================================================= Expat Worlds Bi-Monthly Digest ================================================= 05 August, 2005 Vol. 7, Issue 13 .....IN THIS DIGEST..... ==== THE STORY =================== -=The Passport Report (continued)=- ==== OTHER EZINES ================ ==== EW SPECIAL ================== -=International Drivers License=- ==== HUMOR, TRIVIA, NEWS AND MORE... == -=Trivia=- -=News Story=- -=Jokes=- ==== THE RESOURCE TIP ============= -=TreeSize V1.75=- ==== INSIDE THE CURRENT EXPAT WORLD == -=Table of Content=- ==== THE STORY ================================== Continuing from last Expat World Digest - an excerpt from 'The Passport Report' - one of the best books ever written from our favourite author W.G. Hill. Although written few years back the basic principles still apply. The Multi-Nationals A multinational corporation has several citizenship's. By incorporating in more than one political jurisdiction, a company becomes a legal entity able to do business in each country of incorporation. The company may be owned by a parent in a foreign country, but local governments generally treat it as one of their own domestic corporations, i.e. a local citizen. To induce a foreign company to set up shop, many governments offer special concessions. These may include up to 25-year tax holidays, discounts on energy and raw materials, free land, subsidized local labor, cash grants and other attractions. Why? Principally because ruling powers tend to stay in office when the populace is employed and prosperous. High rates of unemployment bring unrest and riot, whereas full employment is a mass anesthetic. The cost of giving a 25-year tax holiday to a company that creates jobs and would otherwise not come, is zero. The impetus to form multinationals, however, did not arise because of courtship's and extravagant inducements. The movement didn't even grow primarily to exploit localized opportunities for profit. Instead, explosive growth of the multinational movement came about to evade restrictions and high taxes. These were initially justified and imposed upon corporations, largely to pay for World War II. Currency Control In order to retain assets within their borders, all countries have at one time or another restricted capital outflows. One reason for moving money from one country to another is fear of loss due to political changes or relative inflation rates. For instance, all currencies tied to the US dollar were in a serious decline during 1984-87. Sensible French or Italian corporate treasurers and individuals looked to the currencies of low inflation countries such as Japan, West Germany and Switzerland for a hedge. Foreigners and foreign subsidiary corporations can manage currency hedging easily without running foul of laws that often provide criminal as well as civil penalties for doing no more than prudently protecting one's capital. Very few countries in the world permit their citizens to have foreign bank accounts, foreign currencies or foreign investments of any kind without strict controls, costly permits and special taxes. Dual citizens, like multi-national corporations, can usually circumvent all currency controls. High Tax Rates Governments imposed tax rates after World War II that generally soared to over 50 per cent. These rates would have been considered confiscator prior to the war when international rates topped out at 10 per cent or so. No company can maintain a competitive edge and a healthy growth rate when over half of its profits are used to pay taxes. The multinational corporate structure allows a company to make component parts and sell profitable services in a low tax jurisdiction, thereby minimizing taxation. For example, suppose a plastic part costs 2 cents to manufacture. It sells for $1.00. If that part is wholly manufactured in the US, UK, Germany, Sweden or any other high tax jurisdiction, the 98 cents profit is eroded by a tax of 40 per cent or more. If, however, the component part costing 2 cents is made in a no-tax zone such as Panama, and the home company is billed for $1.00, a 98 cent tax-free transfer payment profit is accumulated and retained offshore. Loan transactions, insurance, shipping and other services are typically rendered by offshore corporations or individuals. Profits from these offshore activities thus build up capital abroad. The Whole World is a Tax Haven A high income individual American could change nationality, move part or full-time to a tax haven and continue to render services to his old company. He could be paid tax-free offshore. A TAX HAVEN CAN BE ALMOST ANY COUNTRY OTHER THAN ONE'S NATIVE LAND An individual can and should be a multinational if his tax payments are of greater value than the benefits received from his home country. The