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This site offers news articles and information pertaining to expatriation, offshore banking, offshore investments, residency in other jurisdictions, second citizenship and second passport matters.  Jurisdictions covered in our main section and our on-line newsletter sections include: Argentina, Bahamas, Belize, China, Dominican Republic, Ecuador, Nevis, Panama, United States and Uruguay.   Ascot Advisory assists with incorportion services, banking introduction services, free zone  license  assistance, residency and naturalization (second citizenship) in the Dominican Republic, Panama, Nevis and some of the other jurisdcitions mentioned above.
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WHERE CAN YOU AFFORD TO RETIRE TAX FREE?           WHY ARE SO MANY OF THE MIDDLE CLASS LEAVING THE US & EUROPE?

Our June 2003 Newsletter:
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Readers Write In: US Patriot Act, Tax  Issues in the news.   US Expatriation Tax for Americans who renounce US Citizenship.
John Schroder - Author of The Ascot Advisory News Letter Bulletin and Numerous Expatriate  Articles
IN THE NEWS:
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TAX CUT IDEA COULD MAKE AMERICANS ABROAD PAY MORE, By William M. Welch, USA Today News Paper 4-30-03
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WASHINGTON — Senate Republicans seeking to meet President Bush's call for a big tax cut on corporate dividends are eyeing a list of potential tax increases in other areas, including elimination of a break enjoyed by U.S. citizens working abroad.
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http://www.usatoday.com/news/washington/2003-04-30-tax-usat_x.htm
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$500 BILLION LAWSUIT AGAINST THE IRS SET FOR TRIAL IN FEBRUARY 2004
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PALOS HILLS, Ill., Apr. 30, 2003 -- Two national membership organizations providing estate planning help, announced today that the 500 billion dollar class action lawsuit they filed against the Internal Revenue Service and several of its agents in May of 2001 has finally been set for trial in February of 2004. The suit charges violations of the civil rights of some 5500 members of the organizations, most of whom are senior Americans. This latest information was released through the Executive Director of the two organizations, Michael Vallone.
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http://www.smartpros.com/x38064.xml
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RELATED TO THE ABOVE (ACTUAL DOCUMENTS FILED WITH THE COURTS):
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http://www.atps.com/uclr/uclr5a.htm
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READERS WRITE IN:
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Hi John - Here are a couple links of info of some truly scary things going on in the US by this government. The second link by far being the scariest, as it is this great (used to be), nations Patriot Act in motion. All these laws WILL turn on US. Yes, I'm talking to you, fellow Americans. Get your Heads out of you know where, people. (John, I'm not sure how long these links will be good, but I just read them a couple of minutes age, read the second one first).
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http://www.lasvegassun.com/sunbin/stories/archives/2003/may/02/515028405.html
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http://www.seattleweekly.com/features/0317/news-parrish.php
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EDITORS REPLY:  Thank you for sending in the links and the information.
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Another Reader Writes:
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John:  Interesting newsletter as usual.  I read with much interest that the offshore community has not been completely taken over by Big Brother.  The former CID agent really gets my attention due to the fact that we are just about to go overseas to continue our careers.  At this point, I am considering the complexities of moving money to a safe destination and I will be in touch with your organization.  This is happening as the IRS is currently investigating us.  We are taking the opportunity before we get ourselves too tied up with lawyers, who would bleed us dry and talk about how it is our responsibility to let them do their jobs properly.  What a mess this country has become.  I have checked out several Dominican Republic real estate with much interest but unfortunately, as a Health Care professional and my husband as an Engineer, making a smooth transition there seems to be a bit too difficult to continue our careers and make a good enough living to plan for the future.  I have tried to find what Health care professionals are needed besides nurses, who I am not, but I have come up empty handed.  Anyway, keep up the work and the fight.  Sooner or later, the people of the United States of America will get fed up with such a screwed up government and really reform the system.
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EDITORS REPLY: Thank you for your letter.  I would tend to generally say that I hear from a large number of middle class people just like yourselves, so you are certainly not alone in your thoughts.  In terms of the Dominican Republic, just as any other new home or new country, it certainly is that case that there are always a number of obstacles and issues (new language, possibly re-certification of what ever professional licenses you may have in the new country, etc.).  However, many people have done it, so it is possible to relocate elsewhere and carry on.  Also, many people often find business opportunities, whereas that was not their original thought, or something they would consider doing in their previous home country due to regulations and costs involved.  So, either way, there are a number of options to consider.
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Another Reader Writes:
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John:  Thanks for the newsletter - which I consumed with relish.  For your technocratic reader who wanted to know the details of the Tax Expatriate Act, I've highlighted it in blue below.  Congressman Bauman's article is also an excellent overview of the concept.

