I would never advise someone to choose a place to live or retire based solely on the jurisdiction’s approach to taxation. Living somewhere you’re not happy just to save on your tax bill isn’t worth it in the long run.
Before choosing where to live, invest, or do business abroad, you should analyze all aspects of the “where” you’re considering. A country’s approach to taxation is an important consideration, but only one of many you should undertake.
Here are three havens offering the chance to both lower your tax bill and upgrade your lifestyle…
Panama
Panama continues to be one of the best options for going offshore. As a resident of Panama, you pay no tax on foreign-earned income, nor on bank interest, certificates of deposit, wealth, inheritance, or U.S. Social Security.
Property taxes are reasonable, with new properties exempt for up to 20 years, depending on their value.
Panama’s pensionado program grants retirees a one-time exemption on the importation of household goods and a $20,000 exemption from import duty for a new car.
Income earned in Panama is taxed in Panama (at a progressive rate from 15% to 25%).
Uruguay
Unlike other tax havens featured here, Uruguay’s tax code doesn’t fully exempt foreign-earned income.
Tax-resident foreigners in Uruguay enjoy tax exemption on foreign-earned income only during their first 11 years in the country. After that, certain types of income, specifically dividends and interest, are taxed at 12%.
Uruguay residents pay a 12% tax on local-source income. Property tax in the country is up to 1.2% of the property value, and movable property located overseas is also taxed, as well as subject to the country’s 12% rental income tax.
While Uruguay has no inheritance tax, the country does impose a wealth tax on assets in Uruguay.
Belize
Like Panama, Belize imposes no tax on a resident’s foreign-earned income. In addition, Belize has no capital gains tax and no inheritance tax. Property taxes are low, and the Belizean population is determined to keep it that way.
Belize’s Qualified Retirement Program (QRP) isn’t just for retired people. So long as you’re 40 years of age or older, you can apply for this type of residency and enjoy incentives such as permanent exemption from Belize taxes, including income, sales, and estate taxes, as well as import taxes on household goods and an automobile, boat, airplane, or golf cart.
Local income is generally taxed at a flat rate of 25% on income over $10,000.
With a Belize International Business Company (IBC), you are not subject to any taxes in Belize, nor are you required to file a return, because you can’t do business in Belize with a Belizean IBC. If you do wish to do business in Belize, you would need a Belizean local corporation.
Some tax incentives for local businesses exist and can lead to a 5- or 10-year tax holiday. The standard local business tax rate is 25%.
Stay diversified,
Lief Simon
Editor, Offshore Living Letter
