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Chapter 131: The Blueprint for Tax Avoidance
🕑 Added 2025-01-01 08:50:38 +0000 UTCThe call was from Attorney Kirk's daughter. She explained that Kirk had suddenly gone into cardiac arrest while sleeping the previous night and was now in the ICU. Although the doctors had managed to save his life, the unfortunate news was that his nervous system had been severely damaged, leaving him unable to speak.
When Ethan arrived at the hospital, he was greeted by the sight of a frail old man lying on the hospital bed, being fed by his daughter.
"Hello, are you Ethan?" Kirk's daughter stood up and asked. Ethan nodded. "How is he?"
"Not very well. The doctor said he'll need to rely on a ventilator for a while. You can call me Shana," she replied. Shana was a freckled brunette with glasses who seemed to still be in school.
"How does he communicate now?" Ethan sat down on a chair while Tom stood outside, guarding the door.
"He... he can't communicate at all," Shana said, her mouth twisting slightly as she glanced at her father, who now looked as though he had suffered a stroke, his face contorted.
"Alright, is there anything I can help with?" Ethan respected Kirk greatly, as the attorney had helped him handle numerous contracts. Although Ethan hadn't been in contact with him since his company signed with a larger law firm, his respect for Kirk's steadfast principles remained.
"Not really. Dad has enough money to cover his treatment," Shana said as she sat by the bed. "But it seems like he sensed something might happen to him, so he prepared a document in advance. It details all the matters he wanted to address. Ethan, you're one of them."
"I see."
"Your case is a bit complex, though," Shana continued. "It involves your company's equity structure and some other intricate matters. I can't handle it myself, so I called in one of my dad's former students to help."
"A student?" Ethan had barely spoken the word when the sound of leather shoes echoed from the hallway.
"My dear Shana, it's been ages!" A blond man wearing a gray suit and a yellow tie entered. Handsome and slightly reminiscent of Brad Pitt, he carried himself with an air of confidence.
"Little Pitt, long time no see," Shana replied with the same phrase, not missing a beat.
"I've told you countless times—my name is Loren Ortiz. Please call me Loren," the man said, addressing Ethan. "I'm one of Kirk's students and worked under him for several years."
"Nice to meet you, Loren," Ethan said politely, shaking his hand.
"So why have you called me here? To care for Kirk day and night to showcase my noble character? Forget it. I'd rather give you $500 to hire a caregiver for him," Loren said bluntly, his directness and efficiency reflecting someone who likely worked at a top law firm.
"I know your time is precious," Shana said, her face expressionless, "but I'm the one paying for your time now, so kindly show some professionalism, Little Pitt."
Ethan raised an eyebrow, finding the exchange amusing. Hiring Kirk's student and buying his time to bring him to the hospital was very much in line with American pragmatism.
"Fine, fine." Loren sat down, pulled out a notebook and pen, and said, "Alright, dear, what do you need help with?"
"It's not me. It's him," Shana replied, pointing to Ethan before handing over several sheets of paper. "My dad was his attorney, and now that he's out of commission, you'll need to handle some matters for him."
"Of course, no problem. Let me take a look," Loren said, carefully reading through the documents. A moment later, his eyes lit up.
"Well, this is a surprise! Mr. Ethan, I had no idea your business was this extensive! My apologies for not introducing myself properly earlier." Loren turned and flashed a professional smile. "I run a business consultancy firm, specializing in commercial advisory services."
"Commercial advisory?" Ethan felt the term carried more weight than it appeared.
"Exactly!" Loren replied quickly, lowering his voice. "Asset transfers, asset restructuring, bankruptcy filings, and legitimate tax avoidance are all within my scope of services."
"I see," Ethan nodded, realizing Loren's expertise lay in managing wealth for the affluent. In a high-tax country like the U.S., such services were indeed valuable.
"But what does this have to do with me?"
Loren chuckled. "It has everything to do with you. You own a talent agency, an advertising company, and most importantly, a multinational corporation. From what I can see, you're building some sort of commercial empire."