The following is a reply from Bob Bauman to the above reader, along with a very interesting article he wrote previously (which we have reprinted):

Dear Sir: Below is something I wrote in 2001, which still is accurate as to US tax law and expatriates. The US does claim a 10 year "after leaving" tax jurisdiction, but it's my impression that it's rarely enforced. Then too, it can only attach US earned income (or assets) where the IRS and the courts have jurisdiction.   Keep in mind the present legislative proposals in the US Congress is just that; they may not become law. I know the House position on this issue has been far less Draconian that the Senate, where Sen. Grassley is on an anti-offshore rampage.
Read this over and let me know if you have any questions.  I do some consulting and will be pleased to assist you. All the best, Bob Bauman - (954) 563-1414
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Expatriation: The Ultimate Estate Plan
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Robert E. Bauman, JD, from an Oxford Club special report, 2001 The legal dictionary definition of "expatriate" reads: "to voluntarily withdraw oneself from allegiance to one's native country: to renounce allegiance to one's country and abandon one's nationality voluntarily."
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Admittedly, that sounds like fairly drastic action, especially to the ears of patriotic citizens of the United States or, for that matter, any nation.  Marshall Langer, a distinguished author and advisor to the Sovereign Society on asset protection issues is an American lawyer who practices in London. In explaining why "expatriation" is so attractive to wealthy Americans, Mr. Langer argues from his practical experience: "Expatriation is the ultimate estate plan."  What Dr. Langer means is that, after taking well planned, prudent steps to rearrange his or her personal and business finances, a high net worth American could voluntarily surrender U.S. citizenship as a legal means to avoid all, or nearly all, U.S. taxes on personal and business income, including capital gains and estate taxes.
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Yes, we mean "zero taxes" - as in not having ever again to pay taxes to the Internal Revenue Service. But how does this work?  Wealthy Americans citizens and permanent resident aliens can cut their income, capital gains and estate taxes to zero if they follow a planned, long-term expatriation strategy. But U.S. laws admittedly could make the price to accomplish that far too steep for all but heartiest of souls.

A 1996 U.S. law (Title 26, Section 877 of the Internal Revenue Code) imposed punitive higher taxes on individuals who relinquish U.S. citizenship "with the principal purpose of avoiding" taxes. For the purposes of this law tax avoidance is presumed to be the true purpose if, at the time of expatriation, an expatriate's net worth exceeds $552,000 or he or she pays an annual tax bill exceeding $110,000. (These figures are indexed for inflation annually.)  The U.S. also asserts tax jurisdiction over an expatriate and his or her assets for ten years after American citizenship ends. Permanent resident aliens ("green card" holders) are also covered by this law's provisions – as a measure of just how "serious" a problem this may be, fewer than a thousand Americans, rich or poor, formally gave up citizenship in each of the last five years. In the first quarter 1999, for example, exactly 128 people quit U.S. citizenship, including J. Paul Getty's 31-year old grandson, Tara Getty (now an Irish citizen), who will enjoy his $400 million inheritance tax free as a result of abandoning American citizenship.
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Why Expatriate?
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Here's the compelling arithmetic: a very rich citizen of The Bahamas, for example, pays zero estate taxes; rich Americans, anyone with an estate worth $3 million or more, can pay 55 percent and up. A fairly stiff 37 percent marginal rate kicks in for Americans leaving as little as $675,000 to their children and heirs. The Bahamas has no capital gains taxes or income taxes on most offshore income and no estate taxes either. And the weather, golf, sailing, swimming and fishing usually are excellent year round, bar an occasional hurricane or two.
Now you can understand why expatriation to avoid U.S. taxes has been an intermittent hot button issue in American politics since 1994. All those rich folks getting away with tax avoidance murder! The very idea! Former U.S. Treasury Secretary Lawrence Summers, when in office during the Clinton reign, even went so far as to call such tax expatriates "traitors" to America. He later was forced to apologize.
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Political History
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It all began on November 24, 1994 when Forbes magazine published what turned out to be a sensational article entitled "The New Refugees," a supposed expose of wealthy Americans who had surrendered their citizenship to escape U.S. taxes.  Filled with juicy details (famous names, luxury offshore addresses, huge tax savings in the millions), the story described how clever ex-Americans who became citizens of certain foreign nations henceforth paid few or no U.S. federal and state income, estate and capital gains taxes.

