Offshore trading account

frankduc

New member
May 6, 2011
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Hi,

I dont know if its true, i heard that Offshore trading account arent taxable in DR. How does it work?

Actually, i live in Canada and i have a trading account with an american firm for proprietary trading, but its not a compagny. Of course, i pay taxes on capital gain here in Canada, because of a treaty between Canada and the US.

If i move to the DR and become a resident, own a house but dont have the citizenship, will i pay taxes on my capital gain made in my account in the US? That means that my money would stay in an american bank. I heard also that in Thailand if you have such an account you dont pay taxes as long as you dont import the money into a thai bank account. Is it the same in DR? What if i pay by interact or credit card or if i stay less than 6 months in the country?

Frank
thank you
 

william webster

Platinum
Jan 16, 2009
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Canada, too, has a tax treaty with the Dom Republic.

Your question relates to your residency status.

Resident Canadians are obliged to report their worldwide income, regardless of where it is earned.
Canadians are taxed on their residency status while Americans are taxed (federally) on their citizenship, regardless of their residency.

I am uncertain of the reporting requirements for Dominicans who generate income outside of RD.

WW
 

Fabio J. Guzman

DR1 Expert
Jan 1, 2002
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Foreigners living in the Dominican Republic must pay taxes on their worldwide income from financial investments after their third year of residency in the country (Articles 269 and 271 of the Tax Code).
 

Spartacus

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Jul 13, 2010
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How is the Dominican government going to know a person has financial investments outside the Dominican Republic and what if the person already is obligated to pay taxes on their worldwide income to their country of citizenship if they are only a resident in the D.R.? Do they have to pay twice?
 

frankduc

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May 6, 2011
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From what i know if you are a citizen of another country and you live less than 6 months in your country of origine you dont pay taxes in your country of citizenship.

If you live less than 6 months in any country, except USA and Britain where its 6 months over 3 years you dont pay taxes. Thats what i have read on many website. Is it true, im not sure?

But its a good question how do they know you have money in the US. But its not important you have to declare to the governement.

What im asking is there a way to avoid taxes on capital gain made from a foreign account.

From what i see even if you have a registered compagny in the Bahamas you still have to pay taxes on the profit of your compagny.

If its the case my last option is the Bahamas or the Cayman where it is said you pay no personnal income taxes, no capital gain taxes and no corporate taxes.

Frank
 

zoomzx11

Gold
Jan 21, 2006
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In the old days you could avoid taxes this way. It is not true any longer. All the offshore locations have slowly been forced by the US to give up whatever the US asks for. Its very risky. All it takes is a mad x girlfriend or x wife to blow the whistle and you can be arrested and end up in jail. If the US government is interesed in you there is no county in the world that will not give you up. This includes Switzerland. There are a number of books written about this but things have changed in recent years. Hell, they even put poor old Wesley Snipes in jail. Be careful.
 

william webster

Platinum
Jan 16, 2009
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Canada

If i understand correctly, you are currently a Cdn resident.

If you wish to leave Canada - officially - you or your accountant should file the "exit tax return" which declares that you are leaving the country. (this has been cited here before)
At that point you are on record w/ RevCan that you are a non-resident.


Technically, you should not be inside Cdn borders for more than 6 months in any year after that declaration.
Whether you choose another residency is an option for you.
Many countries have a "minimum stay" requirement for thier residents.

The last time I looked at it, Bahamas had a special residency classification for people who bought a house/land in excess of US$250,000. (maybe more now)
Residency is granted quickly for this category but the resident is not allowed to work in the Bahamas.

I suppose a good question here is - "Does a person actually need a residency?"
You will need a driver's licence, health insurance, etc. and may need a residency for some of these things but it may be possible to become a "citizen of the world".

Do people do this? Certainly, they do.
We can all watch Shania Twain tonite on television from her Swiss residence (instead of Timmins ON).
Do you think her tax bill is very high? But she is a Swiss resident.

Can anybody flesh this "world citizen" idea/concept out ?

WW
 

frankduc

New member
May 6, 2011
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I think Mr Guzman has covered much of my questionnings.

Its not possible the way i see it to live in DR without paying taxes, unless maybe (if im correct) like Webster said I keep my canadian citizenship but leave Canada (if i come back dont stay more than 6 months) and live in any other country of the world less than 6 months per year. Like having a house in DR, France, Thailand and stay only 4 months per year in each of them. (an expensive solution unless your a billionaire)

The Bahamas maybe my last option, i have to buy a house anyway and i rather be under the sun than snow 6 months a year paying high taxes.

Most of what you say Webster i already knew, i just wish it was the same for DR since the cost of living is lower and you have a better choice when it comes to the house market.

Frank
 

william webster

Platinum
Jan 16, 2009
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I think Mr Guzman has covered much of my questionnings.

