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International Expansion Options in Central America

International Expansion Options in Central America

A rapid rise to economic prosperity, a handful of valuable trade agreements and a range of innovative tax regimes have successfully converted Central America into an appealing location for the foreign investor. There are several common misconceptions about Central America's levels of development, safety, and security for investments. Whilst no doubt certain areas of the region are less developed than others, some are experiencing economic growth on an unprecedented scale, and make excellent hosts for incoming businesses. Central America’s past is not an accurate reflection of its current standing, particularly for El Salvador, Costa Rica, Panama, and Belize. These four nations have rocketed ahead on compound annual GDP growth over the last 15 years, particularly in the case of Panama, which showcases a 300% GDP growth since 2004.  Central American Expansion- Trade globally from a central location Central America’s location lends itself perfectly to international trade. Positioned centrally as a bridge between the two hemispheres with access to both the Pacific and Atlantic Oceans makes Central America a major hub of global maritime trade routes. No other region can claim to have such direct access to the three largest consumer markets – North America, Asia, and Europe.  Of all Central American nations, Panama, known as the launch pad into Latin America, leads on the trading front. The Panama Canal generates approximately $USD2 billion a year just as a maritime thoroughfare. When combined with the free trade zone at the entrance to the canal, a total of $USD20 billion is...

A Lawyer’s Guide to Business in Costa Rica

A Lawyer’s Guide to Business in Costa Rica

Last week, we had the privilege of hosting our Costa Rican Country Manager, Mauricio Zuñiga, in our Bogotá office. We got the chance to ask him a few questions about the legal aspects of business in Costa Rica. Here we’ve provided a detailed and insightful guide to the inner-workings of Costa Rican business operations.  Business in Costa Rica - What types of legal entities are there in Costa Rica?  There are 5 types of legal entities available to set up in Costa Rica. Of those 5, I would say 2 are used in the vast majority of cases and these are the two I would personally recommend to a foreign investor. Sociedad de Responsibilidad Limitada (SRL): This is a Limited Liability Company.  It’s more familiar business, private, and with known investors. There’s a more restricted liability.  Sociedad Anonima Corporation): corporations often have unknown shareholders and can be listed on the stock exchange. Generally, these are more restrictive as any changes to the company have to be ratified by the major shareholders.  Both of these are able to be incorporated by foreign people. However, there does need to be 2 shareholders as a minimum in both cases. The choice between these two is dependent on the activities the businesses seek to perform in the future.  What key steps are involved in company formation and incorporation? Generally speaking, company incorporation in Costa Rica is fairly straightforward compared to its other Latin American counterparts, and can even take as little as a few days!  Firstly, the company must form a set of bylaws which summarize the intent and...

Uruguay Revamps its Free Trade Zone Regulations

Uruguay Revamps its Free Trade Zone Regulations

Free trade zones have been the catalyst for multinational expansions across the world. By benefiting from the competitive tax and customs exemptions, businesses are able to reinvest profit and grow faster.  Uruguay is home to 12 free trade zones in total. Within these zones, all forms of business activities are permitted: from manufacturing and warehousing, to services and trade. As such, these special economic areas play a key role in attracting foreign investment to Uruguay. Benefits of Uruguay’s Free Trade Zones Free trade zones (FTZs) are put in place by nations in order to draw foreign investment into their countries. Through the mediums of rent, employment, and other secondary spending from large companies, nations are able to generate large income streams.  Well-known companies such as PepsiCo and Sony base operations within two of Uruguay’s zones and, as such, have profited greatly over the last decade. Out of the 12 FTZs, 11 are privately owned whilst one remains owned by the state in the city of Nueva Palmira. Despite private ownership, all zones are monitored by the Free Zone Area which reports to the General Trade Bureau of the Ministry of Economy and Finance. In order to draw attention from foreign investors, Uruguay has set a number of incentives for companies to benefit from when setting up operations in these areas. The most appealing of these is zero tax.  Tax exemptions Tax exemptions are probably the most beneficial part of operating from an FTZ. Operators working in these zones are exempted from all national taxes except social security for their...

