Unfortunately, much of what the press articles and blogs have been saying is more alarming than the reality. It has been said that Uruguay will tax:

• its corporate vehicles’ offshore assets
• foreign residents’ assets
• foreign residents’ income

That is incorrect.

The problem was originated because a draft of a proposed change to a tax law was leaked.  A different, adjusted draft, was finally prepared.  And that draft is still a work in progress, and is being adjusted in the Senate´s committee.  And the proposed change only aims to tax the money that Uruguayans have abroad, not foreigners who come to Uruguay.

Here’s the exact situation of where the issue stands on the three supposed taxes:

Taxes on corporate vehicles’ offshore assets: On May 28^th, the Ministry of Finance, where the bill proposal is being discussed, issued an official statement clarifying one issue of the proposed bill: that there will be no new taxes on Uruguayan companies, and that their offshore assets will not be taxed.  Explicitly: that nothing will change for Uruguayan corporate vehicles.  So, Uruguay remains an offshore tax free jurisdiction.

Taxes on foreign residents’ assets: It has been made clear from the start that assets owned abroad by foreign residents in Uruguay will not be taxed at all.  This was never in doubt.  This is only for citizens (at a very small scale; and remember that this asset tax is gradually being phased out since 2007, and will disappear by 2017).

Taxes on foreign residents’ income:

• Some types of income (not all) generated abroad could be taxed.  But the aim of the law is to tax the money that Uruguayans have abroad, not foreigners who come to Uruguay.
• The Ministry of Finance issued a second statement on June 1^st, clarifying that the law will in no way jeopardize the country’s policy of attracting foreigners to relocate in Uruguay.  And that their income will not be taxed or double taxed.
• The likelihood is that on income tax the tax will be circumscribed to Uruguayan citizens, and the government is considering adjusting the text of the bill, possibly to grant tax credits, so no one is taxed twice.
• And remember, it would only be on some types of income: interest on deposits and dividends.  So, any other type: salary, capital gains on sale of shares or property, pensions, lease, income, etc. are all excluded.

Even if he is correct, I still think the proposed law is a bad idea and another step down the slippery slope…

In the last four years I have seen a negative trend that leaves me shaking my head in wonder as Uruguay’s government does everything it can to make this country poorer. Prices have increased, and property prices have become ridiculous. From a business point of view, everything has become harder and more expensive.

But, THE WORST IS YET TO COME. Uruguay’s government has announced that it is giving up its traditional territorial taxation and will start taxing the worldwide income of its residents—including investment income.

In fairness, according to a friend of mine in the governing party, Uruguay was bludgeoned into this change by the OECD countries, especially by the USA and the EU, which threatened to ban Uruguay’s agricultural products if this new taxation was not enacted.

Nevertheless, the impact of this new tax law will be huge, especially on expats and immigrants who moved here based on the principal that their foreign investment income and pensions would be tax free.

The flight has already begun; even people who have gotten their permanent residency have left and more are planning to leave.

Those who can afford two homes in two different countries are debating whether it is worth living here less than 183 days per year, in which case they would not be tax resident (assuming Uruguay uses the OECD model on which the tax is based); and then living someplace else for less than 183 days (except the US which has different rules). With a couple of vacation days in a third country, they would then not be tax-resident in either place.

Those who cannot afford two homes are taking a hard look at Central America and Eastern Europe, depending upon their tastes and needs.

I am personally broken-hearted about this, but will probably still spend about 180 days here, and the balance in one or more of the other places in which I have business.

I wonder if anyone in government here has considered the results of this ill-advised decision?

Frankly, unless Uruguay provides some exceptions, like for pensioners, or at least concludes a series of double taxation treaties, without which some immigrants could find them paying taxes twice, the number of new residents will slow to a trickle, while the number of immigrants leaving, for at least a majority of the year will swell to a tidal wave that will have a huge negative impact on the economy as they spend their dollars or euros elsewhere.

I am taking a wait and see attitude before making any final decisions, but I am sifting through my options. I suggest you do the same.

US economic, military and political dominance is likely to decline over the next two decades, according to a new US intelligence report on global trends.

The National Intelligence Council (NIC) predicts China, India and Russia will increasingly challenge US influence.

It also says the dollar may no longer be the world’s major currency, and food and water shortages will fuel conflict.

If that isn’t enough, remember this:  the US Dollar is going to drop precipitously in the next few years due to the huge amount of money the government is printing to finance bailouts.

In my previous post, I quoted attorney Mark Teuten as saying, in part, that housebhold goods…”can be brought in free of tax within 6 months of the grant of permanent residence.” That seems pretty clear to me, but it obviously is NOT CLEAR to some people.

