How do the world’s rich avoid taxes?

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Author: Zhi Sir source: Mr. Zhi (ID: zhixs10)

Over the past few hundred years, the rich people all over the world have been thinking about one thing, that is, how to earn more money, how to pay the minimum tax, and how to rack their brains to pass on their wealth to the next generation safely to prevent them from being squandered.

Some people are skillful in avoiding taxes through some formal means; Some evade taxes and evade taxes. They are free overseas and play cat and mouse games; More high-end players participate in formulating the rules of the game and legalize some tax evasion.

Here I would like to talk about the difference between tax avoidance and tax evasion.

Tax avoidance is legal. It can be disclosed to the tax authorities, and can be “done” without being prohibited by the law. However, in fact, it still exploits legal loopholes to pay less tax, which is against tax fairness.

Tax evasion is clearly illegal. I will not talk about the illegal content. It is written in the criminal law.

This article will focus on how the world’s top rich people cross the sea and show their magic powers in tax avoidance, and uncover the hypocrisy mask of some tycoons.

one

In 1992, a scandal occurred in the American charity industry.

United fund raising is the largest charity organization in the United States, with a very wide influence. However, President alamoni appropriated a donation of 600000 US dollars to support his lover, and finally received the honorable treatment of seven years in prison.

In order to restore its reputation, the US Congress urgently passed a bill requiring all non-profit organizations to submit tax returns in a timely manner every year and use up 5% of their total assets, otherwise they will lose their tax-free advantages.

By October 1996, the United States federal government continued to take drastic measures and passed the comprehensive, unified and emergency supplementary appropriation act, which required non-profit organizations to disclose basic data and financial information to the public. They should no longer hide it and take everything to the sun.

With a whole set of combined blows, the bad atmosphere of the American charity industry has been significantly curbed.

However, there are still many loopholes to be drilled.

For example, the foundation uses up 5% of its assets every year, which can be used in the field of charity. However, the IRS has no clear standard for the definition of charity. I use the money to help a worker team, promote an environmental protection campaign, or help close a high pollution factory. All of these are considered as charity.

More directly, the 5% of the funds are not used for charity purposes, and there is no problem in spending all on administrative expenses.

In other words, as long as you spend this money reasonably and legally, do not enrich your own pockets, and can withstand the review of financial reports, you can spend it as you want, and the law does not care.

The remaining 95% of the funds can be invested without any use restrictions, and the income earned from the investment only needs to be taxed by 1% and can be included in the cost.

I used to hide in the dark and make drums myself. No one found me. I was a little scared. Now I am forced to stand in the sun and make drums. It seems that there is no difference, let alone tie my hands and feet.

In 2013, CNN of the United States, together with the Tampa Bay times and the investigative reporting center, conducted a year long investigation on the corruption of American charities. The results were as follows:

The 50 worst charities in the United States have raised 1.3 billion US dollars in the past decade. Only 4% of the money was finally given to people in need, and the remaining 1 billion US dollars were paid to fundraisers.

This data is very interesting. Many charities in the United States need to hire some fund-raising companies to help promote when they raise funds.

However, if the expenditure exceeds 70%, it is really magical. It is equivalent to raising $100 million through hard work, of which $70 million has to be paid to the promotion company. The remaining 30 million US dollars will be deducted from management expenses, daily expenses and other miscellaneous matters, and only 5% of the funds will be used to deal with supervision.

The investigation report also cited some bad examples, such as a cancer charity that sent $18 million to the chairman’s son’s company; A diabetes charity raised $14 million and spent only $10000 on patients over the past decade.

As for other things, such as repeated salary collection, concealing the direction of funds, secretly paying consulting fees, signing fund-raising contracts with friends, and even playing tricks in bookkeeping to raise the price of cheap goods, etc., are common means. Do not underestimate the professionalism of the American rich.

The American charity named “children’s wish” was rated as the worst. The investigation organization specially whipped the public:

In the name of dying children, it raises tens of millions of dollars every year, but less than 3% of the money spent on children is spent on fund-raising.

I checked the data of last year, and the fund-raising expenses accounted for 83.4%:

Ken Berger, President of charity navigation, said:

“If a non-profit organization spends 70% of its fundraising on daily expenses, I’m sure they’re either stupid, or they put the money in their pockets, rather than really helping others.”

