Tag Archives: Territorial Tax

Nicaragua for immigrants and tax free foreign income

Nicaragua offers low cost of living, beautiful colonial cities, spectacular beaches and a vibrant culture. A territorial tax system makes in an interesting county for foreigners.

Managua_Nicaragua

 
Taxes in Nicaragua

Nicaragua taxes only income derived from Nicaraguan sources.
 

Picture of Managua, the capital of Nicaragua by gallohouse.com
 
 

Income tax

For individuals, income tax  is calculated on a progressive tax rate, up to a maximum of 30%. Taxable income is based on Nicaraguan source income. As a foreign retiree, you pay no taxes on out of country earnings.

Value added tax
This tax applies to the following acts performed in the national territory: sales of goods, providing of services, and importation of goods. It is calculated at a flat rate of 15% on the value of the goods or services. If you own a business the value added tax will be returned to you.

Transfer tax
Property transfers are subject to a 1%-3% pre-payment income tax on the purchase price. While most sellers ask the buyer to pay it, you should be aware that it is a pre-payment of income tax; therefore, it is legally payable by the seller.

Real estate tax
Annual property taxes are approximately 1% of the 80% of the municipal cadastral value of the property. The cadastral value of the land is calculated substantially lower than the market price of the land.

There are two other critical factors that have also played a considerable role in defining Nicaragua’s fate as a retirement destination: a comprehensive retiree benefit program and the many desirable locations scattered throughout the country.

Investing in Nicaragua

In the last decade, Nicaragua has privatized nearly all its old state-owned monopolies, save for the public utilities, and has thus dramatically reduced the amount of government red tape investors have to contend with when they do business here. In addition, it has opened up all sorts of new markets.

A foreign investment law ensures you can repatriate 100% of your profits and, after three years, the initial investment as well. Even if you don’t “register” your investment, banks will freely repatriate profits. You’ll find no legal grounds for discrimination against you when you invest. The law allows for 100% foreign ownership in every economic sector. And there are no restrictive visa or work permit requirements to inhibit investment.

Law 306 gives you an incentive and makes it easy for you to help jump-start the industry and make a profit while you’re at it. Many tourist activities fall under the law’s umbrella, and with an investment in any one of them, you benefit through tremendous tax savings.

Low crime rates compared to other countries

Nicaragua is the second safest country in all of Latin America behind Uruguay, and Nicaragua has a lower reported crime rate than France, Germany, and the United States, according to a United Nations/Interpol study.

Run Your Tourist Business Tax Free for up to 10 Years

Nicaragua’s Law 306 enacted in September 1999 is the most attractive and aggressive–tourism incentive law in Latin America. If you’ve ever thought about opening your own B&B, running a tour business, or having a little arts and crafts shop, Nicaragua is the place to do it.

This law is sweeping in scope and offers benefits for investors who take advantage of the program. If your business qualifies, you pay no income or real estate taxes for up to 10 years, and bring in (or buy locally) all the supplies you need, from furniture and boats to linens and cash registers all tax free.

The application and approval process is fast. INTUR, Nicaragua’s institute of tourism, has outlined very clearly what you need to do. The law allows the agency just 60 days to approve your applications. What’s more, depending on the type of project, an investment of only $30,000 can qualify you for benefits.

In general, Law 306 offers investors the following benefits:

  • Pay no income taxes for up to 10 years
  • Pay no real estate taxes for up to 10 years
  • Import into the country all the supplies you need to facilitate your investment tax free.

Nicaragua’s Retiree Benefit Program Makes a Retirement in Nicaragua Easy

The country’s “retiree” program is much like the Costa Rican program was in the 1980s, attracting thousands of expatriates to Nicaragua. To be eligible, you need only be over 45 years old and have a monthly income of at least $600. The Nicaraguan government provides significant tax incentives for foreigners, and encourage investment in the country.

The benefits come mostly in the form of tax incentives. As a foreign retiree, you:

  • Pay no taxes on any foreign earnings.
  • Can bring up to $20,000 of household goods, for your own home, into Nicaragua duty free.
  • Can import or purchase one automobile for personal or general use duty- and tariff free up to $25,000, and sell it, tax-free, after five years.
  • Can import an additional vehicle every five years under the same duty exemptions.

Where Are the Foreigners Retiring in Nicaragua Locating?

The hottest Nicaraguan retirement destinations are the colonial cities of Granada and Leon, the capital of Managua, and most notably the southwestern corner of the Pacific coast around San Juan del Sur, where beach front property options abound.

Nicaragua offers the lowest cost of living in Central America (lower than Panama) with prices 20% to 60% lower than the United States. It also offers an opportunity to purchase stunning beachfront, lake, or colonial real estate at great prices with low property taxes.

