Q: Which type of Haitian business incorporation will most effectively shield me from significant personal liability?
A: The Haitian Sociéteé Anonyme (S.A.) is Haiti's equivalent of a limited liability corporation. Absent the presence of serious fraudulent acts, the S.A. affords its shareholders the protection from personal liability enjoyed by shareholders of American corporations.
Q: Are there any other business entities aside from an S. A.? W hat liabilities are relevant to those business entities?
A: Also permitted by Haiti's laws are the Société en Nom Collectif (the registered partnership) and the Société en Commandite Simple (limited liability partnership). Absent an operating agreement, the partners of a registered partnership share joint, several and unlimited liability for the entity's debts and liabilities. The limited liability partnership's silent partners are shielded from that entity's liability while the managing partner, responsible for its daily operations, is subject to unlimited liability for the partnership's debts and liabilities
Q: What is the ideal investment vehicle in Haiti for a foreigner?
A: Due to the exposure to potential liabilities, most foreign investors create a subsidiary in Haiti by participating in a S.A. Others choose to work directly with or do business through already-existing subcontractors.
Q: How are Haitian corporations regulated differently than US corporations?
A: Haiti's Commercial Code requires a minimum of three shareholders at all times. Unlike corporate regulations in most American states, all officers on the Board of Directors of the S.A. must also own equity in the company and at all times at least one Board Member must be a Haitian national (who can be the company’s lawyer). It can take a minimum of ninety days to file for S.A. status, although that time is currently being reduced to 70.
Q: What are some of the formalities for creating a corporation in Haiti?
The Commercial Code specifies a minimum stated capital amount depending on the business category. One quarter of the stated capital amount must be deposited at the Banque National de Credit (BNC). A copy of the Bylaws, the minutes of the first general assembly creating the corporation, the subscription bulletin is submitted to the notary public who prepares the “Acte de dépoôt” (deposit certificate) for those documents. Extracts from those documents, must be submitted to the Ministry of Commerce prior to receiving the Authorization to Operate as a S.A. The Authorization to Operate must then be published in Le Moniteur as notice to the public.
Following the above formalities, the new entity must apply to the Direction General des lmpôts (DGI), the Haitian revenue service, in order to acquire a taxpayer identification number and to enable it to comply with its fiscal obligations.
Q: Do I need to use the services of an attorney or a notary to create a S. A. in Haiti?
A: Although recommended, Haiti's laws do not require consultation with an attorney in order to create an S.A. However, unlike in the United States, the use of a notary is mandatory as far as submitting original documentation of the bylaws to the Ministry of Commerce. An attorney's role in creating a corporation usually starts with the drafting of the bylaws of the S.A. to ensure it abides by the Commerce Code's regulations. The attorney typically is engaged to follow the client's file until it is published in the official state publication, Le Moniteur.
Q: What is double taxation and how does that apply to a Haitian corporation (S. A.)?
A: Like the shareholders of American corporations, individuals (including foreigners) owning shares in an S.A. are said to be subject to double taxation due to the nature of the corporate structure. First, the corporation's profits are taxed at a rate of thirty percent (30%) by the Haitian revenue service, the DGI. Second, the distribution of profits (dividends) to the shareholders is also taxed at twenty percent (20%). Unless the S.A. qualifies for the tax-holiday, shareholders of a Haitian corporation are subject to double taxation. There is no equivalent in Haitian law to the S-Corporation commonly found in the United States. While corporate profits can be accumulated, after five (5) years they will be deemed distributed
Q: As a foreign shareholder, must I declare my Haitian derived income to the US government?
American citizens (and citizens of other countries) must also be aware of the tax implications in their country of origin for the revenues from Haitian sources of income. There are no bilateral tax treaties between Haiti and the US; as a result, although tax credits may be available, US citizens living in Haiti may be subject to personal income taxes to both governments' taxing authorities.
Q: I plan on creating a Haitian S. A. but wish to capture all of my profits in a foreign company. Is this possible?
A: It is certainly possible to create an independent S.A. in Haiti, subcontracting work to a foreign company that earns the majority of the mark-up profits, or to create a subsidiary in Haiti with the foreign mother company legitimately earning the majority of the mark-up profits. However the foreign investor should be aware that Haiti's tax code regulates price transferring and this arrangement should be carefully structured in order to avoid implicating them. The rules are particularly unclear and subjective.
Q: What is a “tax holiday”?
A: Haiti's Investment Code provides significant economic incentives to new businesses in the exporting, agricultural, arts and crafts, industrial, and tourism sectors and to those operating in "free zones". Qualified businesses may benefit from a 15-year tax holiday during which neither the corporation nor its distributed profits (dividends) are subject to any tax withholdings. The reinstatement of those taxes following the 15-year period is staggered. Furthermore, the capital investments of those businesses are granted an accelerated depreciation for additional tax benefits. The tax holiday is not granted automatically- it must be applied for by the prospective investors.
Q: How will raw materials and heavy equipment needed for business in Haiti be treated by customs if I qualify for the Tax Holiday a pursuant to the Investment Code?
A: As for equipment and raw materials, qualified businesses may benefit from a Customs Franchise permitting them to import duty-free the heavy equipment and raw materials necessary for its operations.
Q: I am interested in organizing a manufacturing company in Haiti. Are there any other advantages aside from those benefits provided pursuant to the Investment Code?
A: Companies operating in the subcontracting industry in which all or most of its raw materials are imported from overseas can also benefit from a Customs Franchise if it can be shown that the imported raw materials are in transit. The qualification for such Customs Franchise is different than those provided pursuant to the Investment Code, but the effect is the same- the imported raw materials will be imported duty-free.
Q: Who reviews my “tax holiday” and Customs Franchise application?
A: A panel, the "Commission of Investments", composed by various Ministries is responsible for granting the tax holiday and the customs franchises granted pursuant to the Investment Code.
Q: Will my business in Haiti be treated equally to other local businesses?
A: The Investment Code is particularly interesting as to its emphasis on granting equal rights to both foreign and national investors.
Q: Are there any advantages to doing business in a Haitian “free zone”?
A: The primary advantages for investors or developers of free zones are that they are provided with a tax holiday and also benefit from an accelerated depreciation of capital investments. The reinstatement of income taxes is done on a staggered basis. The primary advantages for businesses operating in a free zone is that the free zone has its own customs agents available to facilitate shipping needs. This may reduce the hassle of coordinating with customs at a different location. In addition to the advantage of having an on-location customs service, new businesses operating in a free zone can also qualify for the tax holiday provided in the Investment Code.
Q: Are foreigners permitted to acquire property in Haiti ?
A: Yes. Property acquisition by foreigners is permissible in limited circumstances and the assistance of an attorney is required by law.
Q: If a foreigner is an owner of a corporation, can that corporation own property?
A: Haitian companies and corporations are generally free to acquire property. However, if a Haitian company is majority-owned (50% or more) by a foreigner, that company is considered as a foreigner in terms of its property rights. The foreign company can acquire property, however only in limited circumstances. The assistance of an attorney is required by law
** The information contained in this summary is for informational purposes only and should not be relied on for legal advice. This summary is intended to briefly introduce the reader to Haitian laws that could be applicable to new corporate endeavors in Haiti.