To the average uninformed U.S. taxpayer, this unfamiliar expatriation gimmick seemed like just another rich man's tax loophole and/or rip off while the "little guys" left behind had to pay. Before Forbes raised the issue of expatriation, few people had even heard of the concept of formal surrender or loss of U.S. citizenship. Since that Forbes article, "expatriation" has remained a favorite issue kicked around when convenient by the American news media and "soak-the-rich" politicians.  Less than two years after the article, Public Law 104-191 was signed by then President Bill Clinton on August 21, 1996, imposing special taxes, penalties and claiming a continuing 10-year tax jurisdiction on persons who renounce U.S. citizenship with the intent to avoid U.S. taxes. The law covers both U.S. citizens and certain foreign aliens legally resident in the U.S. who permanently leave the U.S. For most of the law's provisions, the effective date was February 6, 1995.

As a national political issue, expatriation is hardly new in America.
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In the bitter aftermath of the War Between the States (1860-65), Congress hotly debated the status of people in the southern states that formed the Confederacy. Ultimately, Congress decided "rebels" who swore allegiance could again become U.S. citizens. The "Expatriation Act of 1868" formally recognized that all Americans do have a right to give up their citizenship, if they so choose.  Almost a century later, in the Foreign Investors Tax Act of 1966, Congress again decided to make an issue of expatriation. In that Act lawmakers tried to impose onerous taxes on exiting wealthy Americans, but the law was so ambiguous it proved unenforceable. How could the I.R.S. prove such "intent"? They couldn't and they didn't even try.
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Expatriate Envy
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The media and political furor following the 1994 Forbes article may have reflected collective envy as much as patriotic opposition to expatriation by American citizens.  After all, expatriation is hardly a serious a problem, with fewer than 800 Americans, rich or poor, formally giving up their citizenship in recent years. Most expatriates give up their U.S. citizenship due to family circumstances, such as marrying a foreign national, or moving abroad, rather than avoiding taxes.

In the 1996 anti-expatriation frenzy, some in the U.S. Congress wanted to forbid ex-Americans who renounce their U.S. citizenship by deed or formal act, from ever again legally entering the United States, if the government could prove they left to avoid paying taxes. And under the sponsorship of Senator Jack Reed (D-RI), this "no return" provision became law, slipped into a major appropriation bill with no debate hours before Congress adjourned for the year. Section 352 of the 1996 Immigration Reform Act adds expatriation to avoid tax as grounds for excluding former U.S. citizens from re-entry into the United States.

