Many wealthy residents in Latin America are reportedly preparing to leave their home country, as the region debates imposing an additional tax on the rich as a way of raising tax revenue at this moment of crisis.
Argentina, Mexico, Brazil, and Chile, are the most vulnerable and facing the prospect of losing many of their wealthy citizens, according to Bloomberg tax.
A Miami-based international tax consultant interviewed by the newswire stated the number of his clients seeking to switch tax residency had increased five-fold.
Persons worth more than US$1 million account for 0.2% of LatAm’s total population, according to Credit Suisse. That is too small a figure considering the wealthy make up 2.3 % of Europe and 7.3% of the United States.
However, these wealthy residents will not leave the entire region. Some of them may settle down in Panama or Uruguay, countries that are doing everything they can to lure the rich foreigners.
Some may even go to Portugal, says the Bloomberg report, pointing to the rising demand for the European country’s golden visa scheme.
Uruguay has drastically cut the minimum investment in real estate required to obtain tax residency, from UYU69 million (US$1.6 million) to UYU16.1 million (US$ 381,570).
Considering the report, Uruguay is looking very attractive for the wealthy in Argentina and Chile, where the government is mulling imposing a 2.5% one-time tax on its rich residents.
Mexico is not talking about taxing the rich, but its wealthy residents are feeling threatened since last year when the government passed a law, under which evading tax is akin to participating in organized crime.
However, leaving your country is not as easy as you think, say analysts. Most of the airports are closed due to the COVID-19 pandemic. And the rich residents need to sell their assets in their home country before leaving. With economies in doldrums everywhere, finding a buyer for real estate may be a challenge.