Rolling Stones moved to France in order to escape high British income taxes. Yet many wealthy Frenchmen are in the UK in order to avoid high French taxes. This anomaly is caused by the fact that most high tax countries exempt foreigners who reside there less than six months a year. Thus, a foreigner who winters in California for four months, travels or lives outside the US for three months and then spends the remaining five months in his own country will typically pay no taxes anywhere! More important, this individual will not be subject to currency controls, investment restrictions and burdensome paperwork brought about by bureaucratic tax and accounting requirements. The multinational (two passport) individual has the same advantages as a multinational corporation. In order to enter and live in a foreign country for six months as a tourist, one generally needs a passport. Several countries also require visas from tourists. And in order to remain longer, to work or purchase a home, a Residence Permit is often needed. "Non-work residence permits" are typically granted to entrepreneurs and others who do not compete on the local job market. A citizen of any country (with the exception of the US and the Philippines) need never acquire a second passport for tax reasons. He simply moves and can then live anywhere outside of his homeland to escape taxes. What's the Most Expensive Passport in the World? The US is the only major country in the world that imposes the same tax rates upon US citizens who live abroad as it does upon US residents. The resulting equation becomes a simple one for non-resident wealthy Americans. By giving up US citizenship, your net income is, at minimum, doubled. Your taxes are higher than you think they are, and getting higher all the time. Remember, that even a 28 per cent federal rate is but a component of the total bite. State and local taxes typically run to around 20 per cent. Then there is an additional federal surcharge for large incomes. Thus, for unsheltered taxable income in the US, the effective rate is well over 50 per cent. Why pay it when one can just be a tourist visiting the US on a non-US passport? Despite what President Bush's lips had to say or what President Clinton envisages for America, high taxes are here to stay and are as American as good old apple pie and baseball. Furthermore, US tax regulations will continue to change constantly and will continue to be complex and confusing. Retainers for tax lawyers and accountants will become increasingly expensive, and necessary, in order to protect American taxpayers from making small mistakes that quickly mushroom into huge fines and severe criminal penalties. US tax collectors, known as the Internal Revenue Service (IRS), are notorious worldwide as a law unto themselves, behaving as extremely difficult and disagreeable tyrants. They have the power to make administrative seizures and confiscation that require the defendant taxpayer to go to court or to prove his innocence. IRS power is totally contrary to the US theory of "presumption of innocence until proven guilty by due process of law". Constitutional protections (privacy, no self incrimination, freedom of speech) have no application to tax matters in the US. A second passport and less than six months (now reduced to 122 days) annual stay in the US avoids these confrontations and eliminates the myriad of full disclosure and detailed financial filing requirements. One may own real property in the US, hold securities and open US bank accounts without being a citizen of the US. It is best to accomplish this through nominees such as foreign banks or trustees for complete privacy. Foreigners who become US citizens must give up their freedom, privacy and at least half their taxable income for the rest of their lives. Even if that income was generated by assets accumulated prior to becoming a US citizen. It is easy to see why the US passport is often called "the most expensive passport in the world"! Naturally, US tax rates fluctuate and so-called tax shelters are available to US citizens and resident aliens. Yet it is far easier to avoid all US taxes and the tyranny of the IRS if one is not a US citizen and has no taxable assets there. Knowing all of this, would you still want to become or remain a US citizen? The clear answer for anyone of substantial means is "no". In 1990, the US Justice Department ruled that FBI agents may enter foreign countries and arrest Americans or foreign nationals wanted for federal offenses. This "snatch authority" will require presidential sanction in each case. Tax-dodgers have less security too, now the IRS has right of access to passport renewal information made abroad. Within a few years, as current passports expire, all non-filing US-nonresidents can