Working on a tax free island to make money?
If you're an American, and willing to give up citizenship, good luck to you.  Otherwise, Uncle Sam still wants his due -- Americans are responsible for paying taxes on income earned anywhere on earth, regardless of their residence. According to Wikipedia, import duties on goods range from 5-22% on everything but cars (30-100%) and a handful of other goods (no import duties). Since almost everything must be imported, you will still be paying the taxman, just on the consumption side. From http://www.taxrates.cc/html/cayman-islands-tax-rates.html: There is no income tax, corporate tax, sales tax, capital gains tax,   wealth tax, inheritance tax, property tax, gift tax or any other kind   of direct taxation in Cayman Islands. Cayman Islands government receives the majority of its income from indirect taxation. There is no income tax or capital gains tax or   corporation tax in Cayman Islands imposed on Cayman individuals and   Cayman Islands companies. An import duty of 5% to 20% is levied   against goods imported into the islands. Some items are tax exempt   like baby formula, books and cameras. Tax on automobiles depends on   the class and make of the model. Tax can reach up to 40% for expensive   car models. Financial institutions that operate in the islands are   charged a flat licensing fee by the government. A 10% government tax   is placed on all tourist accommodations in addition to the small fee   each tourist pays upon getting on the Caymans. The Cayman Islands   government charges licensing fees to financial institutions that   operate in the islands as well as work permit fees for expatriate   employees ranging from around US$ 500 for a clerk to around US$ 20,000   for a CEO. The Cayman Islands has an income tax enacted, it is just currently 0%.  It raises revenues from its tourism, import duties, and business registration.  It is part of the UK commonwealth and therefore enjoys the military protection of that federation, but doesn't have to spend on it. But unlike the US, the UK does not have an umbrella federal income tax on its overseas territories, so the Cayman Islands doesn't have to pass that down to its citizens nor do its citizens/residents have to be encumbered by one. It was not taxed by the King when it was first incorporated (hm, might need to fact check that). They also didn't go to war with the king over some small tax, so they got treated differently than some other North American colonies you might think of. The Cayman Islands is not the only government that raises revenues this way. Delaware also has a 0% income tax and raises the majority of its revenues on business registration (and perpetual franchise taxes on those businesses), allowing it to spare its citizens from passive income taxes. But unlike a US state, a citizen or business in a UK overseas territory does not have federal regulatory overhead, making it more attractive as a worldwide financial center.
So, my question is what is the limit below which I don't have to pay taxes while trading. I just invested $10. Do I have to pay taxes for this too? what are the slabs? Any income is subject to tax. That said, investing $10 will probably not generate much of income, even at the discount brokers most of it will be wasted on commissions... I am also having an assistantship. So is holding two sources of income legitimate? Thanks You can have as many sources of income as you want. Working is what is restricted when you're on a student visa. As long as you don't open a business as a day trader or start working for someone trading stocks - you're fine. "Be careful here: If ACME were in California, I would pay taxes on USD 17,000 because I   had revenue of 20,000 and expenses of 3,000. To CALIFORNIA. And California taxes S-Corps. And, in addition, you'd pay $800 for the right of doing business in the State. All that in addition to the regular Federal and State taxes to the State where you're resident. Suppose that ACME is in Britain (or anywhere else for that matter). My   revenue and expenses are the same, but now my money has been earned   and my expenses incurred in a foreign country. Same thing exactly. Except that you'll have to pay taxes to the UK. There may be some provision in the tax treaty to help you though, so you may end up paying less taxes when working in the UK than in California. Check with a licensed tax adviser (EA/CPA licensed in your State) who won't run away from you after you say the words ""Tax Treaty"". Does it even make sense to use my S-Corporation to do business in a   foreign country? That should be a business decision, don't let the tax considerations drive your business." Wanna make sure every company pays at least some taxes? Install a 'tax floor'. Basically, no matter how many losses you claim, no matter how much you offshore, no matter how many loopholes you find, you can not drop below a certain number. Let's say 15%. That is it, you have to pay at least 15%.   As this takes effect, and only after revenues stream in for a few years to help balance things out, you can even slightly adjust the high rate down a tad to help the big companies that don't use the loopholes.  Please spread this idea around. Call it whatever you like.  There ate places you can go which have no government taxes... mostly because they have no government and there is no social services.  They are places like Somalia, and regions of Afghanistan.  Sorry, but if yippy ate going to live under the umbrella of three modern world, that comes with an implied cost that we pay or pay the consequences.  The fact that you are using their internet would seem to indicate that you do enjoy the services that are paid for with your taxes. A lot wrong with this statement. Services which is 90% of their income is not exclusive to tourism. If you read the entire thing properly you'd know 80% of their income from services is not from the US 80% of its tourism is from the US. You're also changing the argument now you're attacking the economic policies of these countries and claiming it is reflective of their tax policy when in reality that's not true. Do you know what the Bahamian fiscal policies are?   EDIT: 50% of Bahamas income is tourism Grass is always greener at the other side of the hill.  Tax is only a small proportion of your costs. you could easily set up a small company in a so called tax haven. But are you willing to emigrate? If not, will the gain in less taxes cover the frequent travel costs? Even if you would like to emigrate less tax might be deceiving.  I recently had a discussion with a US based friend. In the US petrol is way cheaper then in Europe. THere were many examples in differences, but when you actually sum up everything, cost of living was kind of the same. So you might gain on tax, but loose on petrol, or child care to just name some examples  For big companies who think globally it makes sense to seek the cheapest tax formula. For them it does not matter where they are located. For us mortals it does. "I'm not 100% certain on boats, since they aren't typically sold for a gain, but the tax base of an asset is typically the cost of the asset plus the cost of any improvements, so your $15,000 gain looks right (check with a CPA to be certain, though, if you can).  