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Thread: Paraguay: The truth about residency and citizenship in Paraguay

   
   
       
  1. #1
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    Paraguay: The truth about residency and citizenship in Paraguay

    The truth about residency and citizenship in Paraguay

    Sovereign Man
    Notes from the Field

    Date: April 21, 2011
    Reporting From: Asuncion, Paraguay


    A friend of mine here in Asuncion owns one of the leading investment firms in town. We were having drinks at my hotel the other evening talking about events around the world and thinking about what might happen next.

    At one point he told me, "You know, I really feel like the decline of the dollar is going to cause a lot of problems in the world-- rising prices, currency imbalances, social unrest... I feel very safe here in Paraguay though because we have everything we need: food, water, and energy."

    He's right. Paraguay, usually overlooked, really does have just about everything that it needs. There is so much land here available for livestock or crop production, and the country sits atop one of the world's greatest freshwater aquifers.

    Meanwhile, businesses are feverishly growing alternative fuel crops, and Paraguay also boasts the largest hydroelectric facility in the world with an annual capacity of roughly 90 TWh; they use only a tiny fraction and export more than 85% to neighboring Brazil.

    Paraguay's economy has benefitted from rising commodity prices and overall regional growth... and despite the government's occasional left-leaning saber-rattling on behalf of the rural poor, politicians generally tend to stay out of the way.

    Paraguay's tax burden (as a percentage of GDP) is among the lowest in the world at around 12%, the same as Hong Kong. It's 28% in the US and averages 35% among OECD members. For this reason, Paraguay is a mini tax haven... but not on anyone's radar.

    Paraguay's individual income tax (first established in 2010, then temporarily suspended) is only 10%; it affects only the higher income earners, and it only applies to income sourced within Paraguay, not worldwide income.

    I've read a few blogs that say Paraguay does not have an income tax. This is simply incorrect... one of the many inaccuracies I've been seeing lately from new monkey see, monkey do expat sites.

    The Internet is both a blessing and a curse... and this is the curse-- massive factual inaccuracies. The digital world has created a wiki-reality: if enough people believe it, then it must be true.

    Internationalization is a rising trend and a lot of new 'experts' are jumping on the bandwagon. Unfortunately, this is leading to a lot of misinformation that gets recycled over and over across the blogosphere like a series of rip-off infomercials.

    Here's the truth-- establishing a second residency overseas is a great idea; it ensures that you have a place to go should you ever need to leave your home country, and it can even lead to an eventual second passport. Note: "second residency" doesn't necessarily mean that you have to spend time there.


    Places like Paraguay are ideally suited for a second residency. Why? Because of the country's political stability, energy and agricultural sustainability, low tax environment, and straightforward immigration procedure.

    Make no mistake, though, there is an immigration procedure. Some people seem to think that you just show up, put some money in the bank, and apply for a passport. This is utter nonsense, and I always get a chuckle when I read such advice from people who obviously have little experience in the country.

    I wrote about this at length in February's premium letter and even flew one of my local Paraguay contacts to our recent offshore workshop in Panama. Needless to say, he was a popular guy at the event and has been quite busy in the past few weeks assisting many of our subscribers with their own residency here.

    In the interest of accuracy and hopefully stopping the spread of misinformation, I'd like to provide a short summary of Paraguay's immigration procedure:

    1) Obtain necessary documents from your home country, including a clean police report, birth certificate, marriage/divorce certificates as applicable. All need to be certified by the Paraguayan consulate that oversees the document's issuing jurisdiction.

    You'll also need to provide a bank reference letter, and, depending on your passport (US and Canadian), a tourist visa to Paraguay.

    2) Travel to Asuncion and submit your application in person. Among other things, this requires establishing a local bank account with at least $5,500. Local bank rates are currently around 4% in USD, up to 12% in local currency. You'll also need a medical screening and various other requirements on the ground.

    3) The permanent residency application takes up to 4-months to be approved, though it can be much less if you use a well-connected facilitator.

    4) After three years as a permanent resident, you are entitled to apply for naturalization.

    Clearly there are a lot more details and many situations that must be reviewed on a case-by-case basis. For example, do you hold a different citizenship as your country of birth? Do you require proof of funds? These may impact the situation.

    As with most things, immigration procedure in Paraguay is all about who you know. The right contacts in Paraguay really streamline (NOT circumvent) the process.

    Naturally, everyone pretends to be well connected. I can't tell you how many places I've been where people claim to have an 'in' with the President.

    Just like relying on misinformation, working with the wrong people is a surefire way to lose money... or worse... get caught up in some illicit forgery or bribery scandal. It's simply not worth it.

