establish company in foreign country

For Australian residents who wish to conduct a trading or investing business overseas, this strategy involves incorporating a company overseas. Typically, the overseas company will be incorporated in a country with lower tax rates than Australia, and have foreign directors. If the foreign incorporated company ensures its Central Management & Control (CM&C) is overseas (and not in Australia), then the company profits will not be taxable in Australia. 

For the CM&C of a foreign incorporated company not to be deemed to be in Australia requires:

  • Foreign directors who actually make strategic company decisions, and don't just rubber stamp shareholders decisions.
  • That the foreign directors have the relevant skills, education & experience to make the strategic company decisions.
  • All directors’ meetings and decisions taken are minuted.
  • All directors’ meetings are held overseas.
  • Foreign directors are provided with timely and relevant information so they are kept up to date with company developments.
  • Directors meetings are held frequently.  

In addition, with this strategy you also need to consider Australia's CFC (controlled foreign corporation) and transfer pricing rules.