Livestream – The Tax Landscape in Latin America – 3rd November 2021

 

VOICE-OVER:
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DERREN JOSEPH:
So good afternoon, everyone. Welcome to another one of our tax talks at HTJ.tax. For those who have joined us before, good to see you again for those who may be new welcome, of course. This is being recorded and, it'll be recorded, and it will be available on multiple podcast platforms like your iTunes, SoundCloud, stuff like that, as well as our website HTJ.tax and therefore, if you don't want to appear, just keep your cameras switched off. Okay. That's great. Thank you. And of course, nothing you say here should be construed as advice. We are having a general conversation with general principles, considered education, or if you want even entertainment, you shouldn't take advice from someone who has not been legally engaged by yourself to provide that advice and they know your situation inside out. So, we're having a general conversation. Thank you for that. For those who provided some questions and comments in advance, thank you. I have them, and I will ask them in the order in which they were received. And for those who are joining now and wish to ask some questions, you can feel free to type in the chat box below. If you're joining us on zoom, if you're on Facebook, LinkedIn, one of the other platforms like YouTube, you can just type in the box below and I'll check every once in a while. So again, thank you and welcome. 

Allow me to introduce Professor Fabian Birnbaum. He is based in, where are you based? In Uruguay, fantastic. So yes, we have the privilege and pleasure of having him guide us through a conversation on taxes and Latin America. Professor, would you like to introduce yourself? 

FABIAN BIRNBAUM:
Yeah. Well, thank you very much for the invitation, it’s pleasure to be here. I work, I'm a tax professor. I am a Chartered Accountant and in my country. I have Master in Tax law in Uruguay and also, I did another law at the London School of Economics, and I work mainly in Uruguay and the rest of Latin America. So, the idea of the invitation of Derren is to try to comment and to talk about the main tax issues in Latin America so, you can have a rough idea of what's going on here. 

DERREN JOSEPH:
Fantastic. Thank you very much for that. So, I know it is a huge topic and it's impossible to condense it, but can you just give us like an overview of what the tax landscape is like in Latin America? 

FABIAN BIRNBAUM:
Well, in the first place, there are many countries in Latin America and each country has different realities. So, but when say there are some general issues concerning the taxation of Latin America. In first place and after COVID, most of the governments were seeking for new alternatives to try to raise revenue in different law that were inactive. So, we have seen in the last one year, two years, different ways to that governments were trying to raise those taxes in order to try to spend more money, to try to alleviate all the effects of the pandemic. 

So, we have been seen, and we have seen many taxes regarding mainly to wealth tax. So, either, there were assessment changes, increasing the rate, different way that there were an active in Latin America that were seeking to raise more revenue. Also in the same moment, we have seen many incentives to try to attract investments in Latin America, because if a foreign direct investment in many of the Latin American countries, is key elements for the economic growth. 

So, at the same time that they were lost, that they were trying to raise more revenue, they were lost that they were giving exceptions and incentives in order to attract investors. So, this is not a contradiction itself it's what's going on. So, it depends, who are some of the people that they were, they were going to have more taxes and who is going to have the incentives. And also, an important issue, of course, the pandemic has the COVID. COVID has a direct impact. And also, an important issue that many Latin American countries were facing is social and democratic problems. And there were, for example, in the case of Colombia, that all the problems started with the tax reform. When, once it was announced at tax reform, because taxes, in some way, they are really connected to the public discussions and to all the different ways that the government have to interact with, all the people. So, this is something that we have been seeing in the last year. 

DERREN JOSEPH:
Gotcha. Thanks for that. So, you mentioned a wealth tax, yes of course. That was quite contentious because in the US it's been discussed in some places, but anyway, which countries we should be aware of that do have a wealth tax. And if you can give us an indication as to what thresholds would be, just generally speaking?

