[stuarte]

Sorry if this question has already been asked - did a quick search and couldn't find anything relevant.

My situation is that I am an Australian citizen but I live in Cambodia which means that shortly I will become a non-resident (for Australian taxation purposes) meaning any income from an Australian source will be taxed at 30% with no tax free threshold. I own a consulting company in Australia and was considering setting the same company up "offshore" to reduce the taxes. The best option appears to be Delaware but I have very little understanding of how tax is setup.

(Cambodia's taxation system is almost non-existant and I haven't quite got a hold of the requirements yet. It appears because of the lack of basic infrastructure that personal income tax is collected through companies so individuals who don't earn money here don't get taxed.)

I noticed on the web that you can incorporate a company in Delaware and pay about $250.00 in company registration fees each year plus the fees associated with a local agent. The company would be an LLC (designed to reduce tax and provide personal legal separation in case something goes wrong) setup with (forgive me if the term is wrong) "pass through" of the money so there isn't company tax, just personal income tax. Is this understanding correct?

Assuming this understanding is correct, would the standard tax free income tax threshold apply as well as the sliding scale of tax? This would then mean a lower tax rate than I would have to pay if the business were located in Australia.

The person who spoke to me on the phone (from the company who sets up the companies but wasn't able to assist with tax questions) also mentioned that setting up a bank account in a separate state would have consequences when it comes to the IRS and taxation. What is the difference between setting up a bank account in Delaware and, for example, a bank account in US$ overseas?

The setup I am currently considering is having an LLC setup in Delaware, having a bank account setup in Delaware as well with a debit card, paying income tax at the lower rate in the US and then just withdrawing the money as cash from an ATM here in Cambodia or transferring it to my Australian bank account if necessary.

Any other advice you have would be great.

Most websites suggest the Seychelles but that probably doesn't look so great when you are working with business partners and isn't as stable as the US.

[AtlantaTaxExpert]

You CAN set up the corporation (probably a subchapter S corporation, also called S-corp) in the U.S. but I believe foreign shareholders of such corporations are subject to a 30% flat tax as well (unless a lower rate is negotiated in a tax treaty).

You REALLY need to discuss this item face-to-face with an international tax consultant. In my opinion, there are too many variables to adequately cover your situation on forum of this scope.