The duty-free exemption only applies for the 6 month period AFTER you get your permanent residency, NOT while your residency is pending!!!! If you bring in household goods before your permanent residency is granted, you will be required to put up a deposit ranging from hundreds to even thousands of dollars.

If you are not sure about your residency status here are some ways to check:

1. If you don’t have a cedula, you don’t have permanent residency.
2. If your cedula has words on the back like “provisoria” or “in tramite”, you don’t have permanent residency.
3. If your cedula has “Residcencia Legal” on the back, you DO HAVE permanent residency.

You might get your cedula quickly, especially if you are handicapped. But, in my experience, you will not get your permanent residency in less than about 1 year. My friend and coworker Borko received his 365 days after arriving here and his was the quickest of which I am aware.

People are being told things other than this, especially by some less than professional “Immigration Consultants”. It may be that there is a language problem, or it may be that they are simply economical with the truth. That is not for me to judge.

An old Southron saying applies here, “I have no dog in this fight!”

My goal here is simply to help others avoid the mistakes I have made–which are legion–or about which I know–which are legion times 10!

Panama was incredible! It was the most dynamic city I have visited in years. It is clearly replacing Miami as Latin America’s primary financial center. There are more banks in one small barrio in Panama City than there are in Uruguay. More business is done every day in Panama than is done all year in Montevideo. Everywhere I looked new buildings were going up: not little buildings–20 to 40 story concrete and steel towers. Real estate values are soaring. One of my business associates bought office space on Avenida Balboa (Panama’s version of Rambla) a few years ago for US$73 per square meter. Offices in his building are now selling for US$3000 per square meter.

And the Internet was incredible… I think we have more bandwidth in the hotel than in all of Uruguay: a blazingly fast 11 MB in our hotel room.

For me, the best features of Panama were its restaurants. I had fantastic Chinese food, which is impossible to get here, and a surfeit of American junk food including Wendy’s, Kentucky Fried Chicken, Pizza Hut, Bennigan’s, TGI Friday’s, Popeye’s and Hard Rock Cafe.

Panama City is very much like Miami, except that they speak more English in Panama!

Would I like to live there? Am I sorry I moved here?

You’ve got to be kidding! Panama is like one big amusement park/shopping mall: a lot of fun to visit, but I surely would not want to live there!

Panama is hot. Panama is humid. Panama is crowded. Panama is expensive. Panama’s traffic is insane. Panama is increasingly dangerous.

For me Panama is a mirror image of Uruguay. Uruguay is a wonderful place to live, a good place from which to do business, but a terrible place in which to do business. Conversely, Panama is a wonderful place in which to do business, a good place from which to do business, but a challenging place in which to live (especially if you are a gringo).

One of the things I love about living in Uruguay is that I do not stand out in a crowd (except for the fact that I am a fat cripple in a wheelchair)as a gringo. Here, I look like everyone else. Panama caused me to have flashbacks of Costa Rica–Santiago and I were both clearly identifiable as foreigners. That could be that between the two of us we were bigger than any six Panamanians, but I think it is more subtle than that. Panamanians are certainly more friendly than Costa Ricans, but then so are North Koreans. Panamanians are certainly smarter than Costa Ricans, but then so is the average mule. Panamanians show more business savvy than anyone I have met this side of Hong Kong or Taiwan. But, Panama has an edge to it which is hard to define, but indicates to me that it could never be home–that I could never really belong there.

Panama is good for business and I will go back there often. If it was next door to Uruguay I might even work there and live here. But it is 7 hours away by plane and Uruguay is my home Regardless of whether you speak English or Spanish the sentiment is the same: home Sweet home – hogar dulce hogar!

Happy Orthodox Christmas!

Today, January 7 is Christmas for the Eastern Orthodox Slavs. This is because we still use the Julian Calendar for calculating the Church Calendar. The fact that it is 13 days later than the civil calendar is simply an added benefit—it lets us shop for Christ during the after-Christmas sales and save big bucks. We have been trained to try to find the good in every situation.

I have been remiss in adding to my blog—my real job has just kept me too busy.

We had a great turnout for our pre-Christmas Open House on December 20^th—I think it was our second largest turnout after Thanksgiving. I have even seen a few pictures of yours truly in a Santa Claus hat—I tried to get Borko to wear a green hat, tights and pointy shoes and be my elf, but he refused. He muttered something about getting a gun, so I dropped the issue.

The puppies are monsters. They get their shots this week and starting Thursday night they will be moving to new homes. I decided to keep the big fat male—we named him Arkan. It is from the Archons of ancient Greece. The Serbophiles among us may also find an alternative attribution.

God Willing—The Aduana wiling—the shipping line willing: my van I supposed to arrive in Montevideo on Friday. With a lot of luck, a miracle from God, and deft handling of the Aduana (Customs), I hope to get it next week.

