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Questions: RFID chips, moving retirement funds, offshore businesses, Panamanian citizenship

March 19, 2010
Pattaya, Thailand

My time here in Thailand is finally coming to an end, at least for now. On Monday morning, after I stop by the US embassy to pick up my renewed passport, I’ll be headed to Hong Kong.

I should briefly mention something about passports. Starting in 2007, the US government began manufacturing all new passports with RFID chips– small devices which record and transmit data.

Malaysia was actually the first country to issue RFID passports back in 1998; since then, most of the developed word has adopted them. The data which is collected/transmitted varies by country but generally includes some personal information as well as some travel data.

The RFID chips have a range of up to 10 meters, and many countries do not have encryption devices.

I’ve spent the last year searching around the world for an embassy in some remote country that hasn’t moved to RFID yet. Unfortunately, I was unsuccessful, so from now on I’ll be walking around with a passport that transmits my personal information.

My understanding is that there are passport ‘shields’ available which absorb most of the transmissions, and I will definitely be looking into this more closely.

On to this week’s questions…

William says, “Simon, thank you for the IRA information this week. I know that Congress has changed the law– do you think that now is a good time to consider the new IRA structure? Can I use it to move my retirement funds overseas?”

Great question. First of all, I must apologize because this only applies to US citizens.

32 million Americans will need to make a decision this year; it’s a unique situation because, this year alone, there are several things coming together: first, the IRS has changed the rules, making it a smooth process to switch from a traditional to Roth IRA.

If you combine that with the devaluing rules, and the concept of an Open Opportunity IRA, you’re looking at a potentially enormous tax savings… but only for a limited time while the IRS keeps this window of opportunity open.

Also, once the structure is established, it’s really a fantastic vehicle for moving cash overseas, or even buying foreign property in many instances.

If you want to plant a flag overseas with your retirement savings, this is really the best way to do it, and the time to do it is now while you can still save on the taxes.

Sarah asks, “Simon- you stated that you would report on Malaysia. I’m more interested in establishing a non-US flag there than in Singapore.”

Malaysia is really a wonderful place… it’s Singapore without the costs, and Thailand without the chaos. I’ll dedicate a whole missive to it, but briefly here’s what you should know:

Malaysia is an easy place to plant a residency flag. You can stay in the country for 90-days without a visa, easily renewable for another 90-days. If you want to stay longer, the “My Second Home (MM2H)” program is one of the best economic residency programs in the world.

MM2H provides a 10-year visa for foreigners who meet basic qualifications– people under 50 have to deposit roughly $90,000 in a local bank, half of which can be withdrawn after 1-year for the purchase of a home. People over 50 need to deposit about $45,000 or prove a $3,000 monthly pension.

Like the Panama pensionado program, the MM2H visa entitles you to a variety of discounts and benefits with things like vehicle purchase and education.

The program is also very streamlined. Like Singapore, you can begin the application process online and check the status of your application on the government’s website, www.mm2h.gov.my

Ralph asks, “Dear Simon, Could you give us your opinion on the best country/countries to incorporate a business in? Thanks for your informative E-letters. Looking forward to the next.”

This is a tough one because it really depends on many factors– your home tax country, what do plan on doing with the new business, where you plan on living, etc.

In fact, the most important thing you should understand about offshore planning is that there is no “one size fits all” solution.

For example, a manufacturing company owned by a US citizen may want to look into Ireland because of the comprehensive tax treaty with the United States.

An IP holding company owned by an expat Australian, Brit or Canadian, on the other hand, may want to strongly consider Labuan, Malaysia. Malaysia has a tax treaty with Australia, Canada and the UK, but not the US.

In the Western hemisphere, a lot of people tend to look into Panamanian structures. For a passive holding company, this might make sense… but for an operating business, I would stay away from Panama because it’s not a common law country.

The bottom line is– always seek the right advice from a tax professional in your home country who understands proper overseas structures. I have contacts in the US and UK if you need.

