The Citizenship by Investment Bill 2013, had its first reading in the Lower House of Representatives and not surprisingly it went through without challenge. The Government side controls all 15 seats in the Lower House. But, it must be noted that Hon. Tobias Clement raised some pertinent questions in respect of this scheme. He was concerned about the impact of this programme on land prices and the future ability of locals to purchase land.
Congratulations Hon. Clement! There are many people who share this concern. It is hoped that your Parliamentary colleagues will seriously consider your concern since it will impact significantly on the FUTURE OF THE YOUTH of the country who, it is generally acknowledged, are responsible for the overwhelming electoral victory of your party.
Experience with Economic Citizenship:
The spectre of scandal and shame of the former economic citizenship programme continues to haunt Grenada. A number of persons of ILL REPUTE held citizenships and even held ambassadorial positions.
Among the most notorious were:
*Viktor Kozeny aka the Pirate of Prague wanted in both his native Czechoslovakia and in the United States.
*Eric Resteiner was found guilty in a US court of defrauding investors out of $47 million through a fraudulent investment scheme he operated.
The ordinary Grenadian citizen knows only too well that among the consequences of the economic citizenship scheme was the imposition of visa requirements for bona fide citizens traveling to Canada which remains in force to the present day.
In 2009, the Canadian High Commission in Barbados offered this comment on Grenada-Canada relations, “Canada’s consistent view remains that, unless citizenships sold under the program are rescinded, it is impossible to sort out which potential visitors to Canada from Grenada are legitimate citizens, and which purchased their status.”
Paucity of Information:
The paucity of information pertaining to the operations of the proposed Citizenship by Investment Programme does not allay fears. How is the current programme an improvement on the first programme? How does the Citizenship by Investment Bill, 2013 address the shortcomings of the ill-fated Economic Citizenship programme?
It would appear that information in respect of the policy and regulations of the CBI is non-existent or known only to a select few like Ambassador Peter deSavary who is already advertising citizenship for sale, even before the Bill has gone through all its stages.
Concerns re CBI 2013:
Among concerns in respect of the Citizenship by Investment Programme are:
*Due Diligence: How is the application of rigorous due diligence guaranteed?
*Governance and Transparency Mechanisms: What are the regulations and procedures governing the programme at its various levels?
*Role of Regulatory Institutions and Bodies: What will be the role of regulatory institutions and bodies such as the Eastern Caribbean Central Bank, GARFIN, the Financial Intelligence Unit, the Immigration Dept?
*National Transformation Fund: How will the National Transformation Fund operate?
*Criteria for Approved Projects: What are the criteria for identifying approved projects? It has been noted that there are websites advertising Mt. Cinnamon Resort and Private Beach Club and the Port Louis Maritime Village. There is also a facebook page advertising the Bacolet Resort and Spa project.
*Who Benefits: Who will really benefits from the CBI? How will the ordinary bona fide citizen of Grenada benefit from the Citizenship by Investment Programme?
Ambassador Peter deSavary and Citizenship by Investment:
Who Is in Charge?:
Is Ambassador deSavary dictating the decisions on the sale of citizenships? The CBI legislation is NOT yet passed. It is STILL to be tabled in the Senate. Yet, Ambassador Peter deSavary is advertising the sale of citizenship for the expansion of his Mt. Cinnamon Resort and Private Grenada Beach Club.
His brochure, replete with the COAT OF ARMS of Grenada and a message from the Rt. Hon. Prime Minister may be accessed at the following link – http://www.grenadabeachclub.com/brochure/Grenada_CBI_Brochure.pdf.
Other sites advertising the Ambassador’s projects are: http://canadian-immigration.ca/grenada-proposed-pilot-economic-citizenship-program/ , “Grenada – Proposed Pilot Economic Citizenship Program”:
This site advises:
* “The Government has selected two projects for this initial launch, which have already been approved under Grenada’s rigorous standards for qualification”.
*”Please contact Adam Blum at firstname.lastname@example.org or by phone at +1 416 840 6194”.
*http://ntlimmigration.com/grenada, “Grenada Citizenship”: This website advises, “The new inception of the old law increases the minimum investment to US$1,000,000 and was conceived for unique global citizens who demand exclusivity and prompt service.
