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How to save 8.25% in 90 seconds flat…

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January 10, 2013
Santiago, Chile

Lately I’ve had a ton of friends and family writing me about visiting Chile.

“We’re fed up with this place,” is how the emails usually start. People are hitting their breaking points and starting to consider their options abroad.

There are a lot of fantastic places to be. Chile is certainly one of them. It’s beautiful, optimistic, full of opportunity, cost effective, civilized, and free.

But the one issue people seem to have is the language barrier. Most of the emails I receive also say something like “… but I don’t speak Spanish!”

Big deal. Learning another language is not rocket science. With a vocabulary of just 100 words– I, you, he, she, go, do, see, eat,  etc.– you can do just fine.

That being said, I sprung for Rosetta Stone’s language software for a few friends, just to help them along.

Now, Rosetta Stone has an instant download option; they don’t need to send you any software in the mail, you can just buy and download directly from their site. Easy.

So imagine my surprise when I got to the checkout screen, entered my credit card information, and the system added 8.25% sales tax, simply because I was using a credit card with a billing address in Texas.

This seemed crazy to me. I’m a consumer in Chile downloading software over the Internet from a company based in Virginia. None of the transaction touches Texas, yet the State of Texas had its hand out for a piece of the action.

So I backed up a screen and used my Hong Kong PayPal account. Hong Kong has no sales tax, no VAT, nada. And poof, the sales tax disappeared from my order. Simple.

(Anyone can do this– it takes about 90-seconds to establish a Hong Kong-based PayPal account…)

This little episode really underscores a key theme worth repeating: technology progresses much faster than laws do… so the system we all live under is completely antiquated. And easily defeated.

Most of the legal and policy framework in the West still operates under a 20th century paradigm, and there are examples everywhere. Tax policy, for instance, is decades old. It completely fails to take into account digital commerce.

Our global financial system is an artifact of the last century… from the way a tiny banking elite sets interest rates, to how nations around the world MUST use the dollar and US banking system as part of international trade and commerce.

All of that worked just fine in the 1950s. But in the digital age, money can flow across borders in an instant. Entire currencies and lending operations (bitcoin, digital crowdfunding) can exist outside of the system. Hell, I was able to defeat the taxman with a simple PayPal account.

It’s clear that the current system is woefully, laughably outdated.

Now, if a business fails to adapt to changing technology, it perishes. With governments, though, old, useless laws can stay on the books for decades. Yet eventually, the chasm between policy and technology becomes so vast that it FORCES a complete reset. Or collapse.

As an example, the Ottoman Empire was so hobbled by ancient regulation, the first printing press wasn’t introduced until 1729, three centuries after its invention.

Together with its massive debt level, rapid currency debasement, and completely outdated (and counterproductive) system of tax farming, the Ottoman Empire began a death spiral into history’s dustbin.

The West today is in a similar position– heavily indebted, printing money like crazy, and operating under outdated systems and policy frameworks.

We’ve seen how this movie ends. It would be foolish not to expect a major reset in the way the world does business… starting with an abandonment of the US dollar as the global reserve currency.

Will it start happening in earnest this year? Possibly. But even if not, you won’t be any worse off for reducing your exposure to a crumbling, deeply flawed system.

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

If you liked this post, please click the box below. You can watch a compelling video you’ll find very interesting.

Will you be prepared when everything we take for granted changes overnight?

Just think about this for a couple of minutes. What if the U.S. Dollar wasn’t the world’s reserve currency? Ponder that… what if…

Empires Rise, they peak, they decline, they collapse, this is the cycle of history.

This historical pattern has formed and is already underway in many parts of the world, including the United States.

Don’t be one of the millions of people who gets their savings, retirement, and investments wiped out.

Click the button below to watch the video.

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://www.facebook.com/jo.merriam Jo Merriam

    How does one establish a Hong Kong based PayPal account if one lives in the U.S.? Does it replace the current PayPal account I have now, or do I have to have 2 accounts? Do I need a Hong Kong based bank account to have the PayPal account?
    Thank you,
    Jo

  • jack81

    Chile has death tax.

    And for a Hong Kong Paypal account, you need a Hong Kong bank account. Your credit card/debit card must be Hong Kong based as well.

  • http://twitter.com/scottalanwise Scott Wise

    @jack81 you seem to know more about this than simon cared to mention. ok so in other words, it takes simon 90 seconds to open a hong kong paypal account, but hours or days, or is just not practical for the rest of us not already established there. this kind of mis-information really causes site credibility to suffer as far as I’m concerned. I would be interested to hear from someone on this site representing simon some details on how this can be done for the average person. I don’t think I’m the only one who gets tired of spiffy gimmicks in these articles that are near impossible for us average smart fellas.

    • http://narth.com Nature 1

      Agree 100% Scott. No one answers legit questions on relevant topics from the ppl who visit this site. It’s been said over & over that jobs are easy to find in Chile but I’ve been told it’s a classist place and it depends on who you know. It seems the info here applies to only entrepreneurs and the top 1% types?
      I’d appreciate a more honest take on the nations promoted here. There are massive social and practical problems with places like India and Brazil for example. I’d really like to become a SMC member just to get a jumpstart in Chile but I’m doubtful it’ll be useful to someone like me.

  • http://twitter.com/peterxxl Peter Cekyl

    Well, there is an simpler solution.
    Just change billing address on your credit card to any Oregon address, which has no sales tax. It doesn’t even have to be yours. You can get your CC statements and bills online (technology is superior to system in place).

    I have been using this for years in iTunes and for goods that are delivered electronically like mentioned Rosetta Stone.

  • dchrist81

    The benefits of making tax jurisdictions compete against each other are so vast that even a long-time international traveler is still learning.

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