Corporate Legal Compliance and Industry Benefits in El Salvador

Corporate Legal Compliance and Industry Benefits in El Salvador

El Salvador is a small country with a big opportunity for investors across the globe. With its geographic location, El Salvador is perfect for linking up trade between North and South America. Alongside this, it has a rapidly growing tourism industry for which its volcanic landscapes and its beautiful beaches are idyllic spots for hikers and surfers. However, in setting up a business or in making an investment in El Salvador, it is advised to make sure that you get to grips with El Salvadorian legislation and the obligations that come with it. Therefore, here is a small introduction into corporate legal compliance in El Salvador. Corporate Legal Compliance El Salvador - Decree 732: Investment Law This law has the objective of facilitating foreign investments and other investments in general, especially those which contribute to the economic and social development of the country. Furthermore, it treats foreign investment in the same light as domestic investments. Thus, to make an investment in El Salvador you must register this investment. Registration of Companies and Investments Article 22 on the Law on Investment indicates that registration of an investment will be requested to the ONI or the inscription of the same one, previous to the fulfillment of the corresponding legal requirements. Accompanying this, Article 358 sets out the requirement for foreign investments to be registered in the Commerce Registry. This is to be done through the completion and presentation of several documents such as: Proof that the company is legally incorporated and abides by the laws of...

Key benefits of establishing a trading business in Uruguay

Key benefits of establishing a trading business in Uruguay

Uruguay’s GDP grew by 2.7% in 2017. This has brought the country’s positive growth streak to an unprecedented 15 years. While neighboring countries like Brazil or Argentina are seeing fluctuations in their GDP, Uruguay remains a force of stability. Uruguay is now one of the most attractive Latin American jurisdictions for the establishment of companies. Uruguay allows 100% foreign ownership of local companies, and companies can be formed with only one shareholder. Below, we outline the reasons why you should consider benefiting from these factors. Learn how setting up a trading business in Uruguay positions you for success in Latin American industries. International Trade - Uruguay is well-connected via trade agreements One of the key benefits of setting up shop in Uruguay is its far-reaching trade agreements. Trade agreements ensure a smoother flow of goods across borders. For trading companies in Uruguay, this ensures a reduction in export or import taxes, which benefits business. Also, Uruguay is part of the World Trade Organization (WTO). The WTO is an alliance made up of 164 countries worldwide (plus 23 'observer' governments) that have relaxed the 'red tape' at their borders to facilitate trade. However, Uruguay reaps the biggest benefits from its membership to two major trade associations. These associations are ALADI and MERCOSUR. These associations target reduced barriers to trade between member countries. Both associations are based out of Uruguay’s capital city, Montevideo. ALADI ALADI is a Montevideo-based trade association comprised of thirteen South and...

What Are The Benefits Of Free Trade Zones in Uruguay?

What Are The Benefits Of Free Trade Zones in Uruguay?

The Free Trade Zone Regime in Uruguay provides companies with tax and customs benefits. Likewise, it is an effective tool for businesses to efficiently manage their business ventures, allowing them to avoid long delays, unnecessary bureaucratic administrative processes, and of course, providing attractive fiscal benefits.  Uruguay is one of the most attractive Latin American jurisdictions for the establishment of companies. Uruguay allows 100% foreign ownership of local companies and companies can be formed with only one shareholder.  Additionally, the government's implementation of legislation relating to tax regimes and free trade zones has turned Uruguay into a commercial paradise for companies looking to establish their operations abroad.  Moreover, we cannot overlook Uruguay's political, economic and social stability.  What are the Features of Free Trade Zones in Uruguay?  Free trade zones are areas in Uruguayan territory which can be both public or privately owned. These are highly secured locations with the following features: State monopolies do not govern.  The business activities of companies operating in these zones have tax and customs exemptions. There is total freedom for the entry and exit of goods, fixed or capital assets, with exemptions in taxes and duties. Companies can develop any business, industrial and service activity in these zones. Some examples are given below: Marketing, deposit, storage, conditioning, selection, fractioning, assemble, disassemble, handling or mixture or goods or raw materials with foreign or...

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