Category Archives: Central and South American Tax & Money Havens

Venezuela a new tax haven in Latin America

Mexico is attractive but Venezuelans pay the least taxes in Latin America, while Argentines and Brazilians pay the most according to a report from the Organisation for Economic Co-operation and Development (OECD), just released onTuesday.

Venezuela had the lowest tax take in Latin America at just 11.4% of national income, according to the report prepared by the OECD, Inter-American Centre of Tax Administrations and the Economic Commission for Latin American and the Caribbean.

Caracas, Venezuela. Picture by Stockphoto

Mexico, the second largest economy in the region and one of only two Latin American countries in the OECD, was confirmed as having the OECD’s lowest tax with 18.8%.

Uruguay to attract foreign residents with tax exemption

More than a year after introducing tax laws that made certain foreign-source income taxable to all residents of Uruguay, the Uruguayan Government decided to provide a tax exemption for all foreign residents in order to keep the existing foreigners in Uruguay and encourage their continued future immigration into the country.

 The new exemption, enacted in May 2012, provides foreign tax residents (non-Uruguayan citizens who spend more than 183 days per year inside Uruguay) a five-year tax-free window during which they will not be liable for income tax on any foreign source income. Foreign tax residents retain their non-resident tax status for five-years. After the five years expire, foreign tax residents must pay a 12% income tax on foreign interest and dividend income like all other Uruguayan residents; however, all other types of foreign income will still be tax-free, including capital gains, pensions, rents, etc.

In order to ensure that foreign tax residents are not taxed twice on their foreign income, Uruguay has also agreed to forgo taxes on foreign interest or dividends if that income is already taxed by another country. Uruguay will thus provide a full tax credit for any foreign taxes paid. This added incentive is significant because many foreign residents moving to Uruguay are already paying significant taxes in their home country. This is particularly true for citizens of the United States, who pay taxes on their world-wide income.

The news certainly calmed many foreigners still living in Uruguay, many of whom were very upset and frighten by the government’s decision to enact a world-wide tax on interest and dividend income. Some of the foreigners had already left Uruguay and opted for friendlier tax jurisdictions like Chile, Paraguay, Panama, Colombia, Mexico, Central America or the Caribbean. More important many more foreigners was considering to exit Uruguay unless this tax exemption was introduced rather quickly.

This new exemption will entice some of those foreign residents to return to Uruguay. The new tax exemption will certainly encourage prospective foreign residents to consider Uruguay again.

Evidence of Uruguay’s great past (Uruguay was a very rich country in the beginning of the twentieth century with higher average pensions and salaries than that of Italy and France as late as in the 1950’s) can be found in the old city / down town Montevideo with its great architecture. The long term decline of the country since then has made it affordable. Average salaries and pensions are now considerably lower than that of Italy and France giving the country a low cost level compared to Europe. The depression in the last decade was the worse recorded in the history of the country and created an historical opportunity for investment in Montevideo with its architectural treasures.

With great nature, good climate, beautiful beaches, colonial architecture, rich in agriculture commodities and fresh water resources, as well as a renaissance of the old city center /  down town Montevideo, many foreigners are looking at Uruguay as an interesting country. The government’s latest tax exemption shows prospective foreign residents that Uruguay is serious about attracting them to the country.

Mexico and Chile have OECD’s lowest tax burden

The Organization for Economic Cooperation (OECD) and Development has published its annual report on the tax burdens in place in 2010 among its members, which shows that Mexico had the lowest tax-to-GDP ratio at 18.7%.

OECD data in the annual Revenue Statistics publication shows that the majority of OECD governments have stabilized the tax burden in place with the tax-to-GDP ratio increasingly nominally from 33.8% in 2009 to 33.9% in 2010. This however is still down from 34.6% in 2008 and below the most recent high point of 2007 when the tax-to-GDP ratio averaged 35.2%

Commenting on its report, the Organization said the underlying message from these comparisons is complex, as changes in tax revenues reflect not only changes in economic activity but also policy measures.

“In those European countries most affected by the financial crisis and subsequent recession there was an initial sharp fall in tax revenues, but then a small recovery in the tax to GDP ratio in 2010,” the OECD stated.

“The data collected also shows that in a period when all levels of government have seen pressure on expenditure and revenues, the average tax ratio for state, regional and local governments has remained steady since 2007 while that for central government has declined,” the OECD explained.

The report’s salient findings include that:

  • Out of 30 OECD countries for which provisional 2010 figures are available, tax-to-GDP ratios rose in 17 and fell in 13.
  • Compared with 2007 pre-crisis tax-to-GDP ratios, the ratio in 2010 was still down more than 3% points in six countries. In Spain it declined from 37.2% to 31.7% and in Iceland from 40.6% to 36.3%. Chile, Israel, New Zealand and the United States showed declines of 3-4% over the same period.
  • The tax burden increased from 31.4% to 34% between 2007 and 2010 in Estonia. Two other countries; Luxembourg and Turkey showed increases of 1-2 percentage points over the same period.
  • Denmark has the highest tax-to-GDP ratio among OECD countries (48.2% in 2010), followed by Sweden (45.8%).
  • Mexico (18.7% in 2010) and Chile (20.9%) have the lowest tax-to-GDP ratios among OECD countries. The United States has the third lowest ratio in the OECD region at 24.8% with Korea at 25.1% and Turkey at 26.0%.
  • The proportion of tax revenues accounted for by social security contributions rose from 25% to 27% between 2007 and 2009 whereas the share of taxes on corporate income and capital gains fell from 11% to 8% over the same period. The share of the other major tax categories were largely unchanged.

Uruguay – Offshore Corporate Vehicle

The main feature of an Uruguay Offshore Corporate Vehicle:

Reputable jurisdiction

Foreign income and assets of Uruguayan corporate vehicles are not taxed. Dividends are not taxed


– Shares may be bearer type (anonymity)

– Bearer shares may be transferred by simple delivery

– Company only requires one director and one shareholder

– Directors and shareholders may be non Uruguayan

– Presence of directors and shareholders is not required in Uruguay

– Purpose may be all-encompassing all types of business activity

– No minimum capital required – no maximum capital limit

– Shareholder’s liability is limited to the paid in capital

– Any person or company may incorporate or acquire an Uruguayan Offshore Corporate Vehicle

Solid banking system with secrecy laws

Free inflow and outflow of capital in any currency.

Few obligations:

Prepare financials statements once a year

Hold a shareholder meeting once a year. However, it may do so by proxies.

File tax forms once a year and pay the annual tax of USD 400

The physical presence in Uruguay of any of the corporations shareholders are not necessary.

Please contact us if you want to establish a trust and or corporate structure in Uruguay.

American companies are living the United States because of high taxes

The corporate tax rate in the United States is the second highest in the developed world.

American companies are finding new overseas tax havens to legally protect some of their profits from the U.S. tax rate of 35 percent, among the highest in the world. Lesley Stahl reports. Move your corporation or part of your corporation out of the United States while it still is possible. Do not wait as the current negative sentiment could result in restriction on US companies in the future.

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