FABIAN BIRNBAUM:
For example, there were first in the last years, there were amnesty programs and wealth taxes because they are really connected one with the other. But for example, in Argentina, there was a wealth tax and then there was like, they call an emergency tax. In general, the rates are quite low, 1, 2%. They are not so big, but sometimes a current, rates of the investments are not so high. So, our right of 2% over the wealth tax sometimes is higher than the rate that they may gain in the investment in the financial investments, etcetera. 

So, for example, Columbia has, Chile has, Peru has the same problem. Argentina, as I mentioned. In Brazil they were discussing that and Mexico as well. So, there are many countries that they were discussing these types of measures in order to try to as I said before in order to try to raise more revenue to solve all the problems of the pandemic. 

DERREN JOSEPH:
Okay, understood. Now going in the opposite direction. I know that people from the US and Canada, they are drawn to jurisdictions where they can have an opportunity to save on taxes if possible. So, which jurisdictions are known for like having a territorial tax system where only tax is paid on income that arises from within the country and income generated outside, tends to be left alone?

FABIAN BIRNBAUM:
Well, I will say that the main countries that are on that has a source principle or territorial principles are in first place Uruguay, Panama, and Costa Rica. Those are the main countries that they have, those type of criteria. Of course, in first place, Costa Rica, for example, is showing the OECD two years ago. So, they might change that principle. And now, with all the discussion of the, the global tax, the multinational, these principles it's been discussed, whether it should be modified or not. So, 30 years ago, all the Latin American countries had source principles. In the last 30 years, there were changes to the resident's principle. But I will say that the only three countries are Uruguay, Panama and Costa Rica that still remain the source principle. 

DERREN JOSEPH:
I know Panama has a reputation for being a tax haven. In your opinion, is it really a tax haven and otherwise, which other countries you think are attractive from a tax perspective like Panama? 

FABIAN BIRNBAUM:
Well, in general, I mean, there are many, British Virgin Island those are located in within America, but I will say, the bigger countries, the most important countries where a name and also shame as tax haven are Panama and Uruguay. Both countries made all the changes in order to try not to be within that definition. As many people will know, such definition is not a fixed, it changed, and it's different from different countries or organizations. 

So, at the end of the day, both countries made lots of changes in their regulations in order to comply with all the tax international tax standards and also with the anti-money laundering rules. So, they have the reputation of being tax havens. However, they did most of the changes in order to be compliant with the international rules. 

DERREN JOSEPH:
Okay. That's fair enough. So, let's, you know, I guess it's hard to talk about like Panama without mentioning the various leaks of confidential data, you know, most recently the Pandora papers. What is your perspective on that? 

FABIAN BIRNBAUM:
Well, this is a personal opinion. I mean, the problem is not information. My first question is how many judiciaries and problems after Panama papers? How many, I mean, how many illegalities they were discovered after Panama papers? Few, so, they release millions of information in order to get few judiciary problems. I believe that confidentiality and privacy are, they should be respected. 

So, this is something that we should work together, privacy and with compliance of the rules, with the compliance of the money laundering rules and tax evasion. So, my perspective is that this is, I will say that they have, there are many political issues behind those information. There were not so many problems. So, at the end of the day, it was just news, big news, but few should be a problem. That's my view on this, so what I hope is that they will respect the privacy of people and the confidentiality because those are rights that they should be respected, but in showing only with the respect of the international rules. So, we need to find an equilibrium on those issues. 

DERREN JOSEPH:
Okay. Understood. And so, logic standard, it was especially the most recent one, the Pandora papers, they were quite sensationalist, but there were relatively a few cases of actual wrongdoing illegality. It seems to be more an issue of morality, you know, what should not happen.

FABIAN BIRNBAUM:
I will say I totally agree. Morality and scapegoat. I mean, at the end of the day, governments need to point who is the person that in order to be the scapegoat. So, there is morality issues, and scapegoat and political issues. So, this is, I cannot say this is a white or black issue. So, it's in the middle. It's not so clear. 

