INTRODUCING PT: THE SIX FLAGS THEORY (also known as The Five Flags Theory)

"Where Liberty Is, There is My Country"
Benjamin Franklin

What's a PT? A PT is somebody who is Prepared Thoroughly for any eventuality or situation. A PT lives stress-free and sleeps soundly at night because he or she is Prepared Thoroughly, free to concentrate on the good things in life. A PT is a Prior Taxpayer and a Privacy Thinker - a Perpetual Traveler or Permanent Tourist who is just Parked Temporarily or Passing Through. PT is also a form of defense: Protection against Tyranny. Some people have called PT "a coherent plan for a happy, prosperous international lifestyle." PTs would probably just say it is the 'Perfect Thing.'

Under the guise of helping us ("for your own safety") governments have intruded into every area o our lives, taking the largest part of our earnings in taxes and rewarding us with little aside from restrictions and harassment. PT is a way to assert your freedom - to escape from the growing repression and intrusiveness of Big Governments everywhere. Like the corporations who have learned to internationalize and diversify, PT shows productive people how to get out from under the thumb of Big Brother. An alternative title could be: How to Remake Yourself into a One Man Multinational.

PTs don't ask for or expect government help or protection in any way. In the same way, we refuse to contribute to superfluous socialist welfare states. But we don't believe in fighting. We will simply resist quietly, under the radar. Hopefully nobody will ever notice we have gone!

PT is not a fixed set of rules. It's just a way of thinking... an attitude to life. The originator of the PT concept does not even wish to be identified. But he is still going strong today, publishing an excellent investment newsletter. In a classic 1950s pamphlet, he explained how this ideal can easily be achieved by spreading your interests out over various unrelated countries. It's not expensive (indeed it's probably cheaper than any alternative). He wrote about international arbitrage through the use of three different nations, jurisdictions, or - as he called them - 'flags.' Later, in the 1980s, legendary author W.G. Hill expanded the number of flags to five - so it became the 'Five Flags Theory.'

With the arrival of the Bye Bye Big Brother 'Black Books' in 2006, a sixth flag was added to the previous flags. Marvelous new opportunities had been opened up that were 'made for PTs' as a result of the internet. Cyberspace was added as the sixth flag that brings all the other five flags together.

W.G. Hill, and later Grandpa, have always been at pains to point out that the Six Flags Theory is not a hard or fast set of rules. It is rather an attempt at putting a little structure to the PT lifestyle so people can understand what international arbitrage really means. Almost nobody really lives the six flag lifestyle, but many people choose to live parts of it. Living is an art, not a science, and each individual will interpret PT ideas in his or her own way.

Below is a listing of the six flags of Bye Bye Big Brother. If you would like to read more, download the sample chapter pdf file for a full explanation of the PT Six Flags Theory.

The PT's Six Flags Unfurled

First Flag

In addition to the passport of your native country, you should hold one or more passports from small, neutral and respectable nations. They do not try to tax their citizens living outside their territory, nor to draft them into military service. These passports should ideally allow visa-free access to as many nations as possible. For ease of travel, we recommend European Union followed by Latin American passports.

Second Flag

This is your official residence. A country which regards you as a bona-fide resident, although you might not actually spend too much (or any) time there. It should be a country which does not tax income earned abroad, the effect being that you don't have to file any personal tax returns anywhere. Tax havens like Turks and Caicos, Panama and Andorra are good low-budget candidates. Bermuda, Liechtenstein, Switzerland and Monaco are more up market - if you can afford them. In the first world, the UK, Italy and Ireland are also worth considering because of their no-tax treatment of foreigners. Most Asian, Central and South American countries do not tax offshore incomes, and many of these countries, like Paraguay (and believe it or not, North Korea!) have no income taxes at all. They are de-facto tax havens. But then again, the whole world is a fiscal paradise for PTs who arrange their paperwork properly.

Third Flag

These are places where you physically choose to spend most of your time. They depend on your personal taste. Quality of life is top priority. Because of legal restrictions on how long one may stay without being considered resident for tax purposes, it may be necessary to have from two to four playgrounds. But the fact is, you can easily make arrangements to spend all of your time as a PT in one playground if desired. It's just a question of getting the paperwork right.

Grandpa's personal recommendations. For no nukes nor pollution and good fishing: New Zealand. For the most interesting sex life imaginable: Thailand. Other sex-havens include Cuba, Paraguay and The Philippines. For a superb year round climate: California, USA or Queensland, Australia. For the gourmet, we give top honors to the French Riviera and Hong Kong. Italy gets third place for excellent food. For stimulating parties and an active social life: Paris, London, Rio de Janeiro or San Francisco. For the best things at the cheapest prices: Singapore, Taiwan and Hong Kong (for consumer goods). Fishing in Europe? Ireland (summers only unless you love cold, damp weather). Uruguay? Punta Del Este is near Buenos Aires (great for a winter home).

Fourth Flag

These are places where you actually earn your money. If you own an existing business that can't be moved, you may not have much choice in the matter: you may have to bite the bullet and pay some taxes. Almost all businesses can be gradually shifted abroad by outsourcing and exporting more. If you earn money with your skills, you can probably re-domicile and operate in cyberspace (on the internet). Or choose an offshore tax haven as your physical business base. Then you are tax free. Either way, your business will be incorporated, to insulate against personal liability. Ideally, you will set up the paperwork properly and you will never have to file personal tax returns, nor need any permits, licenses or special dispensations.

Good access to contacts, labor markets or materials is also important. London, Tokyo and New York are the big centers for finance and insurance. Zurich, Milan, Singapore and Frankfurt are among the second-ranked contenders. But in today's global economy, you could frankly base your business anywhere. Wild-card contenders such as Estonia, Malaysia or Panama are out there competing to offer you a business haven. They all deserve a serious look.

Fifth Flag

These countries are where you keep your savings and investments, safely salted away from where your money is actually earned or spent. They should score highly on respect for privacy, communications, professionalism and stability. Your assets, kept in secret numbered accounts, will be controlled with hacker-proof encrypted electronic messages or personal visits only. Naturally, you don't live, play or do much business in the place where your assets are discreetly planted. And it is important to have a banking passport from a country that does not (by treaty or otherwise) insist your banking haven give them a full dossier on your activities.

You can have several asset havens. Top-ranked candidates include Liechtenstein, Switzerland, or Austria for non-EU or US citizens. Bankers in other locations may not yet be up to the Swiss standards, but they fly under the radar and are more accessible to people with moderate wealth. Read more about Private Banking Secrets.

Sixth Flag

This is your Internet Business, Communications and Cash Transmittal System. It's so cheap to rent server space that it doesn't matter much where your servers and websites are located. You can be physically anywhere, but invisible to all. Have a few servers, and offshore sites. Best for them to be in places like Taiwan, Costa Rica or Panama - or on far off islands, like Tuvalu or Niue.

Better still, why not just totally distributed so you can change jurisdiction automatically every two seconds - technology makes it possible and it is becoming easier by the day. Your internet presence should emanate from any place where the net is unregulated and untaxed. Your electronic base should be anywhere - where you are not. With no physical presence, you can't be served with process or sued. Your encrypted communications, files and data banks will be safe from private or government snoopers. If 'authorities' in your server's host country bother you - or if an ISP gives you grief - you just press 'delete.' With your sixth flag you can take advantage of many new opportunities in the 21st Century Information Age.

Virtually all the reports in the Bye Bye Big Brother series deal directly or obliquely with selecting and setting up your six flags. Understanding the six flags theory is vital. We strongly recommend you re-read it a few times so you can think more about it. How does it apply to you?