My plan is to travel around Uruguay in February and March on long weekends. That should generate a lot more blog pieces AND I am going to write the second edition of “The Southron’s Guide to Living in Uruguay”.

With all of the blessings of the last year and the promise of God’s goodness in the next, I will close today with the Christmas Tropar from our Divine Liturgy:

Thy birth, O Christ Our God, has shed upon the world the light of knowledge. For through it, those who worshipped the stars, have learned to worship Thee as the Sun of Justice; and to recognize Thee as the Orient* from on High: Glory be to Thee!

*Orient means the “new dawning” in this context.

Pocitos, Buceo
traffic all the way
Oh, what fun it is to ride
My ‘lectric trike today
La Rambla is a mess
cars are everywhere
Christmas here in Uruguay
is more fun than up there!

The UruguayLiving/Socieadad Southron pre-Christmas party will be held on Thursday night December 20th.. Please bring any Christmas music that you want to hear–The Southron will have a good selection of traditional (and even some modern stuff for the infidels).

There will NOT be an Open House on Thursday night December 27th!

We will resume our usual schedule on January 3rd.

I have really been remiss in writing in this blog, but I’ve simply been so busy with my real job that I have not had time to do it.

Therefore, this entry is going to be catch as catch can…

FIRSTLY, the weather is absolutely, positively, wonderful! Warm, sunny days without any humidity, and cool pleasant nights. This is the weather in Montevideo I live for: excuse me, for which I live. (I know there are grammarians lurking about out there.)

SECONDLY, we lost one puppy—I’m not sure how, it just disappeared. The good news is that the remaining 7 are healthy, growing like weeds, their eyes are open, and they are beginning to stumble about. I am confident the remaining four males and three females will make it. One downside is that Lucy has become more aggressive and tries to keep King Harry from my bedroom. She also nips the maids if they get too close. I’m hoping this passes once the puppies start running about. (There will be more pictures when Harry posts again.)

THIRDLY, Thanksgiving dinner was a huge hit; thanks especially to our staff, who did most of the work, Clara, who cooked up a storm, the other people who cooked 3 of the imported turkeys for us, and everyone who brought food or drinks and helped us all have a good time. I think in total we had between 80 and 90 people. Next year we may have to rent the hippodrome. (See pictures at the end too.)

On December 9, the Good Lord and the shipping line willing, my van will leave Yankee-occupied America, and be on its way to the Oriental Republic. It is “scheduled to arrive” on January 3. Allegedly, I will be able to have it within a day or two. However, since that is a holiday season, I am not going to hold my breath.

I am hoping to be able to use it to tour Uruguay, at least on a half-time basis, in February and March, so that I can write a second edition to my book—updated and expanded.

PENULTIMATELY, there will be another Open House gathering in Piriápolis on Saturday, December 15 from 5 to 10 p.m. at the same venue as last time. Steve Bowman of CoastalUruguay.com is the prime mover, and yours truly will wheel his way out, along with Harry and some of the UruguayLiving.com gang. Mark your calendar now! More details will follow soon.

AND FINALLY, please remember our Open House is held every Thursday evening from 6 p.m. until we throw the last drunk out. That being said, only gringos ever show up before eight o’clock. I usually do not wander downstairs until about 7:30 p.m. The Uruguayans show up in force fashionably between 8:30 and 9 p.m. (The only Thursday when we MIGHT cancel the open house is between Christmas and New Year’s Day. If we do cancel it, it will be announced here and in the forum.)

This will be a wonderful chance for members of our online community in Piriapolis, Punta del Este and points east, both Uruguayos and extranjeros alike, to get together. (Somebody please get on the conch shell express and let the Aussie colony east of Punta know about this—can’t have a fun party without the gang from Oz!)

Ken has graciously invited me and the UL gang (including Harry the West Highland White Terrier) to attend.

I will be bringing a supply of my books which I will give away and sign, for as long as they last.

Full details can be found at: http://www.sociedadsouthron.net/forums/viewtopic.php?f=12&t=1073

The Southron, Jimbo, Mikey, Harry and the gang look forward to seeing you there.

Something more than 50 people, Uruguayos and Extranjeros piled into the “clubhouse” behind our offices for food and drink and fun. This week, we were pleased to have a magic show, featuring card tricks by Judith Ginerman, who first visited us with the English class in which she is a student–Judy has become a welcome regular ever since.

In addition to our “local” Uruguayan and immigrant friends, we also welcome visitors from as far away as Siberia.

The Open House is open to everyone and is held every Thursday night (with a possible exception around Christmas and the New Year) from about 6PM until we finally throw the last people out…

For directions and the address go to: directions.