Nicaragua is an exotic land where the sun shines all day long with tropical rivers, colonial cities, friendly and lively people, and the largest body of fresh water south of the Great Lakes  with the world’s only freshwater sharks.

Affordable Health Care in Nicaragua

Affordable health care is available in Nicaragua. There are several first class hospitals in or around the greater Managua area, with the Vivian Pellas Metropolitan Hospital being the most specialized. Throughout the remainder of the country there are ample amounts of quality clinics, hospitals, and doctors who are available for basic medical attention.

HTH Worldwide is also able to provide you with a comprehensive health care policy that will cover you not only in Nicaragua, but also in the United States, at 100% cost reimbursement. This plan provides a nice sense of comfort as you live in Nicaragua. It is recommended that when it comes time to move to Nicaragua you obtain Med Evac insurance (which can cost as low as $250 per year). This is a precautionary measure in case highly specialized equipment is not available in Managua.

Residency

Nicaragua’s laws resemble the old pensionado rules that were in place in Costa Rica in the 1980s, attracting thousands of expatriates to that country: They provide significant tax incentives for foreigners, and they encourage investment in the country.

Resident expatriates say it is as much the friendliness of the people that attracts them to Nicaragua as any other factor, such as the tropical climate, low price level, or attractive government incentives. But the government program is often a key deciding factor: It’s fairly easy to qualify for retiree status, the paperwork is minimal, and the benefits compare favorably with those in other, neighboring countries.

Law of Resident Pensioners and Retirees (Decree 628): Nicaragua passed legislation to encourage retirees and pensioners to move to the country. The Law of Resident Pensioners and Retirees gives benefits mostly in the form of tax incentives.  To qualify, you’ll need to prove to the Nicaraguan government that you’re actually a citizen of the country where you claim your nationality, that you’re in good physical and mental health, that you’re in good standing with the local police, and that you have an income equivalent to at least $600 a month. Add an additional $100 for each dependent family member living with you in Nicaragua. The minimum age for eligibility is 45, but this can be waived if the applicant proves stable income.

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Hong Kong Again Ranked As World’s Freest Economy

The World’s Freest Economy. Picture of Hong Kong by Jakub Halun

For the 19th consecutive year, Hong Kong maintained its position as the world’s freest economy, according to the 2013 Index of Economic Freedom, published annually by The Heritage Foundation.

Launched in 1995, the Index evaluates countries over 10 economic freedom factors – from property rights to entrepreneurship – grouped into four broad areas of economic freedom: rule of law; regulatory efficiency; limited government; and open markets. Based on its aggregate score, each of the 177 ranked countries was classified either as: “free” (i.e. combined scores of 80 or higher); “mostly free” (70-79.9); “moderately free” (60-69.9); “mostly unfree” (50-59.9); or “repressed” (under 50).

The top four in the index were unchanged. Hong Kong scored 89.3 on the 1-100 scale, which, although 0.6% lower than last year, still topped the 88 of Singapore, which, although 0.5% higher than 2012, ranked second, as it has for all 19 years. Australia and New Zealand ranked third and fourth, at 82.6 and 81.4 respectively, enabling the Asia-Pacific region to account for the four highest-ranked countries.

Switzerland took fifth place in the ranking (and continued to be the only “free” economy in the European region), with Canada finishing sixth, despite slipping a half point, and Chile seventh, moving more than half a point toward greater economic freedom. Mauritius, the only sub-Saharan country to rank among the top 10, was eighth with an overall score of 76.9. Denmark finished ninth, just ahead of the United States, which remains in tenth.

The US, with an economic freedom score of 76, lost ground again in the 2013 Index. Its score was 0.3 points lower than last year, with declines in monetary freedom, business freedom, labor freedom and fiscal freedom.

The world average score of 59.6 was only one-tenth of a point above the 2012 average. Since reaching a global peak in 2008, the Foundation noted that economic freedom has continued to stagnate. The overall trend for last year, however, was positive: Among the 177 countries ranked in the 2013 Index, scores improved for 91 countries and declined for 78.

“On the plus side, average government spending scores improved,” it added. “Unfortunately, this was matched by a decline in regulatory efficiency, as a number of countries hiked minimum wages and tightened control of labor markets.”

Hong Kong’s score was lower than 2012 due to increased government spending relative to gross domestic product and an increase in inflation. Among the 10 economic freedom factors assessed, Hong Kong maintained its top position in trade and financial freedom, remained second in investment freedom and property rights, and rose from third to second in business freedom.

Hong Kong’s Acting Financial Secretary Professor KC Chan welcomed Hong Kong’s highest ranking, noting that The Heritage Foundation complimented Hong Kong’s highly competitive regulatory regime “which, coupled with an efficient and transparent legal framework, sustains vibrant engagement in global trade and investment.”