China’s regulations on public welfare undertakings are actually very strict:

For non-public foundations, the annual expenditure for public welfare undertakings shall not be less than 8% of the fund balance of the previous year, and the salary, welfare and administrative expenditure shall not exceed 10% of the total expenditure of the current year.

The management expenses of most charitable foundations in China are very low, basically no more than 5%, which is reasonable. After all, the management expenses are too low, which is not conducive to the effective implementation of philanthropy.

It is precisely because of so many loopholes in the American charitable foundation that it has become a new tax avoidance method for the rich circle.

If a top rich person wants to donate US $10 billion to his own foundation, he can directly exempt US $10 billion from inheritance tax and get a 20% deduction of donated assets, that is, US $2 billion.

From a legal point of view, the ownership of this $10 billion belongs to the charity foundation, and is no longer anyone’s personal property. However, the board of directors and key equity are concentrated in the hands of the founders and family members, which can be fully controlled.

Through capital operation, charitable foundations can obtain huge benefits. The more money they donate, the more money they donate. A charitable foundation with a scale of US $1 billion may donate 5% every year. After 20 years of donation, there are still US $2 billion in the account.

For example, the 2003 financial report of the Gates Foundation shows that the amount of investment in that year was US $26.8 billion, and the investment income was US $3.9 billion, while the charitable expenditure such as taxes and donations in that year was only US $1.3 billion.

Zuckerberg’s playing method is relatively advanced. He did not set up any charitable foundation, but managed their donation through a limited liability company.

The advantage of doing so is that it can avoid tax, and it does not need to disclose specific activities like the traditional foundation, and it is not even subject to the supervision of the IRS.

Laurena Powell, the widow of jobs, also opened a limited liability company to manage charity, so I can’t see any financial information on the charity navigation network:

In recent years, a more popular game is DAF, also known as the “donor advice fund.”.

The simple explanation is that the rich will donate this money to DAF management institutions, such as $1 billion, directly get a tax preference of $1 billion, and can also control the whereabouts of this money.

He is optimistic about a certain segment of the pharmaceutical industry this year. He can ask the management to invest US $100 million in related companies. Next year, he is optimistic about which industry, and then invest US $100 million. If they are not optimistic, the money will always be placed in the account for rolling financing, which is very flexible.

In addition to not having the ownership of the donation, the rich can control all other powers.

The main reason why the rich have come up with so many tricks is that the estate tax is too harsh.

Here I would like to say a cold word: the US estate tax system stipulates that before inheriting an estate, you must pay the estate tax in cash before you can handle the formalities of inheritance.

As a result, if the inherited property is US $10 billion, it needs to pay US $4.9 billion in cash according to 49% of the estate tax before inheriting this huge estate.

If the estate tax has not been paid within a certain period, it will be regarded as automatic abandonment and will be out of date.

Families with small assets have nothing to do with inheritance tax. During Trump’s administration, the exemption from inheritance tax was raised to $11.2 million, which means that the total amount of tax exemption for a couple was $22.4 million, and the excess part needs to be taxed.

This policy has led many overseas rich people to immigrate to the United States. For example, some wealthy middle-class people in Japan have gone to the United States to avoid the 55% inheritance tax in China. The total amount of tax exemption of US $20 million is just enough to avoid tax.

For the rich class with assets of about $20 million to $1 billion, they generally have a characteristic, that is, they would rather pay a large amount of inheritance tax than avoid tax through charitable funds. Because after paying taxes, the remaining money can at least be freely controlled by the children, who have property ownership, and then realize wealth appreciation through various care.

It is not cost-effective to set up charitable foundations and then pay high salaries to children. Don’t forget the wage tax rate in the United States. These rich children must pay the top 35% tax rate, plus other taxes, which is not much different from the 49% estate tax.

Therefore, the rich in the United States have different ways of tax avoidance, and not everyone is willing to establish charitable foundations.

The simple division is:

1. Billionaires choose to pay estate tax.

2. Those who choose to set up charitable funds are billionaires.

two

The real role of charitable foundations is not to avoid taxes, but to expand power. Among them, the top leader is Rockefeller, who was the first to understand the foundations.