Weeks later when he discovered what the Senate had unknowingly done, then U.S. Senator Daniel Patrick Moynihan (D-NY) angrily denounced the provision supposedly exiling American tax expatriates noting that, Congress had without justification added such persons to a list that had until then included only "terrorists, convicted criminals, [and] those with communicable diseases..." But as we said, the law has never been enforced and not one person has been excluded from U.S. re-entry under its onerous provisions.  It is worth noting that the expatriate tax punching bag is hauled out by demagogic U.S. politicians whenever it becomes politically convenient. In 2000 a new "soak the rich who run" gimmick was introduced in Congress by ultra leftist Rep. Charles Rangel (D-NY) as H.R.3099. It would have imposed a new, one-time capital gains tax on the assets of expatriates when they left the U.S., regardless of the taxpayer's motive for relinquishing U.S. citizenship. Gifts by offshore expatriates to relatives back home in the U.S. would also have been subject to new taxes. The bill died, but Rep. Rangle has promised to keep pushing his punitive proposal.
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Save Millions Legally
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In spite of possible punishment, for some high net worth U.S. individuals and their family members there are definite advantages in pursuing expatriation.  In 1962, John Templeton, respected international investor, businessman and philanthropist, surrendered his U.S. citizenship to become a citizen of The Bahamas. This move saved him more than $100 million when Templeton sold the well-known international investment fund that still bears his name. Twenty-three years after surrendering his U.S. citizenship, Templeton, a well-known philanthropist, told the Wall Street Journal the political frenzy over expatriation could happen only in America."  Other wealthy ex-Americans who have taken their formal leave include billionaire Campbell Soup heir John (Ippy) Dorrance III (Ireland); Michael Dingman (The Bahamas), chairman of Abex and a Ford Motor director; J. Mark Mobious (Germany), one of the leading emerging market investment fund managers; Kenneth Dart (Belize), heir to the billion dollar Dart container fortune; Ted Arison (Israel), head of Carnival Cruise Lines; and millionaire head of Locktite Corp., Fred Kreible (Turks and Caicos Islands).
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In truth, citizens of almost every other nation see maximum tax avoidance as a positive means for self-survival. In some countries, such as France and Italy, tax-dodging is said to be as much a part of the respective national character as a taste for vin rouge ordinaire or pasta.
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Public Law 104-191  (26 USC 877)
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The original 1966 U.S. anti-expatriation law, conceded to be unenforceable, was the first attempt by Congress to impose special, higher taxes on individuals who relinquished their U.S. citizenship "with the principal purpose of avoiding" U.S. taxes. That highly subjective intention was virtually impossible to prove. There are no known cases of it being enforced.  The later 1996 law imposed what might be called a "wealth means test." It assumes that an individual has a principal expatriation purpose to avoid tax if the individual's average net income tax liability for the five tax years ending before expatriation is greater than $110,000; or if the individual's net worth on the date of expatriation is $552,000 or more.

The 1996 law is so potentially punitive that thoughtful migration experts criticize what they see as the setting of a much broader and very dangerous U.S. precedent. They point out the law not only involves retaliatory government acts against resistance to high taxes, but poses possible human rights violations by limiting the right to international travel and migration, both guaranteed by traditional international law and the United Nations Charter.  The underlying punitive motive behind the 1996 law can be seen in its crass reversal of the normal burden of legal proof. Whereas the old 1966 law required the government to prove the expatriating U.S. citizen was renouncing citizenship to avoid taxes, the later law shifted the burden of proof to the taxpayer, who must prove he is not trying to avoid taxes.

On the broader issue of other, non-tax specific acts that might cause a loss of citizenship, as I have noted, U.S. government policy presumes an American citizen does not wish to surrender citizenship; therefore proof of that specific intention is required before expatriation is officially recognized.