be traced. Foreigners are Always Treated Better than Citizens Generally, anyone with papers identifying them as a foreigner can avoid most unpleasant police and bureaucratic contacts. My driving license was once taken by a pickpocket in an English speaking country. The policeman making the theft report insisted upon arranging for me to obtain a replacement license issued by the local authorities so that I could continue my Australian tour with a rented car. The test was difficult, and I flunked it. Locals would have to wait six months before applying again. I was given a short oral course by the friendly director of the department and an oral re-examination. The result was an immediate license. "We try to help our overseas visitors," I was told. Foreigners are more likely to obtain friendly, if not red carpet treatment since most governments encourage tourism. Nasty, local bureaucrats or customs officers may do their worst to their own countrymen, but few will harass foreigners. One exception may be the world infamous US immigration officers. They are mean as junk yard dogs to everyone. But guardians of the United Kingdom's borders and the Spanish Civil Guard, for instance, are always kind and helpful to tourists of obvious substance, although not always so nice to natives. Backpackers do not always get the same welcome! In any event, local citizens, backpackers or otherwise are far more likely to be strip-searched or abused than foreigners. Americans coming home from Panama or the Cayman Islands can expect the proverbial third degree, complete with body search. Any affluent American, unless he is otherwise protected, is suspected of being in the money laundering business. He will be grilled. Any other nationality can import and export as much currency as they please with no reaction from US officials. Incidentally, cash bundles do show up on those airport X-ray machines. Customs officials of the country you are leaving will often seize large amounts of cash (over $30,000) if you can't prove it was legally obtained, ie tax paid money. The crime of money laundering is always the flavor of the year. How a Dual National Made US $175,000 on a US $600 Investment in Three Weeks While a second passport is not being touted as the way to make a great fortune, reports from many of our clients indicate that a second nationality can lead to unexpected cash-making opportunities. One unusual situation occurred in 1985 when United Airlines announced a promotional contest. Anyone who could touch down in all 50 states of the US within 50 days, using United Airlines, would win unlimited first class air travel for one year. An individual we'll call "Joe" had just acquired his second nationality. He was already aware of a "See the USA" air pass promotion that provided 30 days of US air travel for US $600. This promotion was limited to non-US citizens or non-residents. A qualification that Joe could now meet. He entered United's contest using his non-citizen's "See the USA" air pass and became one of 73 individuals to win. During the awards ceremony, Joe learned that he was the only one to make it on a $600 air pass. Other entrants had spent over $6000 on air tickets. Joe then rang up over $175,000 in first class airline trips in 1986 and 1987, all of which were paid for by United Airlines. United's contest ended long ago. However, at the time of writing, the "See the USA" air pass program is still operating for non-US citizens. Other countries have similar deals for foreigners. In Italy for instance, tourists obtain free road insurance and 15 per cent discount coupons for gasoline. Non-EU citizens may purchase vehicles in Denmark at a substantial discount and obtain free two year international tax-free tourist plates that give de facto immunity on parking and traffic tickets. Another example of the money-making potential of dual nationals involves an American Paraguayan. He bought a fully loaded top-of-the-line Mercedes Benz in Stuttgart for US $30,000, drove it all over Europe and the US and sold it in the US after one year for a neat $20,000 profit - after paying for shipping, EPA conversions and customs. He then bought a tax-free Cadillac convertible in the US which he sold in Switzerland for a similar profit. Although he could probably have accomplished this without a Paraguayan passport, he knows through experience that US customs authorities aren't so easy going with a US passport holder. Instead, they tend to impound an imported auto in order to find fault with its smog conversions. In addition to ever-present situations to turn opportunities into cash, respectable foreign visitors who maintain their good humor and politeness will normally obtain exceptional courtesies from immigration, police and customs officials. To be continued in