DERREN JOSEPH:
Understood. So, you know, given the evolving tax landscape, we've seen jurisdiction If we stick it would be the Americas, like you mentioned, the Caribbean islands at one, that's become quite an interesting case study recently has been Barbados, right? Like Bermuda and some other jurisdictions. They have introduced like a remote worker type of visa, something that allows someone to come into the country and have an extended stay. But most interestingly, someone can stay for a year in first instance and work and not be subject to any taxes. That's a bit of a carve out. And I guess in Europe, there are some jurisdictions that have interesting carve-outs. So, for example, non- habitual residents in Portugal, the Beckham law in Spain, res-non-dom in Ireland, and UK, some there's something similar in Belgium and Italy. Are you seeing any interesting carve outs like that in on mainland Latin America, that will make it interesting for remote workers or for entrepreneurs?

FABIAN BIRNHAUM:
I will say that the only country, I would say Panama, and Uruguay, mainly Uruguay.  Let’s try Uruguay and Argentina or like Germany and Switzerland and Switzerland is Uruguay and Germany is Argentina. The type of relationship, all the countries are big, big difference between them, but their relationships. So, for example, in Uruguay, where we see lots of Argentinians, for many reasons, economic reasons, because they don't want to stay in Argentina due to taxes due to different political differences, and they are coming to Uruguay. 

So, I knew Uruguay, I will say big incentives to try to attract people to live here. And those incentives are an exemption of 10 years of any offshore income that the people, the person might obtain. So, it's a huge, it's a huge benefit. And I, I'm not aware that there is any regime like that in a Latin American country. I am aware that Europe, they compete on the attraction of individuals, but this is not the case of Latin America. But I would say that Uruguay is the countries that compete on that and try to attract mainly Argentinians due to the proximity between both countries to try to attract them to live in Uruguay, that's why there are so many incentives, 10 years tax is for those that come here. 

 DERREN JOSEPH:
Okay. That is very interesting. And especially for people who are of the earlier phase of the growth phase of whatever they're doing, having that opportunity to save on taxes, allows them to reinvest that into the company and perhaps accelerate their growth. So that is quite an attractive. But what about on the other side of the spectrum with retirees, I'm aware that there's some jurisdictions in Europe that make pension, they give them preferential tax treatment as an incentive to bring retirees in. Is there anything similar to that in Latin America? 

FABIAN BIRNHAUM:
No. As far as from the case I mentioned from Uruguay, there are no cases like that. So, and there is no such tax competition on individuals. Like there is in Europe, in Latin America, the only country I would say that also Panama gives some tax incentives, but except from Uruguay in some case Panama, the rest of the country, there is no that's competition on the individual. 

DERREN JOSEPH:
Okay, understood. 

Someone just asked a question. They are, I'm assuming that American citizen. Yes, they’re US citizen and they are living in Columbia. And so, they are Colombian tax resident, and they have a company in the US that they're going to sell, what the person is asking generally speaking, because of course we can’t give advice, but generally speaking, would the sale of a foreign company by someone who's Colombian tax resident be subject to taxes in Columbia?

FABIAN BIRNHAUM:
Yeah. And also, there was the tax reform. There was a tax reform recently enacted in Columbia. And one of the main issues was targeted on this type of transaction. So potentially yes, I will say that. And this is something that was targeted on that, on our recent tax reform, the touching ball has few months. So, something that the person should be aware of analyzing any tax consequence. 

DERREN JOSEPH:
Okay. Yeah, absolutely. So be subject to taxes, potentially, probably in Columbia. And of course, because they are Colombian tax resident when they're doing the US taxes, because they're still a US person as a citizen living outside, they would get a credit for taxes already paid in Columbia and the Form 1116. 

FABIAN BIRNHAUM:
Yeah. That happens a lot with the US because the US still tax, the people that has the nationality there. And in contrast with the rest of the genomic countries, that that's a residence. So, any US national that live and reside in Latin American country, probably they will need to comply with both and should restrictions with the Columbia as an example, and the US. And in some cases, there aren't, there is no tax treaties in those countries. So yes, this is something that we see a lot.

