How to avoid paying high taxes: lessons from the middle of nowhere

Written by Andrew Henderson

Dateline: Kuala Lumpur, Malaysia

In the middle of the Indian Ocean’s Mozambique Channel between Madagascar and continental Africa lies a tiny reef called Banc du Geyser.

The Banc du Geyser is a largely submerged reef barely a few miles at its widest point. For most of the year, the reef is submerged below the ocean tides, as if it weren’t even there. The rest of the time, the few sandy parts are covered by little more than seabirds.

The reef is quite an isolated place. The nearest land, the French island territory of Mayotte, is nearly 100 miles away. Even Mayotte is best known for its .yt domain extension, one that we recommend for diversifying your digital presence.

What’s interesting about Banc du Geyser is that it is disputed territory, claimed by France as part of its “Scattered Islands” territories, as well as the African nations of Comoros and Madagascar.

Some claim there may be small oil reserves deep below the sea, but most of the dispute talk focuses little on oil and more on government puffery, the kind of territory marking that goes back centuries.

Beyond larger territorial disputes like those making headlines in the South China Sea are hundreds of similar scuffles over a rock in the middle of the ocean or a mile-wide patch of sand and seaweed.

Governments love to hold on to every scrap they can.

Just like governments have disputed and fought over mere inches of earth for centuries, governments are fighting for their right to stick their claws into you and get every penny they can.

History shows they will leave no stone unturned to roll out their political agenda using your money.

To them, you are nothing more than a milk cow ready to be sucked dry at any moment. You can try and use cute ways to protect yourself by asking “how to avoid paying high taxes”… or you can look to get off the farm.

Here is just a sampling of what is happening on tax farms around the world today:

In South Korea, the government just rolled out a new program forcing Korean companies to pay a surcharge if they don’t distribute the vast majority of their earnings to shareholders.

Taxable distributions, of course.

In the Philippines, the government tax authority just upheld an order to tax fringe benefits, including to government workers.

The so-called civil servants in Manila are filing a court case challenging the ruling, claiming they are impoverished and working for table scraps. They never figured the machine would turn on its loyal subjects.

Other countries like Ukraine are making it tough for business by doubling taxes on oil and gas activity in the region. Just what the country needs when it works to reduce reliance on Russian energy, right?

Even the tiny African nation of Burundi is imposing new “stamp taxes” on mobile phones their people are acquiring in great numbers as the continent continues to grow. They just so happened to throw in new taxes on essentials like flour and sugar for good measure.

And of course, the United States is also home to its share of tax grabs. From internet sales taxes to an endless string of Obamacare taxes, the government is desperate to get its claws into you in any way possible.

Not only will you pay a larger share of your salary and your investment returns thanks to a laundry list of Obamacare taxes, but Senators are currently attempting to prohibit US companies from merging with foreign companies under the so-called “corporate inversion” process rather than deal with the real problem: the world’s highest corporate tax rate.

(They’re doing the same thing in India, too.)

Around the world, bankrupt governments are getting their fix by any means necessary.

All too many times, people tell me that “it can’t happen here” or assume that governments must play by some kind of rules.

But nothing could be further from the truth.

As seen just in this short list of taxes I found just in one day of reading the news, governments in need of quick cash will break any rule and make up any excuse to get the money they need to keep their party going.

It doesn’t matter if they have to tax essentials and bury their own people in poverty and even starvation.

It doesn’t matter if the money they take – or, more cleverly, convert into the “safety of government bonds” – is your retirement account.

It doesn’t matter if your business was playing by the old rules, because the rules can be changed at any time.

As we’ve seen just this year with taxes in The Land of the Free, it can even happen retroactively.

This is why there are several steps you should take to protect yourself:

1. Own your own location independent income stream
Owning your own business is preferable to having a job for any number of reasons. However, when it comes to high taxes and government wealth grabs, having a job makes you the ultimate sitting duck.

However, owning a business that is similarly tethered to one place is a recipe for disaster, too. Just look at how difficult it is for the United States government to resolve what is the most punitive corporate tax system in the world.

They just won’t budge.

However, they have shown themselves to be much more adept at raising taxes in a prompt fashion when needed, and as we’re seeing now in South Korea and elsewhere, they can close so-called “loopholes” that allow you to (once legally) stash money offshore in an instant.