At the end of the 19th century, the social contradictions in the United States were seriously intensified.

On the one hand, the commercial trust led by Rockefeller, Carnegie and John Morgan monopolized the oil, steel and financial markets of the United States, and even manipulated the political arena to personally put McKinley on the presidency and further safeguard the interests of large consortia;

On the other side are the vulnerable groups of workers who earn US $100 a month and are treated harshly. They live in a high-risk environment, are indignant and dissatisfied, and launch strikes and demonstrations one after another.

In 1901, President McKinley was killed. The assassin was an anarchist. He explained his motive for the murder: McKinley was the enemy of the working people.

Vice President Theodore Roosevelt, one of the four giants on Capitol Hill, began a vigorous anti consortium action.

First, he took the northern securities company to court and personally dissolved it. Then he dismembered the trusts of various industries, including beef whisky, tobacco sugar, telegraph steel and textile, and so on. He was nicknamed the “trust blaster.”.

The standard oil company under the Rockefeller family is no exception. In 1890, it monopolized 95% of the country’s oil refining capacity, 90% of the oil transportation capacity and 25% of the crude oil production. It is the best example of antitrust. Its only end is to be dismembered.

In 1910, most states in the United States began to collect progressive income tax, and the Rockefeller consortium became the focus of collection. Everyone shouted in the wind and rain.

Rockefeller Sr. made a major decision, that is, to establish a charitable foundation “for the benefit of all mankind” and put the wealth of the whole family into it.

This move is very clever:

1. The Rockefeller family did not have to pay progressive income tax and inheritance tax any more, so as to appease public anger;

2. The money was donated and belonged to the public in name, but it was not donated to the country or to specific individuals in need of help, and it was still under the control of the Rockefeller family;

3. The power of the foundation is quite large. There is no restriction on investment. The license has no time limit and can be distributed globally.

Critics at that time openly mocked that the fund’s money could be used anywhere, do anything, and even be tax-free.

For the Rockefeller family, tax avoidance through the foundation is only a short-term goal. The long-term direction is to expand its influence and let the foundation undertake the “new image and business mission of the benefactor of all mankind”.

As for the recipients of donations, the Rockefeller Foundation donated public health schools to famous universities such as Harvard and Hopkins, and asked them to teach the drug treatment theory of “taking medicine when you get sick” and “taking the right medicine”, so that the large pharmaceutical companies behind them can make huge profits.

Those medical schools that spread homeopathy and natural medicine therapy and did not adopt the theory of drug therapy not only did not receive any donations, but also faced the dilemma of being closed.

In 1910, the Flexner report, which was planned by Rockefeller and Carnegie, sharply criticized the chaos of medical education in North America at that time, and promoted the standardization of medical education in the United States.

Since then, all medical schools must adopt the modern medical model of large pharmaceutical companies. Those schools that do not rely on drug therapy have been closed down collectively. Those schools that do not have advanced facilities and high-level teaching teams, and small-scale rural medical schools in some places have also stopped financial support.

Some doctors did not treat their diseases according to the modern medical model, and even were arrested and imprisoned. You can understand that they are practicing medicine illegally.

The increase of the entrance threshold has directly excluded the vulnerable groups such as ordinary students, and has become an elite hereditary education.

In this way, the Rockefeller Foundation donated generously around the world, including Beijing Union Medical College Hospital. Through the drug publicity of one university, a drug trust covering the world market was formed.

During the war years, Rockefeller conspired with the government to vigorously promote drugs, with more than 200 million doses injected into the blood of American soldiers.

The old Rockefeller’s famous saying is very penetrating:

The State Department in Washington is our biggest helper. Many ambassadors and ministers have helped us open up new markets in the farthest corners of the world.

Today, among the top 200 charities in the United States, they have fully penetrated into all fields, participated in the formulation of public policies, and occupied the dominant position.

Soros is the world’s largest philanthropist. He founded the open society fund to support dissident groups and activities around the world, support a group of young activists, and encourage the spread of “free ideas”.

The Clinton Foundation is the most important tool for the Clinton couple to collect money, which is equivalent to a local snake. Anyone who wants to do business in the United States and wants to establish relations at the government level must pay homage to the foundation and donate sufficient funds.