 DERREN JOSEPH:
Understand, understand, and, you know, keeping on that theme of people with businesses and particularly those who are selling physical products online, I know in the EU, it becomes a bit complex in terms of the VAT regime and of course, sales and use tax in the west. I mean, there are 50 states, but they're like 15,000 sales and use tax jurisdictions in the US. What about someone who's doing some sort of e-commerce in Latin America, the landscape there, and how do they best navigate that? 

FABIAN BIRNHAUM:
Well, any person that wants to do e-commerce Latin America first, they need to breathe because complexities. If they're not breathing a lot they cannot, I mean there are many changes on that direction. In most of the countries in first place, there is no coordination between the Latin American countries. So, each country has their own rules. So, for example, we have been seeing changes right now in Mexico. There were changes in Uruguay, Argentina, and Chile, in Peru, as well in Columbia, there were changes and all those changes were completely different. 

In some cases, it is widely used the withholding assets. So mainly the credit cards need to ask specific amount. They will pay on behalf of the e-commerce company. This is something that we'll be seeing in both taxes, income tax, and VAT. So, there are changes depending on if it is a B2B business, a B2C business, if it's a digital business, if it's an Uber business, I'm refer to Uber to those who connects to people or to businesses. I, as far as I know, there are some jurisdictions, like, for example, in some case in Argentina and also in Uruguay that the e-commerce needs to register on the tax authority and do the tax returns itself.  So, there were many changes on that. There is no coordination on those rules and each country has its own their own and their own rules. And there are, of course there are lots of gray areas because all these rules are quite new. There are a few backgrounds and doctrine the judiciary judgements 

DERREN JOSEPH:
Understood. Understood. And so, so yeah, so in each jurisdiction, one would need to register and plan for not just direct taxes, but the sales taxes or the indirect taxes as well, and then have to navigate jurisdiction by jurisdiction. What about digital products or someone who's offering SAS like software as a service? I know it's becoming a first, you were flying on the radar, but now increasingly it's being taxed. Well, how was it in Latin America? 

FABIAN BIRNHAUM:
Well, the same happens. I mean, some of the software might, in some cases it was that's before all the digital taxation, that was an act in the last two or three years. Most of the cases, it is a tax through withholding either the business company that pays the software or the credit card that, so it depends mainly on the type of business. If it's a B2B business probably the local business will need to withhold the tax. And if it’s B2C, the problem is how the foreign company could comply. And in some cases, it was exempted, in our cases, it was mandatory to the foreign company to register in the local authority. And in some other cases, the banks or the credit cards were appointed as withholding assets. So, there were many different situations depending on each country. 

DERREN JOSEPH:
Interesting. And what about services? Like if you are, for example, a tax consultant and you're serving clients who base in those jurisdictions on any tax implications in Latin America?

FABIAN BIRNHAUM:
In most of the cases, there are a withholding tax on technical services. This is quite common to see on the different countries. Of course, I assume that there also be rules that might be triggered depending if the person goes to their country, if they're injured this more than six months, but there are, I will say most of the gun that they have a withholding tax on technical services, and those rates can vary from 15 to 30, 35%. 

DERREN JOSEPH:
Right. So just to be clear, even if the service provided does not have PE in Columbia, it would. So, they, the client would still need to withhold and remit?

FABIAN BIRNHAUM:
Yes, yes.

DERREN JOSEPH:
Wow. That is, that is pretty aggressive. Understood, understood.

FABIAN BIRNHAUM:
I would say that most of the Latin American countries have and withholding taxes on that. 

DERREN JOSEPH:
Okay. And what about generally speaking, like digital service taxes, like a Netflix tax, same principle? 

FABIAN BIRNHAUM:
Well, those taxes were inactive in the last two, three years, but I will say that right now, I will say, let's say Netflix is wildly taxed in Latino America in both vat and income tax. 