As Hong Kong’s economic interaction with mainland China has got closer, and trade and financial linkages with the Mainland have grown significantly, The Heritage Foundation further complimented Hong Kong for continuing to demonstrate a high degree of economic resilience and remaining one of the world’s most competitive financial and business centers.

Chan confirmed the government is determined to uphold economic freedom in Hong Kong. “The government will continue to provide a business-friendly environment for firms to flourish, while establishing an appropriate regulatory regime to ensure the integrity and smooth functioning of the free market. We also strive to remove impediments to industries tapping into new markets,” he added.

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Palau Launches International Shipping Registry

Picture of Leisure World by Ivan Meshkov

The Palau International Shipping Registry has officially opened its doors following a launch ceremony which saw the registration of its first two vessels, the cruise ships Amusement World (12,764 Gross Registered Tonnage (GRT)) and Leisure World (15,653 GRT) operated by Universal Ship Management.

Despite the territory’s diminutive size, with a population of just 22,000, the Registry has already signed up to the most significant major shipping conventions, including: the International Convention for Safety of Life at Sea; the International Convention for the Prevention of Pollution from Ships; the Safety of Training, Certification and Watchkeeping; the Bunker Convention; the Civil Liability Convention; and the Maritime Labour Convention 2006, among others.

The Republic of Palau consists of eight principal islands and more than 250 smaller ones lying in the western Pacific, with maritime boundaries with Indonesia, Philippines and the Federate State of Micronesia. The Registry is headquartered and administered in Houston, USA.

The Registry is committed to the highest international standards. The President of Palau, Johnson Toribiong said at the launch: “In announcing the opening of the Palau International Ship Registry for business, we are committed to ensuring the safety of our fleet personnel and passengers, ensuring protection of environment by which our fleet traverse, and ensuring peaceful voyages of our fleet, reflective of the Republic of Palau and her flag. We are proud to say that the Palau International Ship Registry is not just another ship registry, but, a ship registry of the highest standard.”

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Singapore Tops Hong Kong as Residence for Mobile Rich in Asia

Hotel guests are seen at the infinity pool at the SkyPark atop Marina Bay Sands in Singapore. Courtesy of photographer: Sam Kang Li/Bloomberg

According to Bloomberg news; Singapore topped Hong Kong as the most desired place in Asia for so-called mobile millionaires to reside, with quality of life cited as the main attraction, a RBC Wealth Management (RY)survey showed.

Almost a third of the millionaires in Asia who live, work or spend more than half their time outside their countries of origin prefer Singapore, while 24 percent pick Hong Kong, the second most popular in the region, RBC and The Economist Intelligence Unit said in a joint research report yesterday.

Singapore topped Hong Kong as the most desired place in Asia for so called mobile millionaires to reside, with quality of life cited as the main attraction, a RBC Wealth Management survey showed.

Real estate led the list of preferred assets for the internationally mobile wealthy, according to the survey, which showed 23 percent of those in Singapore reporting a “high propensity” for property investment, compared with 7 percent in North America. The island’s home prices climbed to a record in the third quarter, prompting the government to restrict home loans and cap property development. Eduardo Saverin, co-founder of Facebook Inc., moved to Singapore in 2009, and Jim Rogers, chairman of Rogers Holdings, relocated there in 2007.

“Singapore always has this quality as a safe haven, not just for your money, but also for your family,” said Wai Ho Leong, a senior regional economist at Barclays Plc in Singapore.

For mobile millionaires who moved to Singapore, 89 percent ranked quality of life as important and 83 percent cited the country’s political stability as important, the survey showed. Infrastructure and educational opportunity were also given as reasons to live there.

Most Millionaires

Singapore posted a 14 percent increase in millionaire households to 188,000 last year, when the Asia-Pacific region countered a decline in wealth in Western Europe and the U.S., according to a Boston Consulting Group report published May 31.

The proportion of millionaire homes in the city was 17 percent, the highest in the world, followed by Qatar and Kuwait, according to Boston Consulting Group. Singapore has a population of 5.3 million, of which about 2 million are foreigners.

“High net worth individuals with global outlooks for their businesses and families are choosing Singapore to live and invest in,” Barend Janssens, the Singapore-based head of RBC’s wealth-management unit for emerging markets, said in a statement.

The city-state is grappling with the elevated inflation that comes with years of economic growth and population expansion on an island smaller than New York City, with rising demand fueling record property and car prices.

Property Boom

In the three months ended Sept. 30, the island’s private residential property price index rose 0.6 percent to a record 208.2 points, according to government data. In prime districts, apartment prices gained 0.2 percent, compared with a 1 percent increase in the suburbs.

