PANAMA : Millionaires Look to Redomicile as Tax Hikes Loom
People want to escape the legal uncertainty where they’re changing the tax code every year. Some governments in Latin America such Uruguay, Argentina are imposing new taxes on wealthy citizens who move to other countries but still retain ties with their home countries.
Millionaires across Latin America are looking to leave their home countries as governments strive to fix public finances battered by the Covid-19 pandemic with higher taxes on the wealthy. Some are ready to move, with families in tow, as far as Portugal. Others prefer jurisdictions closer to home, such as Panama and Uruguay, which are positioning themselves as convenient locations for the emigrant rich.
This interest in relocating comes as the Covid-19 outbreak magnifies the huge disparities between rich and poor in much of the region, considered by the United Nations as the world’s most pronounced. As governments grapple with the soaring costs of the coronavirus, politicians in Chile, Brazil, Argentina, and Peru are all debating measures to target the wealthy, among other tax measures, to boost revenue.
According to Credit Suisse, there are about 670,000 individuals worth more than $1 million in Latin America, representing 0.2% of the region’s population. That compares to 2.3% in Europe and 7.3% in North America
The reports of millionaires fleeing to protect their wealth when millions are suffering from disease, mass unemployment, and rising poverty are bolstering calls to clamp down on tax avoidance. Millionaires’ itchy feet are creating opportunities for jurisdictions who offer fast-track residency schemes as well as favorable tax rules like Panama or Portugal. Investment under Portugal’s Golden Visa scheme is highly appreciated and Brazilians were the second largest contingent behind Chinese investors.
Panama provides easy access to a variety of international destinations. The Tocumen International Airport currently connects to 84 destinations and, it has the most extensive global network in Latin America. In addition, those who obtain a Panamanian passport can travel to more than 125 countries visa-free. For many business people and international families, this a major advantage.
The prospect of a business-friendly atmosphere, positive returns on investments, tax benefits and open-borders approach invites citizens from all over the world to join and partake
Individuals can find a visa program in Panama that will suit their own needs. The following three visas are among the most beneficial programs for investors: the special passport visa, the reforestation visa and self-solvency visa.
The special passport visa, also known as the private retiree visa, has recently been the center of attention for its exclusive passport option. Holders of this visa receive a special Panamanian passport upon visa approval. The passport is similar to a diplomatic passport, which is valid solely for traveling purposes and does not grant citizenship.
For the reforestation visa, with a minimum investment of $80,000 cover at least 5 hectors of land in an approved forestry project, investors can receive permanent residency.
The self-solvency visa is an excellent option for investors looking to diversify their funds to divide their investments among real estate and fixed-term deposits. The allocations of funds can vary in proportion, if the minimum required investment of $300,000 is met. Like the reforestation and special passport visa, immediate family members can apply within the same application for the self-solvency visa.
The residency visa can take up to three years to complete. Upon arrival in Panama, the applicant will submit the application and receive temporary residency valid for six months. The application will be approved within the six-month period. Each step requires an in person visit, however, applicants do not have to remain in Panama through the process.
Citizenship in Panama
Under Panamanian law, a quick trip to Panama every two years will be sufficient to ensure permanent residency is maintained. If a resident does not visit once every two years, residency can be suspended. After five years of permanent residency, residents are eligible to apply for citizenship. (by citinavi staff)