[box]There is an apt analogy between multi-national corporations doing business around the world, and individuals who legally hold dual or multiple citizenship, using their passports for world travel and business.[/box]
By registering under local laws in more than one political jurisdiction, a corporation has the right to do business in each country where they qualify. Or a corporation in one nation may choose to set up a subsidiary company in a foreign nation where they do business. The subsidiary company may be owned by a parent company in a foreign land, but the local government treats it as one of their own domestic corporations, i.e., as a local citizen.
In fact, to induce a foreign company to set up shop, many governments offer special concessions, tax holidays, discounts on energy and raw materials, free land, subsidized local labor, cash grants and other attractions. Why? Because ruling powers want to stay in office and that’s easier to do when the local populace is employed and prosperous. Foreign capital means local jobs.
The major impetus to form multi-national businesses, however, did not arise because of extravagant foreign inducements. This international movement didn’t grow primarily to exploit profitable local opportunities in foreign lands. Instead, explosive growth of the multi-nationals came about in part to evade undue business restrictions and confiscatory high taxes in the company’s home nation. Foreign nations offered and gave them much better tax breaks.
[box type=”info”]Now the same pressures are forcing individual citizens to look elsewhere, offshore, for protection from high taxes and excessive government control.[/box]
Until relatively recently many countries did not permit their citizens to have foreign bank accounts, own foreign currencies or hold foreign investments. Those that did allow these financial activities abroad still imposed strict reporting requirements, currency controls, costly exit permits and special transactions taxes. But “dual nationals,” just like multi-national corporations, can move about the world in such a way as to minimize or avoid currency and other controls.
A foreign citizen who winters in California for four months, travels or lives outside the U.S. for three months, then spends the remaining five months in his own country, may be able to avoid paying taxes anywhere! More importantly, this roaming individual can escape currency controls, investment restrictions and the burdensome paperwork that comes with permanent attachment to one place on the map.
In order to enter a foreign country and live there for six months as a tourist, one generally needs a passport. Some countries also require foreign tourists to obtain a “visa,” a prior written permission to enter that country, which is attached to your passport. And in order to remain longer, to work or to purchase a home, a “residence permit” is needed. “Non-work residence permits” are typically granted to entrepreneurs and others who do not compete in the local job.
Photo credit: Halans via Visualhunt.com / CC BY-NC-SA
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