Your ""cost basis"" would be $50,000 + $25,000 = $75,000, and your net gain would be $90,000 - $75,000 = $15,000.  The result is the same, but the arithmetic is organized a little differently. I am fairly confident you cannot include your time in the ""cost of improvements"".  If you incorporated and ""paid yourself"" for the time, then the payment would be considered income (and taxed), if it was even allowed. Depending on your tax bracket that may be a WORSE option for you. You can look at it this way - you only pay the tax on the $15k gain versus paying someone else $15k to do the labor." Ugh. Really? I thought this subreddit was smarter than this.   1) You pay taxes on net income, not sales. Expenses are tax deductible.   2) This took place in the UK, which operates on a different set of tax rules than many of us are familiar with.  3) The company still pays other taxes even if they don't pay income tax. In the US, examples would be payroll taxes including the employer portion of things like SS and Medicare, but I'm sure the UK has similar programs funded in a similar manner. To the extent that they own their buildings, they also pay property taxes. They globally source their supplies, which means they also pay import taxes. There are a ton of other taxes that a company pays.  4) Tax laws are complex because business is complex.   Inflammatory headlines like this serve no purpose whatsoever. In Sri Lanka, this is the normal practice. We, employees are free from the burden of paying tax for the income we get as a salary. Because that part is been taken care of by the company/employer. &gt;The days of the secrecy regime are long gone and continued success is based on respected levels of regulation, strong legal protection, and access to international investment opportunities. Tax information is automatically shared with nearly 30 states including the United Kingdom, France, Canada and the United States. In today’s world a financial centre’s reputation is a key factor in success.  Good thing governments like Sudan and Zambia doesn't have the clout that the OECD countries do in shutting down blackmoney and tax havens for people trying to dodge their taxes. I'd imagine quite a comfortable living could be made with just black money from the developing world.   This is a PR piece for the Cayman Islands. It depends and I would not just jump into conclusion as I have seen cases where offering some services are not U.S. sourced income. I'll advise you speak with a knowledgeable tax professional. &gt; Do you know what the Bahamian fiscal policies are?  Yes.  Yet are a no income, estate, and wealth tax country.  They have payroll tax that amount to almost 4%, and that us what funds their social services and infrastructure.  However, only 10% off their GDP comes from manufacturing, so they have vey little need for strong infrastructure. That would change drastically if countries stopped bringing money into the country from tourism and banking.  They are basically living off of and depending on the income of wealthy, tax strong nations. "The current tax regime?  Not sure if you are being serious or facetious, but:  [US Citizens and Resident Aliens Abroad - Filing Requirements](https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad-filing-requirements)  &gt;If you are a U.S. citizen or resident alien living or traveling outside the United States, **you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States.**  In contrast, corporations don't pay taxes on profits earned abroad until repatriation [here](http://money.cnn.com/2014/08/14/news/economy/corporate-taxes-inversion/index.html), [here](https://www.nytimes.com/2017/03/09/business/economy/corporate-tax-report.html), [here](https://www.bloomberg.com/graphics/2016-apple-profits/).  So guess what they NEVER do?  This is why literally every large US multi-national corporate ""person"" pays next to nothing in taxes.  It is quite obvious that this is a violation of the spirit if not the letter of tax law.    That simple fix would wipe out massive amounts of government debt and force multi-national corporations and their shareholders to become engaged stake holders in the efficiency of government.  But if, unlike W-2 paid human counterparts, you can dodge all taxation, ""Who cares if the government is using funds efficiently?""  That is incentive to actually game the system to force the government into wasteful spending because the subsequent fallout of increased taxation and/or failure of the state can be dodged without consequence." "So, what's your actual plan/strategy/suggestion to combat this, again?   Are you planning on buying physical gold, other precious metals (again, tangible--not paper), and buying &amp; investing in real estate?       This isn't a sarcastic question; I want to go down this hypothetical path in the thought experiment a bit further.       For example: for a US investor, could *part* of the strategy be to ""move to a state with no state income tax"" to preserve as much income as possible in order to invest that income in one of the target categories?     Is careful selection of primary residence (real estate) in a location most likely to appreciate part of the strategy?      Is moving your investment accounts offshore to a tax haven part of the strategy?" "As soon as I see the word ""friends"" along with money transfer I think scam. But ignoring that red flag.... You will have American companies reporting to the IRS that you are a Canadian Vendor they have hired. Then you are transferring money to people in Bangladesh.  Assuming also that you fill out all the regulatory paperwork to establish this Money transfer business  you may still face annual reporting requirements to 3 national taxing authorities. In the United states there are situations where the US Government hires a large company to complete a project. As part of that contract they require the large company to hire small businesses to complete some of the tasks. In a situation where the large company is imply serving as a conduit for the money between the government and the sub-contractor; and the large company has no other responsibilities; the usual fee for providing that function is 8% of the funds. This pays for their expenses for their accounting functions plus profit and the taxes that will trigger. Yet you said ""At the end of the day, I will not earn much, but the transactions will just burden my tax returns.""  The 8 percent fee doesn't include doesn't include having to file paperwork with 3 nations.  Adding this to all the other risks associated with being an international bank, plus the legal costs of making sure you are following all the regulations...No thanks."