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Caribbean Fears Tax Crackdown

June 4, 2009Article by Ray Withers

A crackdown on companies and individuals hiding their money in tax havens by the US and a European governments is threatening to undermine Caribbean property investment and economies, claim some nations.Many small countries like Grenada, St Lucia and St Kitts have concentrated on building a tax friendly environment only to be faced with sanctions by governments seeking to stop businesses and the rich escaping taxes.

Leading the attack on the tax havens are the US and UK – and in response Caribbean ambassadors in Washington attacked President Barack Obama’s proposals to collect more taxes from US citizens offshore.

Many feel their Caribbean property and tourist sectors could be badly hit by the moves as the rich who hold offshore accounts and do business in the Caribbean regularly visit to meet accountants and lawyers.While they are in the countries for business meetings, they also spend big bucks on golf, entertaining. Many also maintain Caribbean real estate.

“The offshore sector feeds the tourism sector, and the tourism sector feeds the offshore sector,” said John Beale, the Barbados ambassador to the US.Many feel that the tax evasion action will have some affect on business, but not tourism and property as the Caribbean is a cheap and easy travel destination for US and European tourists.The attractions are cheap cost of living, miles of sandy beaches and guaranteed sunshine.

One company, Property Frontiers can show prospective buyers three resort investments on different islands:

Silver Reef resort, St Kitts

This select development will offer just 62 villas and apartments set in lush tropical landscaped gardens with free form and lap pools. The resort will offer full rental pool administration for only a 15% cost with predicted net yields of 8-11%. With apartments available from £153,000 investors can purchase their property with just £46,000 cash plus legal costs.

Indigo Bay, Tobago

The 79 apartments at Indigo Bay are in such high demand that the developer has a letter of intent from a leading European travel company for the complex stating room rates of $150 per night.
Virgin Holidays are also keen to get the contract. With this in mind the developers are happily offering investors a leaseback agreement of 10% net yields for 5 years. Plus, to ensure investors don’t miss out on the beauty of this island paradise this contract comes with 2 weeks personal use per year!

Using a 65% loan-to-value completion mortgage, investors can purchase an apartment with just £35k plus purchase costs, enabling a cash-flow positive investment with forecasted annualised return on investment of 55%.

Bacolet Bay, Grenada

A 5 star resort set in 41 acres of tropical gardens state-of-the-art facilities. Investment with a 70% loan-to-value mortgages offered enabling buy-in from £71,550

The resort has world-class spa, leisure and dining facilities and offers high net yields of between 11.3% and 14.3%

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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