How Digital Nomads & Remote Workers Pay $0 In Taxes, Legally

The tax law for majority of the world citizens is defined by the physical presence. If you spend more than 180 days in any country regardless of what citizenship you posses, you’re liable to pay taxes in that country.

However, if you don’t spend more than 180 days in any country in any given year, your legal tax liability is almost always going to be $0. So if you’re spending 4 months in Pakistan, 4 in Thailand and 4 in Turkey, you owe no income taxes to any of these countries.

If you work as a freelancer, in a tech company, in an e-commerce business or anything that can be done remotely, you can travel the world and legally owe $0 in taxes. If you’re feeling a little adventurous you could spend your potential tax liability on your travels, at no added cost really.

This applies to citizens of most countries in the world with a few exceptions such as citizens of US who are liable to pay taxes in US regardless of their residence.

Even the workers in US can take advantage of state taxes by moving to sunny states with 0% taxes. As Twitter, Shopify have already announced going fully remote, and Facebook planning to do so smoothly over the next 5 years, I see a lot of people taking advantage of this. The biggest loser, of course, would be California.

A Billionaire’s Advice [Part 2]

Yesterday I wrote about a meeting that I had with a billionaire in NYC and some of the advice that he gave me. When we met him, our situation was unique and it made us feel invincible. So I asked him some questions that a lot of other people probably wouldn’t. Because we had a unique relationship with him, he was very kind to us, and wanted to genuinely help us so he welcomed all questions.

The unique situation that we had was that we had successfully setup the US infrastructure including a company, payment gateway and access to other business tools that weren’t available to people in Pakistan. We were at the top of our game with regards to the revenue that was being generated and like other Pakistanis we had extra-ordinary tax benefits available for IT services and IT related services. So when he recommended that we move to US, a natural question came up that we’re able to use most American infra without paying any taxes, why would you ask us to move to US, bear higher costs of doing business and also pay insanely high taxes.

His answer was tax is what you pay for the privilege of doing business in the US. The privilege that you think you have is not nearly enough compared to the privilege that you will have once you’re here. He was vague like that. He didn’t give any specifics of what privilege other than what we already have.

He reminded us once more, “I was going to be a teller at a bank 5 years ago but I’m not. The US has something to do with that”.

I didn’t follow his advice. I’m still here in Pakistan. I know I missed a lot of things. As a digital nomad, that’s okay. But if you’re looking to build the next big thing and want to amass insane amount of wealth, you should give his advice a thought.

A Billionaire’s Advice

I and Saad met a young CEO in his 30s who is a billionaire. The meeting happened in New York City in October of 2013. He encouraged us to move to US and pursue a career there. He said if he hadn’t moved to US, which he had done only a few years before that, he would have been a teller at a bank in his home country.

I obviously didn’t take that advice as I have continued to live in Pakistan for over 7 years since that meeting. For a brief period, I had thought about taking his advice but I was only slightly motivated. And after I was turned down by an accelerator in US, I also lost the little motivation that I had.

As some of you may know, I’m a proponent of digital nomadism. There’s a freedom associated with the ability to be location independent. Moreover, $100K in US last a really short time compared to $100K in a developing country. As for the quality of life, sure quality of life is not great in Pakistan, but in theory you could have great quality of life at a small cost in many countries if you wanted.

Digital nomadism also instilled remote work habits in me. While many of my friends are going bananas now that they have to work from home, it has come naturally to me. In fact, every effort that I’ve made previously to move to an office has failed so far.

In summary, digital nomadism is great but it’s a freedom movement. It’s a hack to live well, spend less, be free and happy. However, in no way it’s the right strategy to be really wealthy. The right strategy to be really wealthy is the one outlined by the CEO we met; relocating to the land of opportunity.

I want to continue to believe that remote work is the future of work. Unfortunately the keyword here is “future”. The present of work is still in the bay area. People like Paul Graham believe US needs to have better immigration policies as 95% of the best programmers live outside of US.

But he doesn’t see hiring the same workforce remotely as a viable solution.

The world has made a lot of progress to equalize the opportunities at a global scale but we’re just getting started and there’s a long way to go. Until then, bay area is your best bet.

Achieving Gender Equality In Tech

It is often statistically reported that women are paid lesser than men in most lines of work. In tech, specifically, it is said that women are paid 5-40% lesser than their male counterparts.

Another striking statistic that is often highlighted is that women make up only about 25% of the tech workers. This particular statistic doesn’t bother me because in comparison, healthcare industry employees 77% women. One gender could be more inclined towards working in a particular industry than the other and there shouldn’t be anything wrong with that.

Coming back to salaries, Fiverr, a freelance platform reported that on their platform women at average earn $96 against their male counterparts who earn $100. This represents a 4% difference and is by far one of the best reported figures I’ve read regarding the gender equality.

I’ve often written on this blog that freelancing, remote jobs or distributed companies have many advantages. I’ve often highlighted the location and time independence as the most major advantages. You could be anywhere at any time living the millionaire lifestyle.

But the data published by Fiverr has given me new reasons to celebrate the digital nomad lifestyle. You could be a man or a women. You could be a Muslim or Jew. You could be in Syria or Romania. You’ll get the equal opportunities and wages as everyone else on the platform.

Distributed companies, remote employment and freelancing is the answer to gender inequality. Not just gender inequality, it is also the answer to racial inequality or any other kind of inequality. Obviously in addition to granting you freedom and wealth.

Turkey, Again

I’m travelling to Turkey, again. I first visited Turkey when I was 6 months old. My parents took me there. They have a lot of footage from our trip which I also recently got to watch again.

My father, who is retired now, spent a lot of time in the past few weeks trying to digitize all the VHS content that he had. He has found some success and restored a lot of that content.

My second visit to Turkey was when I was 25. Since then I’ve been there every year, at least once.

Turkey is what Pakistan could have been. It is also one of the potential countries suited best for digital nomadism.

The quality of life is miles ahead of what it is here in Pakistan. The cost of living is incredibly cheaper than most of the developed countries. In my opinion, cost of living is only 33% higher in the metropolis of Turkey compared to the metropolis of Pakistan. So, if you need $1000 to live in Pakistan, you only need $1300-$1400 to live in Turkey.

This slightly higher cost for a much better lifestyle makes it my favorite spot to spend some quality time.

Here’s my favorite video about Turkey.