Its not possible the way i see it to live in DR without paying taxes, unless maybe (if im correct) like Webster said I keep my canadian citizenship but leave Canada (if i come back dont stay more than 6 months) and live in any other country of the world less than 6 months per year. Like having a house in DR, France, Thailand and stay only 4 months per year in each of them. (an expensive solution unless your a billionaire)
Yes, you keep your Canadian citizenship - definitely.
And yes, you need a 3rd leg on the stool to avoid the 6 month rule.
Maybe you stay in RD for 5 months or so, Canada for 5 months or so and going skiing somewhere for a couple of months... or go do whatever - just travel.


The Bahamas maybe my last option, i have to buy a house anyway and i rather be under the sun than snow 6 months a year paying high taxes.

Most of what you say Webster i already knew, i just wish it was the same for DR since the cost of living is lower and you have a better choice when it comes to the house market.
Right about cheaper. I calculate living in Rd is less than half of my NoAmerican cost - food, restaurants, etc

Frank

WW..... trying a new answer method but the system doesn't like it.
It wants to go outside the box ! Hell, I LIVE outside the box :))
 

frankduc

New member
May 6, 2011
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It's not just cheaper, you get more for your money. Here in Montreal at the starting price of 350k you get a very basic bungalow. In the Bahamas, you get about the same often in a close secure community near beaches. In the DR, bungalow turn into cottage double the size.

I'm a bit disappointed since i saw on some site like escapeartist, that it was possible to trade with an offshore trading account and avoid taxes on capital gain from foreign investment. I tried to display the link on another post but the forum seems to block it. That would mean those sites are lying about the possibilities to do so.

Considering, if what i have read is true, that personnal income tax in DR are 25% it still better than 56% here. Unless, its like Canada and they have provincial or state taxes. Cause Canada is 31% federal + provincial and a lot of hidden taxes, that make us compete with Sweden or Finland when it comes to the top most taxed citizen in the world.

Of course, you understand i'm only talking about legal way to avoid taxes, i'm not interested into going to jail.

Frank
 

donluis99

Bronze
Jul 12, 2004
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Foreigners living in the Dominican Republic must pay taxes on their worldwide income from financial investments after their third year of residency in the country (Articles 269 and 271 of the Tax Code).

This is so??? For a US Citezen, DR Resident, Investment income from ScottTrade.com is taxable here in the DR, even though taxes are payed in the USA/IRS because they are earned in the USA thorugh USA based investments?

An Investment in a B.V.I. corp. transacted in Miami, profits from long term capital gains, reported to the IRS and taxes paid to same are, these capital gains are taxable in the DR???

Mr. Guzman, with all due respect, there must be some qualifiers for this, otherwise there is now way to have so many expats here in the DR, at least not all being tax evaders?
 

donluis99

Bronze
Jul 12, 2004
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yikes.....es claro but there must be something more, how can one pay for example Capital Gains in the USA, Short term which are 35% +/- plus 25% or more here in the DR, extrauplate please, there must be more to it. Otherwise why bother....

Art?culo 269.- RENTAS GRAVADAS DEL CONTRIBUYENTE DOMICILIADO
O RESIDENTE EN LA REPUBLICA DOMINICANA. Salvo disposici?n en contrario
de la presente ley, toda persona natural o jur?dica, residente o domiciliada en la Rep?blica
Dominicana, y sucesiones indivisas de causantes con domicilio en el pa?s, pagar?n el
impuesto sobre sus rentas de fuente dominicana, y de fuentes fuera de la Rep?blica
Dominicana proveniente de inversiones y ganancias financieras.

Art?culo 271.- RENTAS GRAVADAS DEL QUE PASE A SER RESIDENTE. Las
personas naturales nacionales o extranjeras que pasen a residir en la Rep?blica
Dominicana, s?lo estar?n sujetas al impuesto sobre sus rentas de fuente extranjera, a
2 partir del tercer a?o o per?odo gravable a contar de aquel en que se constituyeron en
residentes.
 

frankduc

New member
May 6, 2011
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This is so??? For a US Citezen, DR Resident, Investment income from ScottTrade.com is taxable here in the DR, even though taxes are payed in the USA/IRS because they are earned in the USA thorugh USA based investments?

An Investment in a B.V.I. corp. transacted in Miami, profits from long term capital gains, reported to the IRS and taxes paid to same are, these capital gains are taxable in the DR???

Mr. Guzman, with all due respect, there must be some qualifiers for this, otherwise there is now way to have so many expats here in the DR, at least not all being tax evaders?

I must admit i am surprise too. Why is there so many people buying houses in the DR and only beeing a resident?
The real estate market is strong in DR, there's a lot of houses to sell. All those expat accept to be taxed on their revenue from capital gain generated outside DR, when in Panama no expat pays taxes on capital gain?!?

But
Art?culo 271 is clear. I dont understand why is there so many luxury estates to sell in DR when you can pay no taxes in Panama. Maybe they are afraid of beeing kidnap by the colombian FARC for ransom, and they accept to pay taxes in DR.


Frank