Question:

If I am the director of a company registered in switzerland. Company is used as a shell company for online market trading.

In actuality, I trade from malaysia using the company in switzerland.

But i pay corporate tax in Switzerland. The profit of the company is sent back to malaysia every quarter to my personal bank account as profit from investment from my switzerland company.

1)Technically, the company in switzerland is making money for me. Although i am the one trading in Malaysia.
2)I am already paying corporate tax to switzerland. And any income repatriated to my personal account should not be taxable because it is foreign sourced investment right?

what is this?

I see. But if I'm dealing with financial products then this doesn't apply right? After all everything is capital gains. But a profit nontheless. So it would be reported as a profit from financial trading.

I don't see how transfer pricing is applied here.


I'm basically saying:
1)I'm a director of xyz swiss. xyz swiss is a financial trading company registered in switzerland and pays tax there.
2)I put money into xyz swiss under my personal capacity for investment purposes. Not as a director expanding his company.
3)Profit from xyz swiss is sent back to me in malaysia as investment gains every quarter under my personal capacity.

Bonus question: 4)If trading profits are repatriated fully, meaning the company doesn't report any gains or losses, and thus is not taxed, is this considered fraud? Because:
1)Swiss company doesn't gain or lose anything thus not eligible to tax in swiss.
2)Yet money is coming back to me in malaysia as capital gains from overseas investment. Therefore not taxable.

This post has been edited by Emily Ratajkowski: Feb 14 2018, 12:16 PM

I see. So as long as the gains are taxed first in swiss then when bring back no problem is. That in effect is kinda like paying only 10% tax since I practically own the while chain of money. That sounds better than 27% tax in msia

The main reason is probably the ease of setting up shop in country Z.

Setting up a foreign company is not easy. The requirement usually is one of the below or maybe a few of the below combined.
1)You're a citizen or permanent resident
2)If you're opening a foreign owned company, you usually require one of the directors to be a citizen of the country
3)High paid up capital. Usually in millions. For Signapore for example, you must have a min of 5 mil and employ at least 10 people if I'm not wrong.

For the normal person, it is usually not possible to just set up shop in another country. But for the rich, these problems can be solved with money. Easily.