The Grenada program is available by invitation only through a handful of select agents, such as NTL. NTL has offices in the following locations: – Dominica, St. Kitts & Nevis, Antigua & Barbuda, Grenada, Hong Kong, Andorra, Latvia.
*Approved Projects and Rigorous Standards: By WHAT rigorous standards have the said projects been approved and by WHOM?
*Agent NTL: Who or what is NTL? How can NTL be a selected agent when an agent’s licence has to be granted under the CBI legislation which has not yet been passed in Parliament? (Ref. Clause 4(1). WHO has granted an agent’s licence to NTL?
*Residency Requirements – 60 days over 5 years: Clause 12 (1) a of the CBI Bill 2013 advises that a person granted citizenship may be deprived of citizenship if he/she does not spend at least 60 days in Grenada during the period of five years.
Ambassador deSavary’s CBI brochure, advises that an applicant/citizen does not need to live in Grenada to be a citizen of Grenada. An address in Grenada is not required for passport renewal.
Citizenship for Life: The brochure advises that “citizenship is yours for life”.
*Accountability: Who is accountable to whom? Is Ambassador deSavary accountable to the Government of Grenada or is the Government accountable to the Ambassador? Is this a case of TAIL wagging DOG?
Real Estate Tourism:
It appears that the CBI is supporting “real estate tourism”. The following observations, are instructive (reference http://www.islaca.com/blog):
* “At Bacolet Bay we have been busy talking to Private Bankers, Wealth Managers and Citizenship advisers in the regions that will be the core market for citizenship investors.
* The feedback has been that the advent of that policy is likely to attract a significant number of ultra high net worth investors to the resort property market in Grenada. We can look forward to the market receiving a very substantial stimulus helping Grenada to realise its undeniable potential as a land of opportunity. “
*A December 2012 posting observed as follows: “Grenada’s real estate and construction sectors are stagnant. Total monthly real estate transactions for the entire country are currently averaging EC$7M (US$ 2.6M). This is equivalent to the sale of one villa in many of our neighboring islands. It is unsustainable, and gives a clear indication of the intense need for policy intervention to shore up real estate values, stimulate construction, and create jobs.”
*The blog makes a case for the Citizenship by Investment Programme claiming, “They attract high caliber applicants who are willing and able to pay significant sums to gain a second citizenship. This adds up to major government receipts and significant foreign direct investment.”
The questions are:
*Land of opportunity for whom: For whom will Grenada become a land of opportunity under the CBI? The answer appears to be pretty straight forward – ultra high net worth investors and the agents.
*Multiplier Effect and Distribution of Benefits: Whom does real estate transactions benefit? Grenada is a SMALL ECONOMY and transactions of EC$7 million are not insignificant. The multiplier effect of a lot less as “NUTMEG BONUS” at Christmas time is testimony to this fact. The question therefore is WHO BENEFITS from these real estate transactions and how are these benefits distributed in the economy?
Myth of Foreign Direct Investment and Government Receipts:
Consider the Mt. Cinnamon Resort and Private Beach Club project being marketed by Ambassador Peter DeSavary.
*The minimum investment is USD 1 million.
*How much does the government get for processing fees and the cost of citizenship. This is a one-off fee.
*How does government raise revenue? By taxes. That is a sovereign right of governments. Ambassador deSavary is advertising a “tax free investment”
*No capital gains tax, income tax or inheritance tax
*Property tax is capped at EC$300,000. The minimum investment/price for a one-bedroom villa is USD600,000. There are villas up to a price of USD3 million.
In order to assess the potential contribution of the CBI programme to the coffers of government, it is useful to refer to the agreement of 11th, January, 2007 between the deSavary companies and the Government of Grenada..
Agreement of 11th January, 2007 between Spiceland Ltd., Spice Land Trading and the Government of Grenada:
The following information is instructive.
Who gets the fiscal incentives:
Fiscal incentives are granted to the following:
* the Land Owner (Spiceland Ltd.) and the Developer (Spiceland Trading Ltd.) and their associated companies.
* to ANY company established for the purpose of owning, operating or managing ANY part of the project.