Even in the post disaster reconstruction work in Haiti, the Clinton Foundation has become the biggest obstacle, and it is hard for the reconstruction contractor to bear the burden. Where there are natural disasters, there is the Clinton Foundation, so the couple are also called disaster capitalists.

Even the bill and Melinda Gates Foundation, which has the best reputation, was founded for the same purpose as the old Rockefeller. It was also to avoid taxes and clean up its reputation. It was isolated from the anti-monopoly case and evaded the investigation of the Ministry of justice.

In 2010, in addition to Alaska and Texas, 48 states in the United States will adopt unified curriculum standards. The main driving force behind this is the Gates Foundation. Therefore, the public opinion at that time emphasized that “the gates and his wife have decided what and how tens of millions of children in public schools in the United States will learn.”

For the US government, the foundation can make up for the lack of funds, alleviate social contradictions, promote the development of culture and education, export values and ideologies, export democratic and free ideas, and do all kinds of things that the government does not want to do, cannot do, and dare not do.

Therefore, the foundation is also known as the “shadow cabinet.”.

The ultimate goal of the foundation set up by the top rich is to consolidate their influence and expand their scope of power. Tax avoidance is a small benefit.

Speaking of this, I am not stigmatizing foreign charitable foundations. I am just stating the facts.

There are various kinds of hidden evils, such as tax evasion, money laundering and power expansion. It is certain that a small number of foundations are really practicing the original intention of charity and should be respected.

As long as a small number of people are willing to contribute, it is enough.

three

Let’s go back to tax avoidance.

The real top rich like to prepare with both hands. The left hand is a charitable foundation, which is used to expand power, and the right hand is a trust fund, which is used to inherit wealth.

As the name implies, trust is the premise of managing wealth on behalf of others.

There are many types of trust models. I will only talk about the highest level of tax avoidance – grat trust (trustee retained annuity trust).

Take Zhang San as an example. He injected $10 million worth of assets into the grat trust, paid taxes, and agreed on a time, such as five years, to return $2 million to Zhang San each year.

Five years later, Zhang San received US $10 million, and the assets on the trust were basically few, and the remaining part could be passed on to future generations tax-free.

After a round trip, the money has not increased, and the children have not received much money. What is the three pictures?

The figure shows the value-added of US $10 million in the next five years.

The bosses of many start-ups often like to put their stocks into the grat trust before listing. After the company was listed, the stock appreciated significantly, and the stock assets originally worth 10 million US dollars expanded to 100 million US dollars.

In the end, he could get back $10 million completely and pass the remaining $90 million of stock assets to the next generation tax-free.

That’s what Facebook founder Zuckerberg did. Before going public, he put all his shares in grat and transferred billions of assets tax-free.

Sam Walton, the founder of Wal Mart, wrote in his autobiography: “the best way to reduce the estate tax is to give it up before the assets appreciate.”

Or, as another famous saying goes, “only rich people with poor tax planning can pay inheritance tax.”

If the property of the whole family has been saturated, and there is not much room for appreciation in the future, can we use grat to avoid taxes?

Yes, for example, the old Trump’s divine operation.

He assessed the family assets of US $1 billion to US $40 million through various means, and then put them into the grat trust, which was taxed at US $40 million and set a two-year term.

Two years later, one-third of the trust property was returned to the old trump and his wife, and the remaining two-thirds was transferred to the trump brothers and sisters, directly saving $550 million in tax burden.

The premise is that trump Sr. cannot die early within these two years, or his successor will have to pay huge inheritance tax.

In view of the loopholes in the grat trust, Senator Sanders announced a proposal:

1. The validity period of the grat trust is extended to 10 years – to see if these old people can live for more than 10 years;

2. Reserve 25% of the trust property to pay gift tax – mandatory tax, don’t try to exploit loopholes;

3. Avoid abusing valuation methods to reduce asset value – eliminate violent depreciation.

Unfortunately, this proposal was not passed.

Another kind of trust is the common family trust, which puts all the property into the family trust and invites special personnel to take care of it, so that the family wealth can be permanently retained and passed on from generation to generation without any external interference.

There are certainly risks. If the trust company is not reliable, there is a risk of running away.

Before Anita Mui died of illness, she put all her assets in the trust and agreed to pay her mother 70000 yuan as living expenses every month. No one, including Anita Mui’s family, can change the trust content.