The 1996 expatriation tax law does allow a few exceptions to this reversal of the traditional proof requirement described above. The law exempts:  persons born with dual citizenship, including U.S. citizenship; cases in which a person acquires the nationality of his or her spouse, or that of the nation in which either of the person's parents were born; persons who expatriate before reaching the age of 18?;  persons who have been present in the U.S. less than 30 days in each of the last 10 years; and persons to be exempted by as yet unwritten IRS regulations as the law requires.
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On a related point, it worth noting that even for U.S. citizens there are still legal opportunities for substantial U.S. estate tax avoidance offshore not available within the U.S. Virtually every form of estate planning that can be done within the U.S. can be accomplished with an offshore structure, but with the added benefit that after the taxpayer's demise, the offshore estate moves outside the U.S. tax system and can then prosper free of U.S. income taxes.
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Formal Expatriation
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While the 1996 law applies only to those who voluntarily surrender their citizenship to avoid taxes, it is worth considering the acts by which Americans may jeopardize their legal standing as U.S. citizens.  In its irrevocable form, "expatriation" per se is caused by an individual's deliberate act of surrendering the native or acquired legal citizenship of their home country. The person must formally surrender U.S. citizenship before a diplomatic or consular officer of the U.S. under the Immigration and Nationality Act, sec. 349(a)(5), who then furnishes to the State Department a signed statement of voluntary relinquishment of U.S. citizenship confirming the performance of an act of expatriation under the Immigration and Nationality Act, sec. 349(a)(1)-(4). Practically, in the case of an American citizen, this means visiting a U.S. embassy or consulate abroad, filing out a standard questionnaire and signing a formal document under oath requesting an end to U.S. citizenship.

Subsequent U.S. State Department approval usually is granted as a matter of routine and it issues a "Certificate of Loss of Nationality." Since 1997 by law the IRS publishes quarterly lists of those who abandon U.S. citizenship for any reason. For names and interesting articles on this subject on the Internet see, http://www.frissell.com/taxpat/taxpats.html
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It goes without saying that surrender of U.S. citizenship should never be attempted unless, and until, a new national citizenship is formally, legally and securely in place. No one wants to replicate the perpetual agony described in Edward Everett Haleís classic short story, The Man Without a Country.
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Acts Jeopardizing U.S. Citizenship

In addition to the formal renunciation described above, most nations, including the U.S., also have a developed body of statutory and judicial law describing various specific acts that may cause involuntary expatriation or possible loss of citizenship by their citizens.
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Depending on the facts of each case, under U.S. law as formerly interpreted, these acts might include voluntary military service in the armed forces of a foreign nation, voting in foreign elections, swearing allegiance to, or accepting an official office in a foreign government. As we noted earlier, the U.S. legal presumption now is always in favor of an American citizen retaining citizenship in the absence of some definitive act of surrender.
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In Nishikawa v. Dulles, 356 U.S. 129 (1958), the U.S. Supreme Court held the government must offer clear and convincing proof that a potentially expatriating act was done voluntarily before citizenship can be lost. In Afroyim v. Rusk, 387 U.S. 253 (1967), the Court said an American has a constitutional right to remain a citizen until voluntary relinquishment and that intent to relinquish must be proven by the government. In Vance v. Terrazas, 444 U.S. 252 (1980), the Court said such intention to relinquish citizenship must be proven by conduct or reasonable inferences. Mere long-term residence abroad does not cause loss of U.S. citizenship, Schneider v. Rusk, 377 U.S. 163 (1964). Even leaving the U.S. to evade the draft in time of war cannot end citizenship. Kennedy v. Mendoza-Martinez, 372 U.S. 144 (1963).

At various stages in U.S. history, reflecting the prejudice of the moment, U.S. law has stated that a non-native, naturalized U.S. citizen could lose acquired citizenship for re-establishing a permanent legal residence in his or her country of origin within one year after U.S. naturalization; by marriage to a Hindu or Chinese spouse; or by becoming a dues-paying member of the Communist Party (USA)!
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Plan Ahead
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Lost in the furor over expatriation stirred by politicians and the press are the practical aspects of expatriation.  Long before, even many years before, a wealthy American formally surrenders his or her citizenship, that person already will have reordered completely his or her financial affairs in such a way as to remove from possible government control and taxation most, if not all, of their assets.

