Say I am a citizen of Malaysia.

I am thinking of either opening a corporation in Seychelles or Delaware LLC.

As far as I know, both are tax free, cheap, and stuff. Delaware LLC is even cheaper.

Delaware LLC, for tax purpose, is a tax "flow" entities. So if you're an american citizen, you will pay tax as if the income of the LLC is your income.

But what about if you are a citizen in other country? From say, Malaysian's point of view, is delaware LLC any different than Seychelles corporation? Both are just foreign entities right?

Must you pay tax for any income the delaware LLC have? Assuming you don't repatriate, etc.

  • FYI, the default rule under U.S. law is that foreign LLCs are taxed as C-corporations not as pass through entities. – ohwilleke Jul 1 at 19:18
  • I’d really recommend a hard look at what the Malaysian tax office thinks of that. – gnasher729 Jul 3 at 15:16

First of all, if your Delaware LLC earns money, you will pay tax in America on that money. America still taxes "foreigners" on American income, just not on"global" income. That is, unless the U.S. has a tax reciprocity treaty with your home country, Malaysia.

I don't know about Malaysian law, but I am writing as an American about American law regarding the Seychelles (and I am not a lawyer). The following is only as an "example."

If you set up an LLC in the Seychelles, you could, in theory, avoid American tax by accruing income there. In practice, if you did nothing but "banking" in the Seychelles, America would look at your lack of "value added" there, and could tax you on Seychelles income as if your corporation was American.

The way to make such a claim stick (typically in a place like Ireland), is to set up a manufacturing or operating facility (e.g. call center) there so that you were shipping goods or services from your offshore operation. Then you'd have a strong claim in America that your operation actually earned most of its income abroad, and the U.S. company was just a holding company.

  • But if I am not an american citizen and I have a company in Seychelles all will be up right? Actually, are you at a tax lawyer? I am pretty sure you don't have to set up manufacturing there. I've heard that the money in that seyschelles company cannot be owned by less than 5 American citizen. Look that up again – user4951 Jul 3 at 17:15
  • @user4951: I AM NOT A LAWYER and can say no more than what I've already said. – Libra Jul 3 at 17:35

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.