* to any company or body corporate making any debt or equity investment in the project.
The incentives comprise EXEMPTIONS from a number of taxes paid by the average business in Grenada.
Among these exemptions are the following:
* Corporate Tax for a period of 20 years.
* Common External Tariff (CET) and General Consumption Tax (GCT) or other taxes that may replace them. VAT has replaced these taxes.
*This exemption is applied to all materials, equipment, furnishings, fixtures, fittings, vehicles, construction, machinery and boats, plates, glass, cutlery computers, CDs, DVDs … and all and any other items (WITHOUT LIMITATION and so as to give the WIDEST POSSIBLE INTERPRETATION thereto) imported .
These exemptions are granted to the Land Owner, Land Developer and associate persons, companies, corporate bodies.
* Property Transfer Tax and/or any other property acquisition taxes: How can companies whose business is REAL ESTATE be exempt from property transfer tax?
According to the agreement the intention is “to construct and subsequently market for sale and lease a residential development”.
* Property Taxes: There is a CAP/limit on property taxes for a period of twenty-five (25) years. The value of each unit shall not be taken to exceed the sum of EC$300,000. Note that the Grenada Beach Club Brochure is advertising units between the prices of 1.25m and 9.97m.
* Customs Service Charge (CSC): There is exemption from CSC on imports of ANY kind. Note that the Customs Service Charge is an administrative charge for the customs service, whether or not tax waivers apply.
* A customs officer has to be there so that the goods can be cleared. When anything is cleared, even BARRELS, customs service charge is paid. Why should millionaires and ultra high net worth individuals be exempt?
* Taxes re receipt of rents and profits from land in the hands of the Landowner and/or Developer: These exemptions pertain to the receipt of rents and profits from land in the hands of subsequent purchasers.
*Rental Pool: Property purchased under the CBI must be in the rental pool. Rental income is tax-exempt.
*Annual Management and Maintenance Fees: Property owners are expected to pay an annual fee for management and maintenance. These fees are tax exempt.
*Withholding tax, Capital Gains Tax and any Investment Tax: Exemptions are granted on all of these taxes.
* Limitation on Alien Land Holding Tax: Alien Land Holding Tax is limited to 5 percent except:
*Total Exemption: If the property to be let for a period of five years or for more than 270 days, then there is total exemption. Under the CBI proposed, the property has to be held for five years and must be in the rental pool. Therefore there will be total exemption from alien land holding tax.
* Transfer of Fiscal Incentives: All of the incentives may be transferred with the disposal of any land, property or operation to which they relate. Hence fiscal incentives are transferred to subsequent buyers.
*Citizenship for Life vis-a vis. Property Holding: for 5 years: Note that according to the CBI programme proposed by Mt. Cinnamon, purchasers of citizenship have citizenship for life but they are only obliged to hold property for 5 years before it can be sold.
* Repatriation of Capital and Profits: The Land Owner, Developer and other associated parties have the right to repatriate all capital, profits and/or otherwise taxes relating to the receipts of rents and profits from land howsoever derived.
*Contribution to Government Receipts: While initially there will be some one OFF FEES, does this programme contribute a significant and SUSTAINED revenue stream to the Government of Grenada. How does the CBI programme add up “to major government receipts suggested by the Isla Blog.
* “Cash Cow”: Who benefits from the “significant foreign direct investment” that will expand Ambassador deSavary’s resort? Is the CBI to be a “cash cow” for Ambassador deSavary and others like him whose “approved projects” are to be financed by the sale of citizenship?
*Sovereignty: Government’s ability to provide services to its citizens depends on tax revenues. Governments have the sovereign right to derive revenue from taxes.
*Second Class Citizens: While all sorts of tax exemptions are applied to persons who will be purchasing citizenship, the bona fide citizens are expected to pay their taxes. Is the government facilitating the creation of a second class bona fide citizen of Grenada?
Based on the foregoing information in respect of Ambassador deSavary’s projects, the bona fide citizens of Grenada can draw their conclusions. Whom does the Citizenship by Investment programme serve? Who pays and who benefits from the sale of Grenada’s citizenship?
(The above reflects the views of Citizens in Defence of Grenada’s Lands and Heritage)