    Trusted contacts are worth their weight in silver.


    Until tomorrow,


    Simon Black
    Senior Editor, SovereignMan.com
    py

  2. #2
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    nationalization in Bolivia

    More beauty queens than anywhere else on the planet

    Sovereign Man
    Notes from the Field

    Date: April 22, 2011
    Reporting From: Santa Cruz de la Sierra, Bolivia


    Fortune smiles upon Santa Cruz. With abundant natural gas reserves that generate immense wealth for the local economy, some of the best weather in South America, and more beauty queens per square block than anywhere else on the planet, Santa Cruz should indeed a fantastic place to be.

    Enter Evo Morales, Bolivia's socialist president.

    After his election in 2006, Morales helped pushed a new constitution through national referendum, that, among other things, restricted private land ownership and declared all natural resources to be the exclusive dominion of the Bolivian people (managed by the state, of course).

    Morales took off on a nationalization binge, taking over assets owned by France's GDF Suez, UK's Rurelec, Italy's Telecom Italia, Spain's Repsol YPF, Brazil's Petrobras, France's Total, Switzerland's Glencore, and a host of other international resource companies.

    Each time this happens, Morales declares a major victory for the Bolivian people, promising to redistribute the wealth and improve everyone's quality of life.

    There's just one problem with this model: Politicians make terrible CEOs.

    They excel at destroying productive capacity, not creating value. They have absolutely no idea how to run companies or manage assets, so even if the goal is to redistribute profits among the people, they don't know how to generate profits to begin with!

    If they're lucky enough to make any money at all, they first line their pockets with cash and then sprinkle the remaining crumbs among their constituents.

    Over time, the assets get neglected. No money is allocated for development, maintenance, and exploration... until one day, all they're left with are dry holes in the ground.

    This is already happening in Bolivia, which ironically just sent a major delegation to the recent PDAC mining mega-conference in Toronto to lobby for new foreign investment.

    These people must crazy-- first they steal all the foreigners' assets, then come back to the table and ask them for more money?

    It's easy to chuckle about the goings-on in Bolivia and think 'that could never happen here.' But fact is, it can happen everywhere, even in your home country. Politicians only know how to confiscate wealth, not create it... and the more desperate they become, the more they'll take.

    On that note, let's start this week's questions with MEH, who asks, "Simon, where can I find information about moving an IRA or other retirement savings overseas, if possible?"

    If you're a US taxpayer with an IRA, one of the best decisions you could ever make is to move it overseas. The country is going further and further into debt, and they're running out of options fast.

    The $5+ trillion sitting in managed retirement accounts is too irresistible for politicians. Just like Evo Morales, they want to take over private assets and manage them 'for the benefit of the people.'

    What a bunch of baloney.

    The best vehicle to move retirement accounts offshore, away from the politicians' control, is called an Open Opportunity IRA. You can also do a lot of really interesting things-- buy gold, buy foreign property, and really boost your investment returns. You can read more about this here.

    Next, Dr. Adel asks, "Simon- I am a surgeon practicing in LA. I'm tired of Los Angles and the deteriorating medical system in the States. I'm looking for a place to relocate and Paraguay sounds like it may be a good place. Is there is a need for a foreign doctors in Paraguay?"

    Definitely. The nice thing about the healthcare industry is that it's in high demand everywhere in the world. Paraguay does have a need for more qualified physicians, and the certification hurdles are much, much lower than in other countries that I've seen.

    The other advantage is that there is a loophole in Paraguay's residency procedure that streamlines the process for foreign professionals who commit to working in Paraguay. You could be on your way to second citizenship in no time.

    Last, Norman asks, "Simon, regarding the recent article about learning new skills, what do you think are the most critical languages to learn in the 21st century? I imagine Mandarin is one, Spanish is probably another (especially in the USA), are there any others?"

    True, conventional wisdom will say Mandarin, Russian, Portuguese, and Spanish. Any of these would make a fine choice. Remember, though, the idea is to be able to add value internationally. It's one thing to recognize that there is a lot of wealth in Russia, Brazil, and China... but think about where the action will be.

    In resource-rich southeastern African nations like Tanzania, Rwanda, Mozambique, and Kenya, they speak Swahili (which is a really beautiful language, by the way). In Sudan, they speak Arabic. In Kazakhstan, they speak Kazakh (and Russian). In Mongolia, they speak Mongolian.

    These may all prove to be exceptionally useful as well, particularly if you're aiming to be a go-to facilitator on the ground.


    Have a great weekend.


    Simon Black
    Senior Editor, SovereignMan.com
    py

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