Before Xu Shixun died of illness, he put tens of billions of Hong Kong dollars into the family trust. Li Jiaxin and his wife can receive HK $2 million in living expenses every month, but they have no right to control the trust fund.

All listed companies under Li Ka Shing’s name, including Hutchison Whampoa, Cheung Kong industry and Cheung Kong infrastructure, are placed within the framework of family trust, and family members are designated as beneficiaries.

In addition, Li Ka Shing has spared no effort in maintaining his personal image.

He often shows people his saving side, such as the 600 Hong Kong dollar Xi Tiecheng watch. As an old actor, he has accompanied him for more than ten years, but privately complains that it is a “damn watch”.

But there is no way. Li Ka Shing has to emphasize the cheap property of his watch on every occasion.

Once, in an interview with fortune magazine, Li Ka Shing brought out the theme of watches, saying that the interviewer’s “watches are too extravagant” and “mine are much cheaper than yours, less than $50”.

There is also the story of Li Ka Shing and the 1-yuan coin, which has been adapted in various versions. It has been passed down like the German conscience sewer. I am curious about why Li Ka Shing has such a precious pocket space with 1-yuan coins.

In 2005, Li Ka Shing received a salary of HK $10000 from Cheung Kong Group. He never mentioned how much dividends he had because Hong Kong never taxed dividends.

Hong Kong’s rich people like to combine thrift with wealth growth, and send a signal to the outside world: my money is earned legitimately and earned through hard work, so as to eliminate the residents’ resentment against “Li Jiacheng”.

However, the past glory of Hong Kong has never relied on these top-level profit speculators, but on the efforts of the largest number of SMEs. I won’t start here, but I’ll leave it to the serious series “Hong Kong”.

Because the domestic family trust law is not perfect, many top rich people will put all their property into foreign trust companies, also known as offshore trust.

Once the offshore trust is established, these assets will have no relationship with the domestic rich, and the ownership will be fully delivered. No matter what happens in China, the assets in the offshore trust will not be affected, nor can they be liquidated.

At present, there are many famous people who are familiar with the Internet. They have basically set up offshore trust.

Despite the bankruptcy liquidation, financial and financial storm, and being surrounded by banners, we can still talk and laugh in public, and the breeze blows over the hills.

four

In June 2021, propublica released a piece of data leaked from the IRS:

1. From 2014 to 2018, the 25 richest Americans increased their wealth by $400 billion, and paid a total of 13.6 billion in income tax, with a real tax rate of 3.4%;

2. In 2018, the wealth of 25 rich people reached US $1.1 trillion, and the personal federal tax bill was US $1.9 billion;

3. Buffett’s real tax rate is 0.1%, Bezos 0.98% and musk 3.27%.

The White House said that the disclosure was illegal, and the FBI is conducting an investigation. After all, it is not illegal for the top rich to evade taxes, and it is illegal to disclose this matter.

Why is the tax rate of these people so low?

According to the current laws of the United States, as long as investors have been holding stocks and do not receive any dividends, they do not need to pay profits tax unless they sell their stocks.

For example, Tim Cook, CEO of apple, received a stock incentive worth $750 million in September this year. He paid $397 million of capital gains tax and finally received a reward of $354.6 million. The tax rate is tough enough.

But Buffett has long held stocks and has not sold them, so he does not need to pay taxes.

Even if Buffett dies, his $100 billion worth of stock assets can be passed on to future generations tax-free, and the capital gains tax will be recalculated. In other words, the younger generation only needs to pay the profits tax on the stock surplus from the day of inheritance to the time of sale when they get the $100 billion assets.

If Buffett wants to use the money, he doesn’t need to sell the stock at all. If he takes the stock as collateral, he can get a large amount of money, and the interest of borrowing money can be deducted before tax. As long as the U.S. stock market maintains a bull market and the stock price keeps rising, the more money you can borrow, the more you can borrow, and the more you can repay the old. You don’t even need to repay the money.

Therefore, Buffett once complained that his personal income tax was not as high as his secretary’s, and publicly claimed that he hoped the US government would stop doting on the super rich, showing a generous appearance.