DERREN JOSEPH:
Right. Okay. Okay. And, and so, you know, it's being rolled out, so digital taxes are being rolled out. So just a matter of time before everyone is on board with it, basically. Yeah, 

FABIAN BIRNHAUM:
Yes, exactly.  

DERREN JOSEPH:
Okay. Interesting. Interesting. So, what about incentive to foreign companies? There are jurisdictions, for example, like Singapore, where I'm based, I've been based since 2013. If you have a startup, you get certain tax breaks and depending on how many locals you hire, you may get incentives on some, maybe even access to government funding. Are there any governments or jurisdictions in Latin America that offer that?

FABIAN BIRNHAUM:
There are some that are famous for that? I will say the most times are a Colombia and Uruguay for giving tax incentives. They both countries have a free trade zone that are really important in order to setting up companies and export to the rest of the world. But most of the countries, they have different, I wouldn't say that they have wide incentives. They have specific incentive on certain industries on type of services, let's say software or certain time, for example and right now there is Mexico enacted approve on new tax reform. And there were certain rules in order to try to promote these types of investments. Most of the company have, and also be aware that there are some countries like Brazil or Argentina that state low taxes. So, each state has their own tax and their own incentives. So, it's sort of the same, let's say in Argentina, it's not the same to set up a company or something in Buenos Aires. So this might differ, so the possibilities are quite big because you have differences on each country at the federal level to say in a US way, and also different states, low taxes in some ways. 

DERREN JOSEPH:
Okay. That's interesting. So, it seems as if, what do you require obviously, Panama standouts when it comes to, just in terms of tax efficiency, but what about ease of doing business? Like the ease of incorporating a company and dealing with government agencies? Would it be those two jurisdictions that stand out as well? 

FABIAN BIRNHAUM:
No, I would say that the first one is Chile. Let’s reminded that Chile is other OECD so in general, they lead those rankings. 

DERREN JOSEPH:
Okay. So, in terms of ease of doing business, it would be Chile, but it won’t be as tax efficient, say Uruguay or Panama. Is that a fair statement?

FABIAN BIRNHAUM:
Yes, but there is an economics explanation to that. Uruguay and Panama are small countries. And so, they need to give tax incentives in order to attract big investments. That's the main explanation. 

DERREN JOSEPH:
And I understand that the tech ecosystem in, in, in Chile is quite developed as well, you know, in terms of not just start-up activity but in terms of funding, VCs are quite active and so on. Yes, fair statement.  

FABIAN BIRNHAUM:
Chile has many treaty agreements, tax agreements, who in many countries in the world, they are used to trade with many countries. So, I will say that they are the most developed country in that way in Latin America. 

DERREN JOSEPH:
Gotcha. And then on the flip side will be a jurisdiction like Brazil. I understand it is quite complex, both, neck and neck, because I've heard people comment that the tax code in Brazil, it's probably even more complex in the US so you think that both Brazil and Argentina, are the same.

FABIAN BIRNHAUM:
I will say that both are both have federal taxes and state taxes. So, you have that complexity, and I will say that they are the most complex countries in terms of taxes. 

DERREN JOSEPH:
Okay. Understood. Understood. And what are your thoughts on pillar two? 

FABIAN BIRNHAUM:
Well, yeah, I mean, in first place, I don't, most of the Latin American countries, they agreed on that, but we agreed because they didn't have any other alternatives. So, they were invited or obliged to go to that Pillar 2. I believe that if they want to change, I'm quite a skeptic on the tax cooperation between countries. I do believe that countries compete with doing them. And this have been the rule in the last 50 years. 

So, I don't know if this might work or not, but this is quite difficult for Latin American countries because they do rely on tax incentives. They do rely on giving incentives to foreign direct investment. They rely on the country where the exports are not the country that consumes their business. So, there is that change of crisis, how to tax. So, I mean, I believe that there are many challenges to the Latin American countries, and they need, they are most obliged to join the OECD agreement because they don't have other alternative, but their needs and the requests tests, et cetera, are not taking into consideration. 

