I pay about 45% income tax and some of my competitors living abroad say it's perfectly legal to partake of the "UAE Free Trade Zone" and create a legal business in the UAE and thereby avoid paying income taxes. One of my competitors who recommends this does about 40 to 50 million $ per year but there legal residences are in the UK and UAE. Seems like Uncle Sam would not allow this unless i renounced citizenship and moved to another country and i don't want to go that far. Here's but one of many popular places that help set up such business entities http://www.rakftz.com/en and it explains it in detail. Lots of Euro based folks do this, I'm just wondering about the legality of this kind of thing for a USA Citizen. I read about how many USA companies have headquarters in Ireland with nothing more than a place to get mail there and some of them don't even have workers there - all to take advantage of lower tax rates. Please advise
The important part is whether the business is separate from you for tax purposes. Jurisdiction is of no importance unless it's a different US state.
Since the entire Swiss Banking scandal came crashing down, and the fact that the G-12 countries now share money transaction info and help each other prosecute tax evasion cases, this is getting very chippy IMO for individuals and individuals owning companies where the net income flows through to the individual. Repatriating funds and moving them around, ESPECIALLY post 9/11, is a tortuous affair. IMO, hire very good tax attorneys and pay your taxes. Sleep at night. Move to a Southern or Western state with a friendly business tax structure. Some states have no capital gains taxes.