Buffett really wants to pay taxes. He has 10000 ways to contribute to the country, instead of relying on the taxes of the working class to support the future of the United States.

Of course, no one knows more about tax avoidance than trump. His method of tax avoidance is simple and crude, that is, he has suffered losses for 11 years without paying taxes every year.

Since 1980, Trump’s business road has been full of ups and downs. He has invested everywhere and borrowed money when he had no money. In the end, the bank started issuing bonds when it could not lend, and finally the company went bankrupt.

In 1995, trump lost $916 million on his tax return, which means that he earned $50 million a year and did not pay any income tax for 18 consecutive years.

Trump’s various daily expenses are included in the company’s account, including $700000 of hair design fees and $700000 of consulting fees paid to his daughter, which are deducted as business expenses.

When he was president, trump paid only $750 in federal income tax.

He claims that he does not receive a penny of salary when he becomes president. However, in the past three years, he spent nearly $200 million in the White House on golf, and all of it was spent on Trump’s own golf course.

No one knows better than trump about the transfer of interests.

“Since the day when the United States had the tax law, the struggle between the government and citizens to exploit loopholes and plug loopholes has never stopped.”

This famous saying is full of game and blood, but the “citizen group” does not include the working class.

A normal American wage earner needs to pay 30% – 40% of his income, including federal income tax, state income tax, consumption tax, property tax and so on.

These tax systems are extremely complex, but they are tightly knit, rigorous and transparent. No ordinary person can escape. After all, a single wage income also means that there is no room for tax avoidance. Finally, they pay taxes honestly, with a maximum tax rate of 37%.

Because of the diversified sources of income, the rich can also hire tax agents to optimize the asset structure. There are numerous ways to avoid tax. The tax rate required to pay through capital investment is only 20%.

“Every billionaire is a policy failure,” said Alexander, a former policy adviser to New York state senator

Originally, taxes could adjust the gap between the rich and the poor, make the rich bear heavy taxes, improve social welfare, and reduce the burden of the poor. The reality is that the United States simply cannot collect taxes on the top rich.

Or most countries are facing the same dilemma: once the rich are taxed heavily, even if it is increased by 5%, they will not hesitate to empty all the assets of this country and transfer them overseas.

In 2012, in order to solve the financial crisis, the French government imposed a 75% income tax on the rich with an annual salary of more than 1 million euros, also known as the rich tax.

In the latter two years, France received only 400 million euros of rich people’s taxes, and more than 30000 people emigrated abroad, resulting in a serious outflow of national assets.

In 2015, the French government was unable to resist and was forced to abolish the tax on the rich.

China does not have any inheritance tax, nor does it have the ability to collect it. After all, inheritance tax accounts for a small proportion of fiscal revenue. It is unable to effectively tax the rich, and it is easy to lead to capital outflow.

However, historically, the United States has succeeded in taxing the rich, with the tax rate even reaching 90%, because there is a natural enemy, the Soviet Union.

In order to resist the ideological invasion of the Soviet Union, Western capitalists ruthlessly cut their flesh, supported the government to impose heavy taxes on themselves, and launched an all-round competition with the Soviet Union.

The period from 1950 to 1970 was the happiest 20 years for ordinary people in the United States. The gap between the rich and the poor was not large, and social welfare was fully covered. It was also the era that red necked groups missed most.

After President Reagan came to power, he began to reduce taxes for the rich in the United States. Because petrodollars brought unlimited power to print money, and the Soviet Union was on the decline, it was not enough to fear. That is why the gap between the rich and the poor in the United States rapidly widened at the end of the 20th century.

Every round of financial crisis can give birth to a group of super rich people who seek wealth and wealth.

Now Biden boasts that he will follow Roosevelt’s new deal and vigorously engage in infrastructure construction and tax increase. His attitude is very good, and he is generally not hopeful about the results.

Unless the US government can continue to find an opponent like the Soviet Union, demonize and play up various threat theories, and find appropriate reasons to increase taxes on the rich.

Now that the opponent has found a good one, and the reasons are sufficient, it seems to be of little use to the rich group.

It is estimated that everyone is numb.

five

Let’s talk about the tax avoidance of the domestic rich.

For the low-level rich, the personal food, drink and food are included in the enterprise cost. The purchase of cars and houses is registered in the name of the company for input tax deduction. It can also be depreciated every year, which increases the enterprise cost.

