Most people have been in a major airport at some point in their lives that has a international hub. Just outside this area is a variety of shops that sell duty free merchandise. Duty free means that their is no customs tax on the goods sold there, or basically tax free. Now, depending on where you live and the tax structures in place, this could save you anywhere from 3% - 20% on the merchandise you buy. If there are items you were planning on buying anyway, this is a good deal.
How is it that airports can offer this? Countries have agreements with one another that allow them to export some of their goods to other countries and if they remain within a predefined area, they can sell any of their goods with no customs tax. Not only can this be done in airports, but also in major ports and other predefined areas. Hong Kong has the largest duty free area in the world. The Colon section of Panama is the second largest.
Countries (and businesses) from all over the world use this opportunity to move some of their products to open up new areas (distribution channels) and improve visibility. Consumers can obviously get some good deals and be exposed to new products.
Now, I will switch gears on you. If this can be done with products, why can't it be done with other things. The answer is it can. For example, in nearly every country around the world employees get taxed on their labor, or their income. If businesses can avoid the tax, why can't you? You as a person might not be able to legally avoid the income tax, but legal entities just like businesses that you control can. Meanwhile you get the benefit.
For example, if you live in the United States, but do business in other countries such as China, you do not pay an income tax in China. China gets its income taxes from Chinese citizens. Now if you bring you personal earnings back to the US, you will have to pay income tax on that. However, if you have a international company (legal entity) that is based in the United Kingdom that does business in China, the money is not yours, but the company's. It would not be subject to taxes in China or in the US where you live. Again, it's not your money, but the company's. But, since you run the company, you get the benefits of it and the best part - you can use it to do more business and make more money.
Most countries allow international companies to be exempt from taxes if they are making their business or money outside of that country. This attracts foreign companies to reside there and improve their infrastructure and commerce. The tax savings alone can become a very big incentive to have operations in this foreign country.
How does this relate to you as a person? It may not. However, usually for a few thousand dollars on up (depending on the complexity of the legal entity and service provided), and some annual renewal fees to keep your company current with the foreign government, you can set up the legal entity to operate and take full advantage of all the tax and other incentives offered to foreign companies. The money this legal entity makes is its own, not yours, but you could control it. This can work for businesses, investments, and other opportunities.
All you have to do is learn the basics and get the proper documentation, and you can become an international business as well. You may not think this is worth the time and effort, but go back to the Monday November 19, 2007 post in this blog about the "Rule of 72". This can show you "the most powerful force in the universe is compound interest" according to Albert Einstein. The compounding effect of just a few percent over the years can be staggering.
You know that the banks and especially the Federal Reserve know how powerful and important compound interest is and how it works. This is how they monetize your labor and make huge amounts of money. But more important to them, is that they can control you through your labor. If you control the money, you control the people and the governments. There is very little you can do today without money, especially for very long.
Think on this some and let it sink in. Stay tuned for more tomorrow ...
After Jesus and his disciples arrived in Capernaum, the collectors of the two-drachma tax came to Peter and asked, "Doesn't your teacher pay the temple tax?"
"Yes, he does," he replied.
When Peter came into the house, Jesus was the first to speak. "What do you think, Simon?" he asked. "From whom do the kings of the earth collect duty and taxes—from their own sons or from others?"
"From others," Peter answered.
"Then the sons are exempt," Jesus said to him. "But so that we may not offend them, go to the lake and throw out your line. Take the first fish you catch; open its mouth and you will find a four-drachma coin. Take it and give it to them for my tax and yours." Matthew 17:24-27 (NIV)If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com
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