Ok so now CLint has dividend income from the BVI on which he will pay tax in
the UK. At a rate likely to be much higher than 17.5%. And maybe he
has some intercompany loans. And some extra tax returns to fill out. And
presumably some filing requirements in the BVI. And more accounting to do.
And he already paid $700 bucks for his company.
It really doesnt sound that simple to me......
···
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Message: 12
Date: Sun, 9 Jun 2002 16:57:37 +0200
From: Gavin Wynford-Jones <gavinwj@compuserve.com>
Subject: Re: Off topic - MEPBM's tax bill
I dont think it is *impossible*. But it is not as easy as
you suggest
It's very easy and surprisingly cheap: USD 700 and two faxes
later, you're set up with a BVI company in all legality. (I have
a BVI company, so I know whereof I speak.)
How do you think that Clint & CO are to repatriate
the profits of
the BVI company as non taxable income?
You disburse the BVI profits two ways: as expenses in promoting
the venture outside the EU and as dividends to the
shareholders. Obviously, you retain a chunk for ongoing
expenses, too. You also control when and how the income is
returned to the UK.
I never said it would be nontaxable. The aim is to remove the
VAT threshold and thus eliminate the harsh cost burden which
ensues on a small company and on the overseas players.
And there's a side benefit: you can issue up to USD 50,000 of
stock at any nominal price you like. Now, somewhere, somebody
was wondering how to acquire the rights to the game... Leave
the income in the BVI company, issue shares over time, and wait
for the right moment.
What would they do
with the tax
losses created in the UK?
What tax loss in the UK? Anyway, a loss is a perfectly
valid business practice. As long as it doesn't go on for too long...
The costs of setting up a scheme, even
if it
where viable, are not going to be small.....
See above.
The costs of running a BVI company are far less than accounting
for VAT in all its glory.
Gavin
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Message: 13
Date: Sun, 09 Jun 2002 16:10:17 +0100
From: jerry.mellerick@lattice-group.com
Subject: Re: Off topic - MEPBM's tax bill
Have to say I agree completely with Gavin. The cost of the SPV (special
purpose vechicle) is small. It is easy to set up and administer (I know I
have done this).
SPV owns all the revenues from the US/wherever and it pays MEGames in
Cardiff an agreed fee to run the game. This would be tax deudctible in the
US and taxable in the UK (a chance for arbitrage here leave profits where
the tax regime is low).
Any trips to the US for Clint & Co could be claimed as a business expense
and offset against the SPV's income (think of it Clint the IRS paying some
of the airplane fee).
There are more ways than one way of getting the cash back to the UK
as gavin mentioned
- dividends (there is with holding tax in the US so maybe not the way you
really want to go)
- management charges (tax deductible in the US taxable in the UK)
- lend the money back at an arms length interest rate (interest is taxable
in the US and tax allowable in the UK - could help offset against the above
thereby leaving ME whole with no tax payable in either direction)
- distribution of capital (return of shareholder's capital). Treated in UK
as a capital gain (depending on the tax position of ME in the UK this could
be beneifical)
There are 1m variations on the above but as I said previously this is not
something that should just be ignored
Cheers
Jerry
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