The middle class rich continue to cheat on the company’s costs and expenses, use gift certificates to replace employee benefits, set up businesses in tax avoidance areas, transfer profits, and so on… It is often the richest people in this class who are most prone to accidents, and turn tax avoidance into tax evasion.

The high-level rich have many means, such as giving themselves an annual salary of 1 yuan, not paying personal income tax, and using equity dividends to avoid tax;

In some industries that require a large number of employees, such as delivery workers, couriers and online taxi drivers, they are induced to become individual industrial and commercial households, no longer their own employees, but business partners. In that way, the company will not have to pay five insurances and one fund, nor will it be obliged to bear risks and pay a lot of taxes.

Or go to an overseas tax haven to set up a company, and then buy a domestic company, and become an overseas direct investment, and transfer tax obligations in China to achieve the purpose of tax avoidance.

The company registration process of these tax havens is extremely simple, and the company’s shareholders, equity ratio, income status and other information are completely confidential and not subject to foreign exchange control. Therefore, the rich groups like to transfer assets through offshore companies.

Virgin island alone has more than 200000 Chinese companies registered.

By the end of 2014, Chinese citizens, including Hong Kong and Macao, had hidden US $1.2 trillion in overseas tax havens, causing an annual loss of US $66.8 billion to China’s tax revenue.

For the top class rich, please refer to Zhang Yong and his wife for tax avoidance methods.

In 2018, when Haidilao submitted its prospectus to the Hong Kong stock exchange, the nationality and address of Zhang Yong and his wife were both Singapore, and nearly 100 billion of assets were also transferred to the offshore family trust.

Why immigrate to Singapore?

Because Singapore does not have foreign exchange control, nor does it have any capital appreciation tax and inheritance tax, and most of the revenue of Haidilao is in China, Singapore does not levy taxes on the income from overseas.

If you are a migrant worker, there are fewer ways to avoid taxes.

For big Internet companies such as bat, many wage earners who earn millions a year before tax can only honestly pay taxes of NT $300000 to NT $400000, so there is no way to avoid taxes.

The more regular tax payers are, the less they will risk to help their employees avoid taxes, which will be focused on by the tax bureau.

What are the income splitting, monthly payment, payment by individual proprietorship, and so on? Unless you can persuade the company and have a greater voice, these tax avoidance tactics are useless.

As for the star class, it belongs to the high-income group. There are also many ways to avoid taxes. The most common way is to go to the tax haven to set up a wholly-owned enterprise and undertake business in the name of a studio, like the former Khorgos.

As a result, the tax rate paid by celebrities has been greatly reduced, from 45% to about 5%, so as to achieve reasonable tax avoidance.

But these people are really greedy. They are not satisfied with even such a low tax rate. They have to make yin-yang contracts, register leather bag companies to transfer large amounts of funds, and finally obtain the strongest supervision in history.

In fact, many of the tax avoidance measures mentioned above have failed, or it is becoming more and more difficult to avoid taxes.

In many movies and TV dramas, the Swiss bank is praised for its privacy and confidentiality. It is the world’s financial refuge and a paradise for tax evaders. However, this myth was first broken by the United States.

In 2009, in order to crack down on overseas tax evasion, the United States imposed economic sanctions, forcing UBS group to hand over 4450 American customers to the Ministry of justice, and imposed a fine of US $780 million.

Finally, Switzerland and the United States signed an agreement: requiring Swiss banks to disclose the account information of the American people to the US government, and the fatca clause was officially born, also known as the anti tax avoidance clause.

This clause is very strong. It requires financial institutions around the world to provide financial information of Americans to facilitate tax investigation by the US government.

In 2018, the Chinese version of anti tax avoidance provisions was born, including:

Individuals hold financial assets such as deposit accounts, custody accounts, securities accounts, futures accounts, cash value insurance policies, annuity contracts, offshore trusts, equity / creditor’s rights and interests of financial institutions abroad, as well as companies established in countries or regions with preferential overseas taxes.

This provision is directly targeted at the rich who have hidden huge amounts of property abroad and have not declared it, and will be subject to a high tax rate.

The tax avoidance era of buying a passport from another country and running to a tax haven to set up a company is no longer useful.

