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 . The Weekly Update news bulletin offer news and commentary regarding a number of issue which are of interest or concern to clients. Such topics may include offshore company formation, trusts, banking, investing, real estate, expatriate matters, residency & second passport matters, and other topics concerning the Dominican Republic & Panama. |
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Cut your Taxes to ZERO ! Regardless if you already have an existing business or you are planning to open a new business, one of the key factors in your profitability can be found with where you business is located. Stated another way, if you had the opportunity to start or move your current business to a place that was a physical and business paradise – would you go? . If this all sounds too good to be true, the simple fact is – relocating or starting up your new business in a number of special “locations” could be the smartest move you ever make. Before we go any further, we should explain exactly what, how and why such a “business dream location” came into being. In other words, to answer your question “Does should an ideal land really exist?” . If You Build It – They Will Come . Many countries want to attract new business and create jobs for the local residents. This is something every country wants. Jobs and new business translate into low unemployment, a healthy economy and happy productive citizens with money to buy the things they want. It makes perfect sense. The difficult task for a government is finding a mix of incentives attractive enough to convince companies to relocate. So while countries like the US continue to burden the small and large businessman alike with increased taxes, increased government red tape and ridiculous regulations - Some countries have actually figured it out. Countries that seek to encourage investment, spur new job creation and are not out to tax their poor citizens to death are called open minded, progressive and pro-business. The places or “business dream locations” they have created are called “Free Zones”. . A “Free Zone” is basically a type of special industrial or office park compound. As such, it can be thought of as a small “state” within a country for a simplified explanation. This very special type of “Free Zone” location or compound offers exactly what the name implies. Free Zones are free from local taxation, free from local import duties, free from many local regulations and are also free from many restrictions that otherwise be applicable to local non “free zone” companies. What is the catch or benefit to the country hosting a Free Zone? Well, the country gets new businesses that did not exist before, or they get entire companies currently operating elsewhere to move their entire operations. This brings jobs and employment opportunities for the local citizens. In the case of the Dominican Republic, a country ranked number four worldwide with respect to “Free Zone” facilities, it is estimated that new jobs are generated at an annual rate of 20% from these locations alone. The companies operating in the Free Zone get a 15 to 20 year tax holiday on corporate profits, low facility costs, low labor costs and competitive costs for expenses such as utilities. . New Frontier for Small Business . In the past, such free zone complexes were normally designed to attract larger light manufacturing companies, but both service businesses and small business owners are currently some of newest tenants to such facilities. Why are they joining the ranks of Timberland, Baxter-Travenol, Hanes and other well-known “American” companies? With minimum wage costs at about US .80 cents per hour, rental costs at US$ 3 to US$ 6 a square foot (per year), no corporate income tax and relaxed regulations – the reasons are not difficult to understand. In addition, modern telecommunications, high speed Internet access, modern transportation, convenient access to shipping ports, private courier services (Fedex, DHL, UPS) all make operating your business fairly simple. . Many Free Zones are starting to see the trend and are making smaller spaces available for the small business accordingly. While larger airport hanger sized spaces were the past norm, smaller business owners will not have too difficult of a time finding a modern 2,000 to 5,000 square foot facility to fit their needs. . In all honesty, locating to a Free Zone may not be for everyone. However, if you currently have an Internet Business, Mail Order business, or small manufacturing company whereby your take orders by telephone or fax and ship your product, a Free Zone location would be perfect for you. Some examples of current small businesses already operating out of the Free Zones in the Dominican Republic include: 800 number call centers, data processing firms, corrugated packing box manufactures, jewelry companies, pack & ship mail order firms, on-line Internet casinos, plus countless others. . The Cost & Process of Moving to Paradise . The next obvious comment you have is, “Sounds great – but what is it really going to cost me?” The first process is to find a location and space that meets your needs. As mentioned earlier, rental rates will vary depending upon size & location, but as a “rough guide” you can figure that a modern 4,500 square foot facility (ready to go with A/C and all hook ups) will cost US$ 1875 per month. We did find a 2,000 square foot facility for one client that came out to US$ 700 per month. . The next step is the application to the local governing body responsible for the granting of an operating license. By using a qualified law firm to prepare and present the application, you can figure on about US$ 4,500 as a legal service fee (which includes license application, etc.). Timing is everything when you apply as the board usually only meets once a month to review applications, but the whole process should take less than 60 days. . Aside from the strictly business aspect of things, one must also take into account the living costs (or savings as the case may be). While Free Zones do exist in Belize, Cayman Islands, Panama, Jamaica and a number of other countries – the Dominican Republic does offer some of lowest costs both with respect to the Free Zone facilities themselves and your local housing costs. . For Additional Information About Setting up an Offshore Company or relocating your business to a free zone, please contact Ascot Advisory Services: . |
