When I say Aust Tax Residents, that refers to individuals, companies, trust , partnerships etc.