next Expat World Digest issue ... ==== OTHER EZINES & BOOKS ======================== ASIAN TIMES ONLINE Asia most trusted source for news, business,commentary and analysis from throughout Asia and our world. (www.atimes.com). ----- SURVIVAL BOOKS Go to and check it out! ----- japan-guide.com Extensive, up to date online guide on Japan living and travel related information. http://www.japan-guide.com/ ==== EW SPECIAL ================================= INTERNATIONAL DRIVERS LICENSE Solve all your driving hassles with this 100% bonafide International Drivers License that is valid in over 160 countries as per the United Nations agreement world-wide. Why you need one ?? If you plan to travel, have present "problems" with your local license, need a photo ID, or you need another form of ID. There is absolutely NO I.D. or documentation required to be issued this drivers license and can be ordered and delivered through the mail. This license is valid for FOUR years. For details email us at office@expatworld.net and put "IDL" in the subject header. ==== HUMOR, TRIVIA, NEWS AND MORE... ================ NEWS STORIES Top architect in citizenship mix-up SYDNEY (Reuters) - Australia's immigration department has been forced to reinstate the citizenship of one of the nation's most celebrated architects, after it was made public it had revoked his citizenship 19 years ago but didn't tell him. The immigration department has been under fire recently for the wrongful detention and deportation of Australian citizens, prompting an inquiry into 200 cases of wrongful detention. Australia is a nation built by migrants, but it has one of the toughest immigration policies and detains illegal immigrants and visa overstayers in remote outback camps. Harry Seidler, designer of Sydney landmarks like Australia Square and awarded the Order of Australia for his services to architecture, fled Nazi-occupied Austria during World War II and migrated to Australia. He became an Australian citizen almost 50 years ago, but after applying to change his address on the electoral roll recently he was told his citizenship had been revoked in 1986. Apparently, unbeknownst to Seidler, Austria had reinstated his Austrian citizenship in 1985 and under Australian law he could not hold citizenship to both countries. News of Seidler's loss of citizenship made front page news in Sydney and sparked renewed criticism of the immigration department. Seidler is 82 and recovering from a serious stroke. Minister for Citizenship John Cobb said in a statement received Wednesday that the decision to revoke Seidler's citizenship had now been reversed because the architect had not deliberately sought Austrian citizenship. "This action will reinstate Australian citizenship to Mr Seidler who is a committed, well respected and honored Australian," said Cobb. --- Alcohol helps you think, say scientists REGULARLY having a glass of wine or two with dinner could sharpen your dinner party conversation. Abstain altogether, or drink too much, and you could be a dullard. People who average two alcoholic drinks a day are better thinkers than teetotallers and very heavy drinkers, according to research. An Australian National University study of 7000 people has found those who drink in moderation have better verbal skills, memory and speed of thinking than those at the extremes of the drinking spectrum. Researchers say it is a mystery why. The study overturns conventional belief that alcohol kills brain cells, leaving drinkers less well off in the brains department. Researcher Dr Bryan Rodgers said people who drink moderate amounts also seem to be healthier, physically and mentally. "The research looked at factors including physical health, personality, social lives, social supports, friendships and enemies, and yet these did not explain it," he said. "It's a mystery." He said there appeared to be no social factors - such as better education of one group - that could explain the phenomenon. The survey was conducted on more than 7000 Canberra and Queanbeyan residents. They were sober at the time. Moderate alcohol consumption was considered to be 14 to 28 standard drinks a week for men and seven to 14 drinks a week for women. --- Kenyan waits for Bill Clinton's answer on offer of 40 goats, 20 cows to marry daughter NAIROBI, Kenya (AP) — A Kenyan city councilman says he offered Bill Clinton 40 goats and 20 cows for his daughter's hand in marriage five years ago. He's still awaiting an answer. Godwin Kipkemoi Chepkurgor wrote Clinton asking for Chelsea's hand in 2000 when Clinton visited Kenya, Chepkurgor told the East African Standard newspaper. Chepkurgor, 36, vowed to remain single until he gets an answer to his proposal to marry Chelsea, 25. Chepkurgor, a city councilor in Nakuru, told Clinton of plans