Ethan had consulted Kirk about his multinational corporation in the past but had never imagined things would develop this quickly.
"Hmm..." Ethan gave a noncommittal response.
Loren continued, "So, of course, you need me. I can help you not only optimize your tax strategy but also stay completely behind the scenes."
"Tell me more," Ethan said, intrigued.
"Alright," Loren began, explaining in the simplest terms possible. "First, tax avoidance isn't the same as tax evasion. Tax avoidance is a perfectly legal business practice. Think of it like this: flying from New York to Los Angeles might cost $232, but driving there might cost $189. The difference is the tax savings equivalent to the time you spend."
As he spoke, Loren drew two lines on the paper to illustrate his point. "If all your income is earned and spent within the U.S., tax avoidance isn't necessary. But if your business operates internationally, it becomes crucial."
He went on to explain how modern taxation is based on two principles: the territorial principle and the personal principle. "The first means that no matter where you're from, any income generated within a country is taxable. The second means that wherever you earn money, as long as you're a citizen, you're still taxed. Many countries combine these principles, meaning your multinational corporation's profits could be taxed twice—once in the country where it operates and again where it's registered. This could result in losing 20%, 30%, or even 40% of your net income."
"That's outrageous," Ethan said, his interest piqued.
"Exactly," Loren agreed, "but there are ways around it."
Ethan nodded thoughtfully. "Go on."
"The solution is to register your company in a tax haven. Have you heard of places like the Cayman Islands, the British Virgin Islands, or Ireland?"
Loren explained that these jurisdictions have zero corporate taxes, meaning companies don't have to pay a dime on their earnings. "By registering your multinational corporation in one of these locations, you can legally reduce your tax burden."
"But that's only part of the solution," Loren continued. "The real challenge lies in the operational countries. Fortunately, your business deals in creativity, intellectual property, and management contracts—intangible assets that are ideal for tax optimization."
Loren's enthusiasm grew, but he paused to look around cautiously. "Is this place secure? Mr. Ethan, perhaps we should discuss this in your office."
Recognizing the sensitivity of the topic, Ethan agreed. "Alright, let's head to the office."
Moments later, Loren turned to Shana and said, "What about my consulting fee?"
"Ask him," Shana replied, looking at Ethan.
"Me?" Ethan laughed wryly. It seemed he was footing the bill for Loren's time. "Fine, we'll sort it out at the office."
Loren's office turned out to be modest, with only a few workstations and a small office. The staff seemed idle, suggesting his business wasn't exactly booming.
Sensing Ethan's skepticism, Loren explained, "You know how it is—our kind of business thrives on discretion. Clients are usually one-time deals."
Ethan raised an eyebrow but chose not to comment.
Once inside the office, Loren shed his jacket and poured Ethan a glass of milk, knowing he didn't drink coffee.
"Now, where were we? Ah, yes," Loren resumed. "Your intangible assets are perfect for tax optimization because we can move your funds offshore."
"Offshore funds?" Ethan asked.
"Precisely. For example, your company, Supreme Creatives, could assign its contracts to an entity registered in a zero-tax jurisdiction. That way, you'd legally avoid a significant portion of taxes. In fact, giants like Microsoft, Google, and Hollywood stars use this exact strategy."
"And how do I transfer the funds back?" Ethan inquired.
Loren smiled. "That's where I come in. I can help you obtain tax residency in the Bahamas by purchasing a property there. Then, I'd assist in setting up a low-tax company in Luxembourg.
"From there, you'd have a chain of entities: a BVI company controlling the Luxembourg entity, a Cayman Islands company controlling the BVI entity, and you personally controlling the Cayman entity.
"This structure would reduce your corporate tax rate to 5%, allowing you to legally transfer most of your earnings back home."
"And the best part?" Loren asked, leaning in with a grin.
"What's that?" Ethan raised an eyebrow.
"You completely vanish from the company structure—like magic. Poof!"