This change was led by the most developed countries. And they are seeking for, eh, taxing some more revenue. I'm not saying if this is good or bad, I'm just saying why this was agreed. So, all these agreements are developing countries. Like most of the Latin American countries are not taking into consideration. So probably they might be some big challenges on all the Latin American countries on how to be part of pillar one or two, and this new tax world. 

DERREN JOSEPH:
Right. Understood. And, you know, and just kind of stepping back there's a perspective that in terms of, you know, the whole offshore world, it evolves, which is what one expects, nothing stays the same, you know, even jurisdictions that are popular, like the BVI and the Cayman they're being used less than they have been historically as, I guess, offshore is evolving into like more national. So, like for example, there are certain states within the US, or even states like, or jurisdictions like Singapore, where it's not exactly tax-free, it's taxed, but, you know, so there's a shift away from, you know, like Panama’s and the Cayman Islands. That's a perspective. What are your thoughts on the whole offshore world? Do you see it evolving or do you see like the Panama’s having a strong feature ahead?

FABIAN BIRNHAUM:
Also let's take the example of a BVI or Cayman. They were enacting many laws in the last years and probably they will need to evolve more to try to ask all the Latin American countries, they will be to be more aligned with international regulations and understand they will exist, and they will be used as an offshore entity, but they will make to change their laws and in line with all the changes in international tax arena. 

DERREN JOSEPH:
Right. Which, you know, I guess, okay, so for Latin America, or like in Asia, if you're like Hong Kong or Labuan in Malaysia, they were large extent. The offshore jurisdiction of choice for let's say businesses or persons in China. And similarly, you know, like, hidden Caribbean islands. They may be more in tune with the offshore needs of the United States and Canada. Right? So, with what I'm thinking, and what I'm asking you is whether given the rising popularity of like South Dakota and Wyoming, and certain you know, the structures that are available with the US, does that come at the expense of Latin America, at least in terms of the offshore world?

FABIAN BIRNHAUM:
This might happen broadly. I mean, most of the offshore world also is located in their own countries. So, at the end of the day, it's a matter of economic and tax competition. I do not believe that the OECD. It’s not, they don't do, they do not cover all the world. They don't have the global perspective. They have certain perspective of some countries and those countries they are seeking for they own interests. They protect their own national interest. 

So, I believe that we will see more tax competition. It will change the tax competition; it will change the old landscape and context of the international tax arena. But there will be tax competition because countries want to attract investments on their own country. And they, they don't, they don't look for global interests. This is my view on this, and I'm sure this will happen. 

DERREN JOSEPH:
Okay. And what about the opposite? Because my understanding is that some Latin American countries themselves have a blacklist. It's not just the OECD.

FABIAN BIRNHAUM:
Yeah. Well, in some cases they have blacklists like the name, the countries that they are blacklisted. And in some cases, they have criteria to say, if one country is regarded that scam, but you might see rules on that. For example, tax havens for certain countries might be subject to a higher with holding that they will be subject to transfer pricing rules, et cetera. But, but these rules, I will say that they were enacted after 2008 after I will say that the crisis of the transparency after 2008, all the work move towards transparency. And after that many Latin American countries, issue list, or criteria to consider certain jurisdiction aspects, garments, underwear, some kind of sanctions on those jurisdictions, they are all still in force.

DERREN JOSEPH:
Right? Like different Latin American countries have different countries on their own blacklist. But like, is there any common jurisdictions that will be popping up on Brazil and Argentina? Okay, now everyone's doing their own. 

FABIAN BIRNHAUM:
And they were modified all those jurisdictions. Panama in some cases it was regarded as tax haven for many countries, then it changes. And in some cases, it's not the country, it's certain type of regime of certain countries. So, it's quite complex to state, which are the tax havens for the Latin American perspective. 

DERREN JOSEPH:
Okay. I understand. And do most jurisdictions have CFC rules controlled foreign? 

FABIAN BIRNHAUM:
Yes, they have.

