Economic Citizenship Opportunities
In late March, I remember reading an interesting article in the Antiguan press. Apparently the Prime Minister of St Vincent and the Grenadines, Dr Ralph Gonsalves, had made some negative comments on the issue of economic citizenship. Specifically he stated that his country would not recognize economic citizenship granted by any of the territories in the Organisation of Eastern Caribbean States (OECS). The Chairman of the Antiguan Labour Party, Gaston Browne, described Dr Gonsalves’ position as ‘foolish’. The article went on to say that Dr Gonsalves had campaigned against economic citizenship in his native land, and is philosophically opposed to the idea. He said only people who had attained citizenship in OECS countries through traditional means would receive the same rights and privileges in SVG.
Normally, one can qualify for citizenship of a foreign country on the grounds of birth on its territory, marriage, lineage or religious affiliation or through naturalization. Naturalization normally requires several years of permanent residence in the country (3 to 10 years). Economic citizenship or citizenship-by-investment however, is a legitimate program supported by a given Government where citizenship is provided to foreign investors in exchange for a substantial contribution to the country's economy. Three countries that are fairly well known for its economic citizenship programs are Dominica, St Kitts & Nevis and Austria.
I remember my first consulting job in Eastern Caribbean in the late 90s when my team leader commented that economic citizenship was the way of the future. He explained to me that no longer will citizenship be an accident of birth but more and more people of means, will begin to acquire second and third citizenships that work to their advantage and to the advantage of their families. More than a decade later, I now see just how right he was. More and more of us have second citizenships that help us professionally, in accessing educational opportunities etc. In the war of words between the Antiguan Labour Party Chairman and the SVG Prime Minister, I cannot help but think that the SVG Prime Minister needs to steer the debate towards ensuring that people of dubious backgrounds do not exploit such programs as opposed to just blindly opposing such programs.
In today’s world, the demand for economic citizenship continues to increase. Sometimes we pay so much attention to the Russian or Asian investors that we forget that the United States is still an important market. The Economix blog started around June 2011, on the New York Times website has an interesting thread on American citizenship renunciation and actually has a chart compiled with data from the Federal Register which clearly shows that the number of high net worth Americans renouncing citizenship is climbing.
The increasingly aggressive stance taken by the IRS now means that, for higher net worth individuals, an American passport could be more of burden than a blessing. The United States continues to be the only developed country that not just taxes its non-resident citizens on their worldwide income, but has what some see as quite onerous reporting requirements as well. Just as an example of the reporting requirements, any American citizen or green card holder who owns or controls a limited liability company in a foreign country must report it to the IRS or face fines of US$10 000. The penalty for not reporting certain foreign financial assets can be so large that they can bankrupt even the wealthiest of taxpayers. The National Taxpayer Advocate, in her recent annual report to Congress, criticized the I.R.S. with respect to how it has handled recent offshore voluntary disclosure programs. Federal Tax Singapore
The Caribbean region is the most tourism dependent region on earth and as visitor numbers to the English speaking Caribbean remain soft, it makes sense to look at other related options such as economic citizenship. Some territories continue to experience a boom in higher-end second homes. In the course of my own travels, I have seen some incredibly beautiful housing developments presumably catering to foreign based high net worth individuals in Barbados, St Lucia and St Kitts. The Caribbean remains attractive to those looking for English-speaking, politically stable, lower tax jurisdictions. To be fair, most Caribbean territories have programs to promote inward investment, but many are in need of review in light of competition from other parts of the world. Despite the post-2008 economic challenges, clearly the demand for investment opportunities, including second homes, is still there and the region needs to demonstrate that it is still open for business.
My name is Derren Joseph and I love the Caribbean region. Despite our current challenges, I continue to have the audacity of hope that we will all enjoy a brighter tomorrow. Read more on derrenjoseph.blogspot.com