Tag Archives: Residency

Paraguay – Dollar economy – Still no personal income tax

Central and South American Tax & Money Havens, , , , , , , , ,

Paraguay has a number of advantages going for it like 10% VAT (the lowest in South America), no personal income tax, 10% corporate tax (the lowest in South America), low labor cost, young population, plenty of commodities and enormous fresh water resources. In addition the capital Asunción has the lowest general price level in the world of any capital.

The personal “no income tax” regime should last at least to 2013 and very likely beyond. Bolivia and Guatemala are other countries in the region with “low or almost no” personal income tax. The employer’s contribution to social security is 16.5% of an employee’s (worker) total salary which includes bonuses. The employee’s (worker) portion is 9%

However, dividend distributions are subject to a 5% corporate income tax. Dividends distributed to non residents are subject to a 15% withholding tax.

Paraguay has a high degree of openness in the economy and a high degree of dollarization. There is no foreign exchange control in Paraguay.

Paraguay is a member of Mercosur. Other members of this trade organization are Argentine, Brazil and Uruguay. Venezuela is in the process of being a future member. The purpose of Mercosur is free trade with limited or no custom between its member countries as well as visa free travelling. Mercosur is planning to introduce the same “car plate” among its members.

See more in IMF research document regarding Paraguay here

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Dubai – Support of entrepreneurial enterprises

Middle East Tax & Money Havens, , , , ,

Dubai has announced plans to launch a new visa system – similar to that already operational in Singapore – that would expedite entrepreneurs’ visa applications and offer business formation advice as part of the Dubai’s efforts to encourage high value start-ups to the Emirate. A new bourse, specially for Small- and Medium-sized enterprises, has also been proposed for implementation in coming years.

As reported initially by Dubai-based paper the National, the EntrePass scheme has been established to encourage “start-ups with high commercial value to set up in Dubai and share knowledge and intellectual property rights with the emirate”.

In return, the paper reported, entrepreneurs will have their visa application expedited and be provided guidance from experts at the Mohammed Bin Rashid Establishment (MBRE) for Small- and Medium-sized Enterprise Development to aid them in establishing Dubai operations, as well as ongoing support. In addition, in certain cases, entrepreneurs may be eligible to financing through the UAE’s first Sharia-compliant venture capital fund, the paper reported.

According to the National’s report, the EntrePass scheme will be implemented on a small scale in the final quarter of 2010 with ten entrepreneurs offered a placement. The scheme would then be expanded thereafter, the Department for Economic Development said. It is anticipated that the scheme will run until 2012 or 2013.

In comments on the scheme to the National, Alexandar Wilians, the Director of Strategy and Policy Division at MBRE, said, “We want Dubai to be the centre for innovative small- and medium-sized enterprises (SMEs). The future of Dubai will rest on nurturing selective foreign entrepreneurs with good ideas to use Dubai as a test bed for development and to build business around it.

We are looking at any company with new business models and existing technology that can be adapted to the UAE and that could benefit Dubai through the sharing of intellectual property and knowledge transfer.

Entrepreneurial activity is a major driving force in Dubai; SMEs account for 98% of companies registered as operating from the Emirate. The MBRE is looking to support the sector’s growth, including through plans to establish a specialized stock exchange for Dubai SMEs – the Dubai SME 100 – which would allow smaller companies with lower capitalizations to gain access to extra funds through public offerings, removing capitalization-based barriers to entry. According to the National, the Dubai SME 100 ranking system would be established in March 2011, allowing for the creation of the new secondary bourse in 2012-13.

In the meantime, support for SME development is to be provided through the Emirate’s first Sharia-compliant venture capital fund, which is to provide Dubai SMEs with additional equity through repayable loans.

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Start-up incentives introduced in Singapore

Far East Tax & Money Havens, , , , , ,

During his keynote address to Singapore’s Fourth Start-up Enterprise Conference, the Permanent Secretary for Finance, Peter Ong, illustrated how the competitive tax regime in Singapore encourages the growth of new start-up companies.

“Singapore offers a very competitive tax regime designed to encourage new start-up companies,” he said. “Under the full tax exemption scheme, a newly incorporated company that meets the qualifying conditions effectively pays only 5.6% on the first SGD 300,000 (USD 213,000) of the income they earn in their first three years.” “After this period,” he continued, “start-ups can continue to pay less than 9% tax on the same amount, thereby allowing new entrepreneurs to retain a larger portion of their earnings to be ploughed back to grow their businesses.”

He pointed out that, this year, the government has also unveiled an unprecedented tax benefit in the form of the Productivity and Innovation Credit, to encourage start-ups and small- and medium-sized enterprises (SMEs) to invest in productivity and innovation. As an illustration, for the first SGD 300,000 that a start-up invests in staff training, it can deduct SGD 750,000 from its taxable income.

The same start-up will enjoy another SGD 750,000 deduction should it invest in automation. “The Productivity and Innovation Credit also allows businesses to convert the enhanced tax deduction into a cash payout,” he added, “a move that would come in handy in helping start-ups and SMEs ease their cash flow.”

Ong then illustrated the programme which supplies young start-ups with grants of up to SGD 50,000 to start their innovative business, while the Start-Up Enterprise Scheme provides a co-financing option of up to SGD 1m in funding start-ups with innovative and viable content.

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