DERREN JOSEPH:
Is there any jurisdiction that stands out as being more aggressive than others in terms of OECD rules?

 FABIAN BIRNHAUM:
I would say that Argentina was one of the countries that was targeting these types of rules and targeting wealthy individuals. I will say that enact more rules and also Mexico right now, try to tackle tax evasion in the wealthy individuals. 

DERREN JOSEPH:
Okay. And is there like a movement towards like public registries, like where you can just go online and see, well, who are the shareholders of this company who are the beneficial owners? 

FABIAN BIRNHAUM:
Not right now, there is more public information, but not regarding shareholders, most of the shareholders need to be and communicate to certain entities, but that information is private. 

DERREN JOSEPH:

Okay. Understood. And what about asset protection? Like obviously in our common law jurisdictions, you know, a trust is quite an effective and commonly use a tool with foundations popular in terms of asset protection?

FABIAN BIRNHAUM:
Most of the foundation, for example, in Panama, are it changes all over, it depends on each country, how they tax them and how they consider the foundations in Panama, for example, the trust in the US, or there were quite things they trust in New Zealand, for example. And, but right now I will say that the US, because it's outside the scope of this year, CRS rules so probably and since the trustee need to inform, many trusts move towards the US and there they use it.

DERREN JOSEPH
Hmm. That's interesting. So, I have some clients in, most of my clients are in common law jurisdictions, but I do have a few in civil law jurisdictions like Indonesia, France, and their perspective in those jurisdictions they've more or less, see-through the trust arrangement. And in Indonesia, as if they just don't recognize it at all. But you're saying that generally speaking, of course, in Latin America, even though they won't recognize a trust within their borders, aside from, let's say Panama, if a tax resident does have a trust in another jurisdiction, it won't be treated as transparent. There aren't any….

FABIAN BIRNHAUM:
Let's say, for example, the case of if the US, of Argentina, sorry. Yeah. It depends on the type of trust and the regulation of the trust, but in some cases, yes, it was appointed. The settlor either has no current beneficiary to read the tax, agent, or to pay the taxes. For example, in Argentina, there were many changes on that. So, I'm trying to, because it was widely used the trust in order to protect the assets and to defer the taxation. So, there were rules trying to tax the settlor instead of the beneficiary. S there are countries and there were many changes on that direction trying to tax the settlor instead of them. 

DERREN JOSEPH:
Okay. Right. So, so in other words, that body of tax law isn't very well developed yet, generally speaking, it's evolving to be aggressive when it comes to that. 

FABIAN BIRNHAUM:
Yeah. It's evolving jointly with the wealth taxes, because before the importance of the wealth taxes, those diminishers and the avoidance measures, they were not so important. Once there was an amnesty program, once there was wealth tax in Latin American countries, these types of measures, they were taking more relevance and that’s why they were many changes on the directions in general, trying to tax the settlor instead of waiting how many beneficiaries to have the assets. 

DERREN JOSEPH:
Another trend that we see in Commonwealth jurisdictions outside of the US so I'm thinking of like Canada, the UK, Australia, New Zealand, there's, I mean, traditionally like tax residents was defined in terms of like a day's test, right. 183 days, you know, but now the there's a move towards like center life tests. And even when someone can be outside of Canada or Australia for maybe one to three years, you know, they're just moving around or whatever. There are certain conditions where some fallback rules would apply and they're still deemed to be tax residents of Canada, Australia, even though they're physically not there because of certain situations, like they may not be charged for resident somewhere else. They're not a bonafide resident of another jurisdiction. They just kind of move it around. So therefore, some fallback rules apply. Do you see any similar trends in Latin America? 

FABIAN BIRNHAUM:
Not, not in all the larger countries, because in first place, most of the countries do not compete on the attracting we needed some types of measures are not so relevant. But in Argentina, for example, that there are many Argentinians’ leaving to Uruguay there were some measures like that. So, because gain taking the Uruguay residence, it was quite straightforward, but trying to be out or not to be a tax resident in Argentina was quite difficult. So, there were many measures on and rules regarding in Argentina regarding this. So, for example, if you have your social security in Argentina or your medical expenses there, it was difficult to leave as our fiscal resident there. 

