Tax Haven No More?
“Bad news from down South America way,” writes friend and offshore expert Bob Bauman. Bob is legal counsel for the Sovereign Society, an organization we’ve trusted for years as perhaps the most reliable source of information on what can be complicated and murky issues.
“It was announced last week that the government of the Republic of Uruguay plans to introduce legislation to impose taxes on bank deposits and other assets held offshore by citizens and residents in the country.
“If this proposed legislation becomes law, this would be a radical change from the current territorial tax system that exempts citizens and residents of Uruguay from taxes on all offshore income, taxing only income earned within the country.
“According to Economy Minister Fernando Lorenzo, the controversial proposal will tax all income generated overseas from deposits held by Uruguay residents, as well as income from assets or investments from non-resident companies or ownership in any foreign entities. Current Uruguayan 12% income tax and wealth taxes would apply.
“‘If the law is approved, residents in Uruguay will have to pay income and wealth taxes on overseas income and from their share of assets in financial or other investments overseas,’ said Lorenzo.
“It is as yet unclear whether the new taxes would be imposed on foreigners living in the country. A considerable number of U.S. and European expatriates are living there, no doubt many attracted by the country’s current tax haven status.
“Worse still, the proposed legislation would seriously weaken existing Uruguayan bank secrecy and financial privacy laws. Current law allows courts to reveal individual’s information only in criminal or child support cases. The proposed bill would allow courts to order release of information to foreign governments in matters concerning tax evasion or other tax offenses.
“This would be drastic change to what is now one of the strongest financial privacy laws of any country.
“‘Uruguay is accepting pressure from rich countries, and the government is not defending the interests of Uruguayans,’ claimed Conservative Party leader, Pedro Bordaberry.
“‘This is crucial for Uruguay,’ Bordaberry continued, ‘since we are a small country and a net importer of capital. Very few Uruguayans have holdings overseas, but many foreigners who live here have earnings outside Uruguay, and we have always stated that only whatever is earned here is taxed here.'”