This may be scaling upward, if a recent case in Guatemala is indicative. The tax authorities recently unveiled Caso B410, which alleges that at least 800 million Guatemalan quetzals ($102.6 million) of taxable income was lost to one individual who was the legal representative of 410 companies that appear to have not executed any public work and were essentially false fronts. The true cost to the Guatemalan state could be in the vicinity of 6.4 billion quetzals.
Despite the many barriers to development Latin America faces, the past 10 to 20 years in the Dominican Republic suggest a way forward, says Francisco Cerezo, chair of the US-Latin America practice at DLA Piper. Creating a sound legal framework has been critical to attracting foreign investment to the island nation, along with addressing multiple-jurisdiction, eminent-domain, and recordkeeping issues.
Digital infrastructure such as data centers, broadband access, and the energy to power them, offer opportunities going forward, he says, although creating it will require a significant investment on the part of governments, the private sector, and private equity.
To benefit, foreign investors must understand the region better and avoid same longtime blind spots. Necessary steps, Cerezo says, include “due diligence—well beyond the type you’d do in the US or Canada—really mapping out the outreach to local communities and stakeholders, and considering bringing a local partner into the management or equity structure.”
But with trillions of dollars needed to stem migration, improve commerce and connectivity, stimulate tourism, bridge the digital and interconnectivity divide, and provide the energy to power a potential nearshoring boom, Latin America and the Caribbean find themselves at a crossroads. Despite the hurdles, these challenges represent opportunity for worldwide investors looking to step in with the support of multinationals and national governments.
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Publish date : 2024-10-14 10:30:00
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