If you run an on-the-ground business, find one out of a highly-regulated, highly-taxed jurisdiction. We frequently talk about emerging and frontier markets as an easier place to successfully start a business.

Otherwise, enjoy the benefit of being able to tether your business anywhere. That, after all, is the “nomad” in Nomad Capitalist.

Incorporate in a place that you don’t live in, such as Hong Kong, Singapore, or the Seychelles, which allow you to pay no or very little in taxes, as well as the freedom to redomicile out of their jurisdiction if they ever get difficult.

I don’t necessarily advise living in Singapore, but that makes it a great place to bank and run your business, since you’ll spend little time there. It’s not that I dislike Singapore, it’s just that I like a place with a little more excitement than some perp getting busted for spilling a little Pepsi on a subway car floor.

2. Never save into a retirement account.
For years I lived in the United States, a young up-and-comer advised by all of the by-the-book tax gurus and know-nothing financial talking heads to enjoy a nice tax deduction by investing into a government-sponsored retirement account such as an IRA.

If you’re a US person, you can throw $5,000 a year in an IRA and enjoy a tax write-off.

However, while many people are worried banking in a highly stable country like Singapore will end up with their money being lost in some sort of tale fit for a crime novel, few people are concerned with the giant pot of gold they are accumulating for future wealth confiscation.

Putting money into a retirement account tethers it to one country and whatever facocta laws the politicians there can come up with. The ones above are, again, just one day’s worth of headlines from around the world; there are plenty of others ways a government could commandeer your entire retirement.

If you already have an IRA in the United States, consider a self-directed IRA. Whatever you can do to set your ship free from the burning dock.

3. Be open minded, flexible and diversified
The reality is, the world is constantly changing. Yesterday’s communist hellhole is today’s capital paradise.

While I don’t believe it’s the panacea many with economic interests there claim it to be, Chile is one example of a place that has come a long way from its former repression, and has earned the title of “new safe haven”.

Similarly, those who wrote Hong Kong off in the 1980s, fearing a brute takeover by “evil China”, were wrong; the place remains the freest economy in the world, even if it is becoming nearly impossible to open a bank account in Hong Kong.

As a reader of this site, you know that putting all of your eggs in Hong Kong or Chile’s basket is a bad idea.

That’s because the emotional attachment that comes from wanting to “fight” for freedom is what causes fortunes to be lost. If you look at these headlines and give up hope, thinking the world is coming to an end because one formerly free country is going socialist, you’ve missed the point.

There are always new safe havens emerging, and you have to keep your eye out for them.

First, though, you must detach yourself from the emotional policies of the government that seeks to control you the way they start wars over far-flung atolls in a distant ocean.

Our premium Membership, The Nomad Society, helps you sort out which “flags” to plant where. It’s a guide to figuring out which countries treat people the best for personal freedom, economic freedom, capital preservation, and receptiveness to business.

Not only does Membership get you access to a wealth of online videos, reports, and charts that boil down the essentials for you, but you get access to our rolodex to help you implement everything quickly, as well as a community of like-minded people to network with.

Read more about Membership today and save yourself from being the next victim of high taxes from governments on the hunt.

Andrew Henderson
Last updated: Dec 29, 2019 at 1:53AM

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2 Comments

  1. Myron Goodrum

    Thanks Andrew! I don’t here many talk about on-the-ground businesses and being a nomad capitalist. I believe most people think that everything has to be online in order to be truly free. But even online businesses (the ones offering tangible products) has to get those products from somewhere/someone on-the-ground!

    So I would love to hear about more specific ways us “on-the-ground” business owners can benefit from your strategies. We wish to have our businesses and ourselves as free as we possible can too.

  2. Charles Liong

    A great article that emphasizes on the nature and intents of governments worldwide.
    Those who’ve chosen to acquire Singapore citizenship should not overlook how their earnings as an employee or are derived locally, which aren’t of a capital gains nature will be subject to a forced savings or indirect tax. A good place to bank or invest in, consider high purity gold not being subject to the government service tax, but one that gets on your nerves and your pocket on a daily basis if living there, especially as a citizen and employee.
    Would love to see more articles covering Seychelles and other emerging nations that treat new citizens and capital the best.

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