Here are some of the steps a U.S. citizen who desires to avoid U.S. (and foreign) taxes to the maximum extent should consider:  move abroad and make your home in a no-tax foreign nation so you are no longer a "resident" for U.S. income taxes; change your legal domicile (your intended home), to a no-tax foreign nation to avoid U.S. estate taxes; arrange your affairs so that most or all of your income is derived from foreign sources; and title your property ownership so that all or most of your assets are foreign-situs properties exempt from U.S. estate and gift taxes. Any property, including real estate, remaining within the U.S. is subject to potential judicial control by American courts and the I.R.S.
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Conclusion
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It's worth considering the advice of a recognized expert, Dr. Marshall Langer, on the decisions one must make if one is seriously considering adopting "the ultimate estate plan," expatriation. Before making any move, consider all applicable Internal Revenue Code provisions and IRS rules, with expert technical and professional assistance at every step, giving special thought to the timing of each action, the impact on your beneficiaries and their tax status. Pay close attention to the legal status of your spouse, since that will affect the tax outcome, especially if jointly owned property is involved.

Consider informal expatriation as a last resort, but always make certain exactly what the law and regulations mean as they might apply to you specifically. Obviously, at every step, you should seek and obtain the assistance of the very best legal and tax advisors.
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EDITORS REPLY:  Thank you for sending this in, and all I can add to Mr. Bauman’s well written and detailed filled article is: AMEN.
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Another Reader Writes:
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Hey John:  Thanks again for all the information.  I have a question that I know you've answered before but it’s been awhile, and because I consider it to be a very important aspect of daily living, I'd like to ask it again.  O.K., regarding the food and water situation, how does a gringo like myself (who loves food) negotiate Santo Domingo without getting sick to my stomach like the last time I was in country.  Granted, the last time I was there I had a lot of Presidente's but I also got unusually ill from something else (I know what a normal hangover feels like).
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EDITORS REPLY:  Well, anytime you change diet or are in another country, it is usually the case that your stomach is the first part of your body to react.  However, I do not think it the case to say that sanitary cooking conditions are any better or any worse than say the restaurant industry in New York (you should read some of the undercover reports about what goes on in the food service industry in the US).  With that said, of course stay away from street vendors that look like they use the same oil to cook with that maybe just came out of their car crankcase.  In addition, stay away from the fatty fried pork called chich-a-rone (not correct spelling) that is very popular as well.  It tastes great going down, especially with beer, but it tends to be the gift that keeps on giving.
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Another Reader Writes:
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Greetings:  I am interested in checking out the DR.  One thing I must have is broadband Internet access. Preferably cable. Is this avail in the DR?  If so, in any of the outlying areas from the major cities?
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EDITORS REPLY:  Internet dial-up access is available from four major providers (local telecom companies), but even though they claim 56K, I would say the best I have seen is about 54K.  In outlying areas, the same 56K service will probably yield you about 28K in reality.  Apart from that DSL lines are available, but it all depends upon how far your home is from the main junction box.  This is the same trick US ISP service providers play as well, telling you that 512K DSL access is available, but not telling you what the requirements are for you to really have the top speed.  Apart from this, T-1 lines are available as well, if you want to pay for it.
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Another Reader Writes:
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Hi, after looking around on different websites I have found the following information.  As far as I can see the 100% exemption from income tax can last from 15 to 20 years for a foreign investor. It says this on http://www.dr-opin.com/whydr/8.html
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Is it true that a foreign investor is only 100% exempt from income tax for 15 to 20 years and what would they base it on?  Also, what other taxes does the Dominican Republic have that a foreign investor will have to pay? Will my accountant have to file any paper work on a yearly or quarterly basis?  After looking at the foreign investment law: http://www.bancentral.gov.do/leyinng.html
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It said that with in 90 days a foreign investor must register his/her investment with the Central Dominican Republic. After you register your investment the Central Bank will issue a Registration Certificate of Foreign Investment.  Does the foreign investor have to register his investment? Is there any way around this? Will his/her money not be insured or will it be frozen by the government if it is not registered?