The Monetary Authority of Singapore told lenders on Oct. 5 to restrict home-loan maturities “to curb continued upward pressure on residential property prices,” in an attempt to avert a housing bubble. The government said in September it plans to cap the number of homes that can be developed in suburban projects as it seeks to curb the increasing trend of so-called shoebox apartments.

The cost of a permit to own a small car for 10 years rose to an unprecedented S$78,523 ($64,300) on Dec. 5 from S$46,889 at the start of the year. That excludes the cost of buying a car. The government auctions limited vehicle permits to control congestion and pollution.

“Only if you’re very young and highly qualified would you want to rough it out in Hong Kong for a few years,” Leong said. “But once you have kids, the pollution gets to you, the lack of greenery gets to you, the crowdedness gets to you.”

Doing Business

Hong Kong is the best place to do business, according to data compiled by Bloomberg. The city of about 7 million people secured the top position in an index based on six criteria including the degree of economic integration and labor costs. Singapore ranked ninth in the index published in March by Bloomberg Rankings.

Hong Kong acts as the gateway to China, the world’s most populous nation, with free-market policies and low corporate taxes.

“Hong Kong is a very big financial center in the region and in recent years has also benefited a lot from China opening up its markets,” said Frances Cheung, a Hong Kong-based strategist at Credit Agricole CIB. Hong Kong is “about the opportunities, especially in the financial world.”

The World Bank ranks Singapore and Hong Kong top in its gauge focused on the ease of doing business. The Washington- based Heritage Foundation has named Hong Kong the world’s freest economy for 18 successive years.

See the full article from Bloomberg here.

Panama – City of Knowledge offers no taxes for research and high tech corporations

Panama has established City of Knowledge in order to attract research and high tech corporations. This includes internet commerce, bio and nano tech corporations. Only 15 minutes drive from down town Panama City it also offer great life style possibilities.

 

Panama City, Republic of Panama     Picture courtesy of Photoatlas

City of Knowledge

Being part of the City of Knowledge implies a commitment to innovation and sustainable development, but it also involves a broad range of benefits designed to make your operations more effective.

Here are some of the direct benefits for affiliates and users recognized by the City of Knowledge:

  1. Tax and immigration benefits through affiliation to the City of Knowledge Foundation project.
  2. Telecommunications, IT and educational technology services, including an intelligent high-tech center with the required capacity for teleconferences, distance learning, fast internet connections, and other services.
  1. A Point of Presence -POP- with direct access to the land portion of 5 International Fiber Optic cables that go across Panama (PAC, SAC, ARCOS, Pan-American and MAYA).
  2. Infrastructure and buildings in good maintenance condition, easily adaptable to various uses.
  3. Technical, administrative and consulting services. Constant electricity flow (99.9%) with redundant power supply from the Panama Canal thermal plant located 300 m (328 yards) away in the Miraflores locks.
  4. Complementary accommodation and catering service.
  5. Sports and recreation facilities.
  6. Access to the major higher learning and scientific research centers in the country.
  7. Access to the Panama Canal Basin, a living laboratory for scientific research and technological innovation on advanced tropical ecosystem management.
  8. Central location: next to the Panama Canal, 15 minutes from downtown Panama City, 5 minutes from Amador resort and 45 minutes from Colón city, located on the Atlantic entrance to the Panama Canal.

Here are the incentives for those participating in the project under Executive Order # 6 of February 10, 1998, which states the basis for the Panamanian State’s support to the City of Knowledge Foundation.

Tax Benefits

  1. Exemption from all taxes, levies, fees or import duties on machines, equipment, furniture, vehicles, appliances or materials necessary for the operation of companies accepted into the City of Knowledge Technopark.
  2. Exemption from Service and Personal Tangible Asset Transfer Tax (ITBMS) on machinery, equipment, vehicles, appliances and materials purchased or necessary for the operation of companies accepted into the City of Knowledge Technopark.
  3. Exemption from any taxes, fees, duties or levies on overseas money remittance when such money remittance or transfer is done for the purposes of companies accepted into the City of Knowledge Technopark.
  4. Innovating companies producing, assembling or processing high-tech goods or rendering similar services for sale in the local or international market at the International Technopark of Panama (ITP) will have the following benefits:
    1. Their activities, operations, transactions, procedures and transfers of personal and real property, purchase and import of equipment and construction material, raw materials, machinery, tools, accessories and supplies will be a hundred percent free of direct taxes, levies, fees, duties and national taxes. This includes income tax exemption for companies.
    2. Their capital will be free from direct national taxes, including patent or license tax.

Immigration Benefits

The State will grant special visas to foreign staff entering the country to contribute to the development of the City of Knowledge project. For further information, see the Immigration and Naturalization Bureau website.

Labor Benefits

Companies affiliated to the City of Knowledge are authorized to hire any international staff necessary for their operation.

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