for a grand wedding presided over by South African Nobel Peace Prize winner Archbishop Desmond Tutu. "Had I succeeded in wooing Chelsea, I would have had a grand wedding," he told the Standard in an interview published Friday during Clinton's recent visit to Kenya. Chepkurgor said his letter praised both Clinton's leadership and his wife, now Sen. Hillary Rodham Clinton, for standing by her husband in the Monica Lewinsky scandal. The electrical engineering graduate said he promised to pay 40 goats and 20 cows in dowry for Clinton's only daughter in accordance with African tradition. But he said the letter prompted security checks — on him, his family and his classmates. It's unlikely Clinton ever received the offer. A security official told the Standard the letter probably never made it out of the office because authorities thought Chepkurgor "just took the joke too far." ----- Oxymoron: Republican Party ----- Beer is good food. -- John Goodman ----- Nobody's ugly after 2 a.m. ----- "I bought an audio cleaning tape. I'm a big fan of theirs." -- Kevin Gildea. ----- A man had been drinking at the bar for hours when he mentioned something about his girlfriend being out in the car. The bartender, concerned because it was so cold, went to check on her. When he looked inside the car, he saw the drunk's buddy, Pete, and his girlfriend going at it in the back-seat. The bartender shook his head and walked back inside. He told the drunk that he thought it might be a good idea to check on his girlfriend. The drunk staggered outside to the car, saw Pete and his girlfriend entwined, then walked back into the bar laughing. "What's so funny?" the bartender asked. "That damned Pete!" the drunk chortled, "He's so drunk, he thinks he's me!" ----- Every nation has to write a book about the Elephant: The French book - The Sex Life of the Elephant or: 1000 ways to cook Elephant The English book - Elephants I have shot on Safari The Welsh book - The Elephant and its influence on Welsh language and culture or: Oes ysgol tocynnau eleffant llanfairpwll nhadau coeden. The American book - How to Make Bigger And Better Elephants The Japanese book - How to Make Smaller And Cheaper Elephants The Greek book - How to Sell Elephants for a Lot of Money The Finnish book - What Do Elephants Think about Finnish People The German book - A Short Introduction to Elephants, Vol 1-6. The Icelandic book - Defrosting an Elephant The Swiss book - Switzerland: The Country Through Which Hannibal Went With His Elephants The Canadian book - Elephants: A Federal or State Issue? The Swedish book - How to reduce your taxes with an elephant. ==== THE RESOURCE TIP ============================ TreeSize V1.75 Every hard disk is too small if you just wait long enough. TreeSize tells you where precious space has gone to. TreeSize can be started from the context menu of a folder or drive and shows you the size of this folder, including its subfolders. You can expand this folder in Explorer-like style and you will see the size of every subfolder. Scanning is done in a thread, so you can already see results while TreeSize is working. The space, which is wasted by the file system can be displayed and the results can be printed in a report. TreeSize is Mailware for Windows 9x/NT/2000/XP. Get it at ==== INSIDE THE CURRENT EXPAT WORLD =============== EXPAT WORLD NEWSLETTER (VOL.17 ISSUE 06) Table of Content: - GETTING THE UPGRADES - BITS & PIECES - A SECOND PASSPORT - PANAMA INFO - THE KNOWLEDGE BOX - LIVING AND WORKING IN GERMANY, IT COULD BE A TAX DISASTER - RUNNING AWAY FROM HOME FOR PLEASURE AND PROFIT! - BEATING THE BUREAUCRATS - THE LETTER YOU SHOULD ALWAYS CARRY IN YOUR POCKET - EXPAT WORLD'S PRIVACY WORLD - BEYOND "1984" - REAL ID ACT HAS PROBLEMS - CROOKED COPS ARE ENEMIES TO FREEDOM - A LETTER TO EXPAT WORLD - LETTER FROM AMERICA - MORE COVER UPS AND LIES - DAY 114 OF BUSH'S SILENCE - AMERICA'S LIMITS - THE OFFSHORE WORLD by EXPAT WORLD - CANADIAN COMPANIES STASH OVER US $88 BILLION IN THE CARRIBEAN - EXPAT WORLD'S WORLD OF PRIVACY - FIGHTING BACK - INTERNATIONAL SNIPS AND CLIPS - AROUND THE WORLD With EXPAT WORLD - SAINT-PIERRE & MIQUELON -- Where France Meets North America - CRAPPER RAPPER - NUDES & PRUDES - MURPHY'S LAW YOU MISSING SO MUCH Each week the EXPAT WORLD DIGEST gives you just a smattering of what you can find in the EXPAT WORLD newsletter that we produce once a month. Why not get the whole story and subscribe now to our electronic version for just US $30 per year. Go to our website: www.expatworld.net to sign up. ********************************************************************* EXPAT WORLD - the newsletter of international living URL - http://www.expatworld.net Email - office@expatworld.net ---------- End of Expat World Digest --------------------------------