Lastly, Libero asks, “Simon, you mentioned not so long ago about a special clause for Italian citizens somehow being able to obtain Panamanian citizenship. Can you provide more details?”

The governments of Italy and Panama signed a bilateral treaty several years ago that entitles citizens of one country to obtain RESIDENCE in the other… so an Italian citizen can obtain Panamanian residency, and vice versa.

This treaty only grants residency, not citizenship. To be clear, there is no fast track Panamanian citizenship program, at least not a legitimate one.

Panamanian naturalization is a long, difficult, and muddy process… I know some people who have been living in Panama and married to a local for 20-years, and they have been denied citizenship.

If you’re looking for second citizenship, I would suggest somewhere other than Panama. Try the southern cone countries that I wrote about a few weeks ago.

Have a great weekend.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • http://na PS

    I’m planning on buying some of these for RFID chipped cards, drivers licence and passports: http://www.idstronghold.com/

  • doug

    I just recently obtained my U.S. passport and the first thing front and center when I opened the package was the fact that both the passport and passport card have RFID embedded. To say the least, I was not happy about that, but such is life in this big brother world.

    There was a sleeve with the card that they recommended it be kept in and they said the cover of the passport offered protection when kept closed. I was doing a quick search online and found a number of places that offer wallets and sleeves that block transmission from the RFID. Here is an example (I am not associated with these people so not recommending the product)


    There are ton of others out there offering similar products.

  • Blair

    Simon, now that you’re off to Hong Kong, I look forward to future postings on incorporating and obtaining residency in that great city.

  • Joseph

    RFID chips can easily be blocked by almost any metal. A layer or two of aluminum foil should do the trick. You may still want to invest in a specialized wallet sometime, but this is a good quick fix.

  • Quantella Owens

    Dear Simon,

    RE: RfID Blocking Sheets.

    This was in my latest issue Of the American Science & Surplus catalog. They have great deals on all sorts of scientific knickknacks. The item is #93390 and it is called the “EMvelope”. The description reads as follows:”it is an 8-3/8″ x 3-1/2 x .012″ thick trimable elecromagnetic sheet (think Farraday cage with floating ground) that blocks RF up to 2.4 GHz. Cut it to size and slip it in your wallet, or whatever, and it protects the data on your credit cards, ID cards, E-Z Pass, or anything else with an embedded RFID chip, including the new US Passport.”

    Hope this Helps.

  • Quantella Owens

    Sorry…left out the most important detail. Price: $10.00

  • Jai

    I have a RFID-blocker passport cover made by Travelon. Found it on overstock.com! Not expensive. Plain black leather, nice quality but not expensive/flashy/luxury category. It comes in a reddish textured thingy, too, but I thought it was too flashy & prefer very low-key yet good quality. Holds driver’s license/credit cards.

    As for incorporation, my question runs to CHEAP & hassle-free. In the best of all possible worlds, it would cost little to set up, nothing to maintain, no taxes, no audits, no paperwork. Just don’t add to my costs or my workload – I’m busy trying to build my biz, and sorely disinclined to deal with govt paperwork & money-grubbing! So how close to no-cost, no-hassle can someone come for a little operating company & where?

  • barky

    I bought a wallet and passport holder that block rfid transmission here a couple of years ago. both are leather, well-made and look nice. i do not remember the cost but it was not a lot. http://www.difrwear.com/

  • Libero

    Thank you Simon.
    Well, PA residency is still better than nothing I suppose. I gather then, in the above particular scenario, one would be okay legally in staying however long they wanted?
    Also, can’t find the article/s you referenced in regards to seeking southern cone areas. Does for example Arg offer any similar type clause or treaty with IT?

  • Michael


    thank you for the invaluable info you provide in your writings. I’m a former Soviet citizen who emigrated to the US twenty years ago. So happy then and so frustrated now. America that I met in 1990 has gone away being substituted by the entity, first vagely, but more and more clearly shaping in something already reminding me the country where I was born and raised.
    My old country is catching up to me…
    Anyways, some questions…
    Are you aware of countries other than Italy that have signed the bilateral treaty with Panama granting there a residency?
    Also, do you have an update on the sustainable community in Panama?
    I’m, for one, is very interested.

