Can US companies easily buy foreign company services

[nomadscientist]

I am not a US citizen but live in the US.

In the future, I want to sell myself at US price level (one of the highest in the world) while living in the third world and buying goods and services at that price level.

I do not want to pay US taxes.

One way to do this is to set up a corporation abroad (e.g. in the Caymans) and sell my services from abroad.

Will US companies and persons be willing to send money to such a company? Will this have legal or tax implications I may not have thought of?

[Alphaville]

As a US permanent resident, you have the privilege of access to the services of a US Embassy/Consulate, to ask for protection or rescue in case of trouble, board the last chopper out of Hanoi, have diplomats negotiate your release from a North Korean prison, etc.

Correspondingly, you maintain the obligation to pay taxes on your worldwide income.

Hiding behind shell corporations and tax havens is considered tax evasion and a crime, usually the province of drug lords and the like. You might end up raising red flags instead of being left alone, but I don’t know.

But still, just because you pay taxes it doesn’t mean you’re going to be doubly taxed. There are treaties and arrangements and etc. so you might only have to pay tax above a certain income level which if you do ERE you might not have. So, killing a fly with a cannon?

Check it out:
https://www.irs.gov/individuals/interna ... -exclusion

If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, and $107,600 for 2020). In addition, you can exclude or deduct certain foreign housing amounts.

There is a lot more in those documents and it’s a PITA to read and I’m not a tax attorney so please don’t take my word for something other that a general pointing in a general direction.

If you don’t want to pay US taxes at all, I think you can renounce your residency and come into the USA with a tourist or business visa whenever you need.

[nomadscientist]

I did not claim to be a US permanent resident (and I am not one).

[Alphaville]

Oh, then you don’t need to pay taxes here. When you’re gone, you’re gone.

BUT if you were to set up a business here, then said business would owe taxes.

What you want is to set up an international business entity in a tax haven and get paid from anywhere in the world?

[nomadscientist]

Yes.

Since it seems to be unclear, the OP is not proposing a criminal conspiracy. I would simply be a non-US person not living in the US and not paying US taxes, which is the usual situation for such people.

Essentially I am asking if, supposing I already persuaded a suitably authoritative manager at megacorp to hire me as a remote contractor in the assumed belief I'm an American with a US-based company, the deal will fail when I give him a Caymans bank account number to make payment to.

I do not see why it would. But I also have never tried it.

[Alphaville]

Yeah they can hire a foreign contractor just like you can hire a virtual assistant in China.

You might need to fill some forms for their benefit, to demonstrate you’re a contractor not an employee, but you don’t have to pay any U.S. taxes for that.

See from their end: https://jiahkimlaw.com/business/ultimat ... ontractor/

And sure, they could wire you money to your Caymans account, from which you could then disburse to your location.

Now you might have to pay taxes in your country of citizenship and/or residency (they might not be the same), but I don’t know what rules would apply there re: foreign income. Thailand, I think, does not tax foreign income...

[nomadscientist]

Even if it's legally OK, is it something corporate bureaucracies are likely to balk at? Would it need to go further up an approval chain than payments to a US contractor (and therefore more likely to flounder on the rocks of not worth the effort/risk)? Especially a question to anyone who has been in a position to make such decisions at megacorp.


edit: Thank you for the link, by the way. This is very comprehensive and useful information.

[Alphaville]

I wouldn’t know, and now just reading that lawyer’s page she’s saying taxes need to be paid? Ayayay... <—ETA: NO

I’d check with a lawyer, yeah. And if so, they could help you prepare all the right documents so things go smoothly with the “sale.”

[nomadscientist]

I wouldn’t know, and now just reading that lawyer’s page she’s saying taxes need to be paid? Ayayay...

Not if the work is performed outside the US:

"The IRS provides guidance on how sources are determined for different types of income for foreign persons. Foreign independent contractors earn income by providing personal services. According to the IRS, the source of personal services income is determined by where services are performed. Therefore, even if a foreign person works for a US company, the income he or she receives is not US source income as long as service is performed outside of the US. As a result, a US company is not obligated to withhold or report taxes if the contractor does all his work outside of the US."

I’d check with a lawyer, yeah. And if so, they could help you prepare all the right documents so things go smoothly with the “sale.”

This is more a culture question than legal one. I think what I am proposing is legal, and the link you gave seems to confirm it. But many legal and useful things are disallowed internally just because they are "weird."

[Alphaville]

Ok yes, all good. I re-edited and erased my misquote.

There are however other issues that might apply, eg. if you’re performing research, the intellectual property of said research, what laws apply, are they enforceable, etc. It’s really tricky stuff, which is probably why the culture has shaped that way.