DERREN JOSEPH:
Okay. Understood. Understood. And last but not least, what about crypto? Like generally speaking, how is crypto viewed across Latin America? 

FABIAN BIRNHAUM:

Nobody knows. That's it really? I will say that they are starting some administrative rulings but still there is no regulation on that. I think it is starting to be on the focus, but there is no good repair relation on that. It is quite difficult to assess what is a cryptocurrency, if it's a currency, if it's an asset, et cetera, how it should be taxed, sell, gain, et cetera. So, it is not so widely regulated in Latin America yet. 

DERREN JOSEPH:
So, for the most part, it'd be treated like property then. 

FABIAN BIRNHAUM:
In general, what they haven't seen is that it is considered an intangible asset instead of a currency. 

DERREN JOSEPH:
Right. Okay. But I understand that there may be certain jurisdictions in Central America that embracing digital currencies? 

FABIAN BIRNHAUM:
EL Salvador. I think the only one 

DERREN JOSEPH:
I see, it’s the only one. So, if I were, you know, like really big into crypto and I wanted to move to Latin America, I probably want to stick to Uruguay and Panama, is that fair? 

FABIAN BIRNHAUM:
Yeah. It could be in order to try to protect from the source principle, it might protect all your cryptocurrency gains, but still, this is just starting. 

DERREN JOSEPH:
Right. Right. And you do see the trend. I mean, is it just El Salvador or do you see other governments considering moving towards that CBDC Central Bank Digital Currencies? 

FABIAN BIRNHAUM:
No, I don't think so. I mean, many countries rely on the monetary measures in order to try to get the benefits or to try to reach certain incentives in the country. So, I do not believe they will rely on a decentralized currency. That is my opinion in the short term. 

DERREN JOSEPH:
Okay. All right. That's great. You know what I'm going to do? Let me just have a look on the other platforms like Facebook and see if anybody has any questions there. Nope. There's nothing there. Any questions on LinkedIn? No, I don't see any, so yeah. You know, thank you for sharing some of your insights and what is a quick, but comprehensive review of the Latin American landscape. I know there's, you know, I've seen some of your questions and comments like Aaron, and I think it'll be, you know, as I mentioned, you probably want to seek an advisor. Who's both US and in your case, Columbia qualified. Definitely you're correct if you're a US person. And I think a professor mentioned that as well, once your US person, whether it be in green card holder or US citizen, no matter how long you spend outside and whatever Latin American country you're in, you will be subject to taxes by section, which you reside on the US so you need to be doing returns for both as to what who gets first bite to the cherry, well, it depends on the source of the income as well as maybe there's a treaty in place. And the structure that by which you hold the asset or enjoy the flow of income or capital gains or whatever it may be. 

So, it really depends, you probably need to sit with a team that understands international tax to take a deeper dive into situations like that. But if someone wanted to reach out to your professor, what's the best way to find you? What are your online credentials? Where did they find you? 

FABIAN BIRNHAUM:
I think that you post my LinkedIn. You can contact me there, or you can contact through my email at fbirmbaum@fbm.tax. So, I will be pleased to receive any emails from you to contact me. 

DERREN JOSEPH:
So FBM, is that your domain? Is that your entity?

FABIAN BIRNHAUM:
Yes.

DERREN JOSEPH:
Okay. So, anyone wants to reach out to professor is available. You can reach them on LinkedIn. He just gave his email address, and you can get him at fbm.tax as well. Thank you very much, professor. And thank you for those who have been joining us on the various platforms and do have a look at HTJ.tax, because we do this every week. Professor, thank you very much for your time, and we'll see you next time. Bye-bye 

FABIAN BIRNHAUM:
Thank you for the invitation. Bye to everyone. 

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