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I did speak with someone on the telephone yesterday regarding opening up an account with one of the local banks and am left with the following questions.  When opening up a bank account with cash at local bank, do they ask for any records? Like for instance proof of where the cash came from, supporting papers, ect?  What is the maximum amount of cash a foreign investor is aloud to bring in to the country? Would they have to claim it?  If I have no paper to claim that the cash was brought into the country and show up at the bank daily with cash deposits, will that be a problem? Considering the fact that I don't have a visa to work there and am an American citizen?  If you could please clear up these questions for me I would truly appreciate it.
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EDITORS REPLY: Well, you have quite a few questions, but allow me to tackle them as follows.  First and foremost, the Dominican Republic is a free country (Thank God), which means no one is looking over your shoulder every minute or that you are under the guise of the government simply because you are a foreigner or might have investments inside the country.  No one is interested in your bank account or your investments, UNLESS you are doing something wrong or illegal, which is another matter altogether.  So, the short answer is, you do not need to register your bank account with anyone.
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However, you touched upon information that pertains specifically to some special programs the government has in place.  For example, there is a special program with regards to residency for investors that invest US$250,000 or more in the country.  There are some special business incentives, which might allow you to set up a new business and enjoy a 15 to 20 year tax holiday (both in and outside of the Free Zones) regarding profits (whereas you might be subject to local income tax otherwise).  In all of these kinds of cases or situations, the investment that you make is tied in to a particular program.  Therefore, it stands to reason you would need to provide proof or documentation that you qualify or meet the qualifications of the program you are involved with.  In addition, there may be some additional benefits obtained by declaring certain investments as QUALIFIED FOREIGN INVESTMENT, as contrasted to local or regular investment in regards to the above (possible taxation matters, etc., etc.)
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Interest earned from bank accounts or commercial paper investments is 100% free from any local taxation.  Period.  Profits on corporate income, salaried income above a certain amount (currently RD$10,000 monthly) and some kinds of foreign source income may be subject to local taxation.  Of course, the proper planning of your financial affairs would help to mitigate any possible taxation issues.
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The banking system is somewhat well developed, with many of the larger banks offering Internet Account Access services, electronic bill paying and many of the other services normally found in a so-called modern well developed country.  With that said, each bank may have their own policies, but they are no different than most banks the world over.
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Another Reader Writes:
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I recently received dual citizenship for Mexico.  Do you think that if I invest offshore under my Mexican citizenship, that I will not be reported to US IRS?
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EDITORS REPLY:  A very interesting question and one, which leads to the discussion of what is called a banking passport, or in reality, simply another passport for investment purposes.  Certainly if you open a US brokerage account as a Mexican Citizen, you are exempt from US capital gains (the fact that you might have dual citizenship is another matter altogether, and would of course make you liable for US taxes).  In addition, I do know that many clients prefer to conduct their banking or investing as a citizen from another country for a variety of reasons, taxation only being just one.  However, the real question that you ask is, will the bank or investment firm holding your account issue any reporting to the US tax authorities?  The answer is, would they normally issue any reporting to a foreign government concerning accounts owned by their own citizens?  I think not, and this is one of the reasons that the US has been very concerned about (and angry about) economic or instant citizenship programs (which allow Americans in this case, the ability to quickly obtain a second citizenship for banking and investment purposes).  It certainly is much easier for the US tax authorities to go into a foreign country and ask for all accounts owned by US citizens, or to have account records possibly sorted by citizenship is that in fact is the case (the Bahamas aside, most countries are not exactly in agreement with the idea that they should act as a tax reporting or collection agent for another government, especially the US). So, this is the problem for IRS is it not?  What if the US citizen became a citizen of Poland and did all of his or her banking as a Polish Citizen rather than as a US citizen?  If it comes to pass that someone or some agency is looking to compile a list of accounts owned by US citizens, then of course the Polish citizens account will not appear. 
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This information has been compiled and presented by John Schroder of Ascot Advisory Services, for the benefit of clients and readers. Ascot Advisory Services provides assistance with such matters as offshore company formation, Panama Foundations, offshore banking, and special services in the Dominican Republic regarding residency, free zone applications, etc. For more information:  
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Telephone 809-334-5387 or 809-756-1917 
Email: info@ascotadvisory.com
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