  • doug

    @barky: I had posted a link above to a place that has the sleeves and wallets as an example, but I have no experience dealing with that store. I saw the site you mention also when doing my research. They seem to have a very good selection. I am glad to hear you had a good experience as I am thinking of buying mine from this source.

  • http://none Rex

    On the RFID chip passport thing, Aluminum does not work from what I have read, TIN FOIL does. TIN FOIL is hard to find these days though. Have not tried any of the wallets, although they would look better than some tin foil (Laughing).
    If you repeatedly hit the chip with a hammer, it will destroy the chip and make it look like you did not do anything to it intentionally. Just make sure to put a layer of cloth over the chip location to protect the passport. Putting the passport in the microwave for 7 seconds to FRY the chip has also been done. In conclusion, these passports have been read from up to 70 feet away and I am sure that it is stronger now.

  • Everett

    Simon or Anyone,

    How does one test a RFID passport in a sheath or wallet to determine it it can not be read a foot or so away for the passport??

  • Rex

    You have to obtain a RFID Reader. If you pay for the reader you might as well buy a READER/WRITER. MAke sure you get a list of the frequency that the RFID reader/writer operates at. These units are good for creating mis-information because you can write false data to the chip (NOT YOUR PASSPORT!!!!) and carry some false info on the chip(s) in your wallet, so when someone scans you then they will see all the false data.
    I know this is way above what most people would even dream of doing (Laughing) but it is fun. I am too much of a tech head though. I have writtent he following statement to some RFID chips “YOU ARE BEING WATCHED!”

  • Joe

    A Faraday Cage is what we’re talking about. You can see for example wikipedia.org for the full description.
    The principle is that a closed metal container blocks all radio waves (for example a metal can with airtight lid.) The antenna of whatever you place inside the “cage” must not touch any part of the cage.
    A mesh can also work however this depends on frequency used and size of the openings in the mesh.
    Easy way to test this is to take a cellphone, turn it on, wrap it inside something that will prevent its antenna from touching the cage (such as a sock?) then wrap it in aluminum foil, folding over the edges so the package is pretty much airtight. Then call your cell phone number from a landline, if you’ve done everything correctly the phone will be out of range and will not ring, but the call will go to voicemail.
    Commercial RFID pouches work as long as the opening in the pouch is closed well (folding over once or twice is often enough.
    Aluminum foil also works.
    Problem is, there are situations where you are required to remove the PP from the pouch (immigration, hotel checkin desk) and that is where someone intent on skimming data is most likely to be doing so.

  • http://www.forrestandsandy.com Forrest Hawkins

    On 3/19 you said:
    “In the Western hemisphere, a lot of people tend to look into Panamanian structures. For a passive holding company, this might make sense… but for an operating business, I would stay away from Panama because it’s not a common law country.”
    But this comes after you mentioned several business opportunities you see in Panama. So, are there opportunities, but you suggest we not pursue them because of the legal structure? If I move there and develop internet based businesses, do you foresee special risks, or do you refer to brick and mortar businesses with employees? Thanks

  • Michael

    Do you have information about the teak wood reforestation citizenship route? I have been informed it is the easiest and quickest means to achieve Panamanian citizenship today.

  • http://www.irishtimes.com/money/pension-funds irish pension funds

    A fund established by an employer to facilitate and organize the
    investment of employees’ retirement funds contributed by the employer
    and employees. The pension fund is a common asset pool meant to generate
    stable growth over the long term, and provide pensions for employees
    when they reach the end of their working years and commence retirement.  

  • http://www.irishtimes.com/money/pension-funds irish pension funds

    Thank you Simon. Nice written and great read, thanks again.
    If I move there and develop internet based businesses, do you foresee special risks, or do you refer to brick and mortar businesses with employees? 

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