The Chinese tax authorities do not care who the shareholders of these offshore companies are and how mysterious they are. They directly pay taxes on the profits of domestic controlled affiliated companies. As long as it is impossible to prove that there are substantial commercial exchanges between the two companies, they must pay taxes.

In the past, as long as they had been abroad for 90 days, they could obtain the achievement of “living in China for less than one year” without paying taxes in China;

Now, as long as you have lived in China for 183 days, you will have to pay personal income tax regardless of the income earned at home and abroad.

In addition, if you want to emigrate and want to cancel your registered residence in China, you must pay taxes to complete the cancellation, which is equivalent to the Chinese version of “departure tax”.

A very interesting thing is that this anti tax avoidance provision in China was officially implemented on January 1, 2019. Then, in the whole of 2018, 17 controlling shareholders of domestic listed companies quickly transferred their equity to offshore family trusts.

On the last day of 2018, sun Hongbin put all the rongchuang shares worth 32.1 billion into the family trust in South Dakota.

The time card is very accurate. After all, the anti tax avoidance provisions will be implemented the next day.

Another major event occurred last June:

The group of seven (G7) reached an agreement on the tax rules for multinational corporations, agreeing to levy at least 15% enterprise tax on multinational corporations on a national basis to combat tax avoidance by large multinational corporations.

This agreement almost clearly says that it will hit tax havens around the world, including the Cayman Islands, the Virgin Islands, and some low tax countries, such as Singapore.

This agreement is only applicable to large multinational companies with an annual revenue of more than 750 million euros. All countries will levy a tax rate of 15% on profits from overseas, without discrimination.

It has little impact on us because we are not a low tax country. The domestic corporate income tax rate is 25%, higher than the lowest corporate tax in the world.

In addition, China’s fiscal revenue is very dependent on personal income tax, and the major taxpayer is still state-owned enterprises. For example, the tax revenue of China tobacco can reach 1.2 trillion a year.

land

In the past few decades, we have followed the direction of the three distribution theory.

The first distribution is that more work pays more. Everyone makes money according to their ability, and together they make a big market cake. Efficiency is the priority, but it is difficult to narrow the gap between the rich and the poor.

The second distribution is income adjustment through taxation.

In the third distribution, enterprises and individuals distribute wealth in the form of charity and public welfare on a voluntary basis to promote overall fairness and justice.

As a result, many things gradually surfaced:

Some people earn a meager salary and live a very simple life, but they do good every day and donate millions of charity money in their lifetime; Some have become fraudulent donations through charity shows and various publicity; Some also played the patriotic card in public, worried about the country and the people, and were eventually found to have transferred assets and changed their nationality.

Some rich people are bright and bright. They have been on the rich list for many years. Behind their backs, they are already heavily in debt and are robbing Peter to pay Paul; There are also those who do not show the mountains and dew all the year round. They donate tens of billions of dollars in real gold and silver, and do not play the charity fund.

On the one hand, some enterprises flaunt their national conscience, and on the other hand, they play the tricks of transnational tax avoidance, high price and low allocation, and cheating their own people; Some also face difficulties, break barriers, create more jobs, and do another form of charity.

Some charitable organizations never let people down on the matter of letting people down. Their financial affairs are not transparent and the consumers are loving; Some of them are unknown, and in a long time span, the deserts in the northwest have become a little green.

Therefore, when the public opinion praises a person’s good deeds in a uniform manner, it is necessary to maintain self-defense and not be fooled easily.

Don’t look at what these celebrities say, the key is what they do.

Some references:

Joe Stawell: The Godfather of Asia

Yu Deshui: the national democratic foundation of the United States agitates the world

Li Tao: why charitable foundations thrive in the United States

Ron cherno: Business Tycoon: biography of John D. Rockefeller

Hans Rusk: the story of Western medicine: the truth of Rockefeller’s drug Empire

Wang Jinying: investigation and reference of the development status and management system of American foundations

CNN report: Investigation on corruption of one billion US dollars: the actual funding rate of charity funds is only 4%

Hong Yijiang, Zeng Cheng: the Flexner report and its impact on American Medical Education

Tian Mingguo: Commemorating the 100th anniversary of the publication of the Flexner Report

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