For the Foreign Investor in Haiti:
Frequently Asked Questions and Answers
1. Is there such a thing as a Haitian corporation and what liabilities am I exposed to as a shareholder in such an entity?
The equivalent of an American corporation in Haiti is the société anonyme (S.A.). Similar to American corporations, shareholders of a S.A. are, absent the presence of serious fraudulent behavior, shielded from personal liability for the company’s debt.
2. Are there any other business entities aside from a S.A.? What liabilities are relevant to those business entities?
Also permitted by Haiti’s laws are the standard partnership and the limited liability partnership. Absent an operating agreement, the partners of a standard partnership usually share equal liability for the entity’s liabilities. In a limited liability partnership, the silent partners are shielded from the entity’s liability while the managing partner is not afforded such protection.
3. As far as shielding myself or my business from liabilities in Haiti is concerned, what is the best way to do business in Haiti?
Due to the exposure to potential liabilities, most foreign investors may choose to either create a subsidiary in Haiti under which the foreign entity will own half or more of the shares in the Haitian S.A., or create an entirely independent S.A. with which the foreign entity will do business, or simply subcontract its work out to an independent Haitian entity. If the foreign investor wishes to do business in Haiti directly, the entity of choice is usually the S.A.
4. How are Haitian corporations regulated differently than US corporations?
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 a S.A. must also be shareholders and one of those shareholders must also be a Haitian national. Thus, it follows that at least one shareholder of any Haitian S.A. must be a Haitian citizen. It can take a minimum of ninety days to file for S.A. status with the Haitian government, however following a recent joint effort of USAID, Presses Nationales D’Haiti, the Ministry of Commerce and the Ministry of Commerce’s Centre de Facilitation des Investisseurs (CFI, the Center for Facilitating Investments), the time frame for creating a new S.A. should not exceed seventy (70) days from the filing date.
5. 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. One quarter of the stated capital must be deposited at the Banque Naitonal de Credit (BNC). A copy of the Bylaws, the minutes of the first general assembly creating the corporation, the subscription of shares bulletin as well as any power of attorney is submitted to the notary public who prepares the “acts of deposit” for those documents. Extracts from those documents, returned by the notary, must be submitted to the Ministry of Commerce prior to receiving an 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 Impots (DGI), the Haitian revenue service, in order to acquire a taxpayer identification number.
6. Do I need to use the services of an attorney or a notary to create a S.A. in Haiti?
Although recommended, Haiti’s laws do not require consultation with an attorney in order to create a 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.
7. What is double taxation and how does that apply to a Haitian corporation (S.A.)?
Like the shareholders of American corporations, individuals owning shares in a S.A. are said to be subject to double taxation due to the very nature of the corporate structure. First, the corporation’s profits are taxed by the Haitian revenue service, DGI. Second, the distribution of profits (dividends) to the shareholders is also taxed as personal income of those shareholders, regardless of those shareholders’ domicile or nationality. Unless the S.A. qualifies for the tax-holiday (see question 11), shareholders of a Haitian corporation are subject to double taxation. There is no equivalent in Haitian law to an S-Corporation in the United States.
8. What is my exposure to Haitian taxes if I am an individual who owns interest in a Haitian corporation?
Corporate taxes are currently fixed at 30% of profits and personal income taxes vary depending on the individual’s income bracket. The laws regulating taxes are subject to the “tax holiday” granted in the Investment Code as an incentive for new investments (see question 11 below).
As for the accumulation of profits, while a Haitian S.A. can accumulate profits for 5 years, a foreign company’s profits are deemed distributed every year and taxed accordingly at 20% unless reinvested.
American citizens must also be aware of the tax implications of the revenues from foreign sources of income. There are no bilateral tax treaties between Haiti and the US; as a result, US citizens living in Haiti may be subject to personal income taxes to both governments’ authorities.
Price-Transfer Rules. Although Haiti’s tax code does address price transferring between a mother corporation and its subsidiaries, the application of these rules is subjective.
Employee Taxes and Social Benefit Fees. The employer is responsible to submit its employees’ income taxes on behalf of the employee. The employer is further responsible for submitting the employee’s social benefits such as ONA and OFATMA, although both the employer and employee must share the cost of the former. There is also a tax on the “masse salariale” or a tax on the sum of employees’ salaries that the employer must bear.
9. What is Haiti’s current minimum wage?
Haiti’s employment laws have been recently amended to increase the minimum wage to 200 Gourdes per day for the standard Haitian worker and 125 Gourdes per day for the Haitian worker in the subcontracting industry.
10. What are some rights or obligations governed by Haiti’s employment laws?
Other than the minimum wage, employment laws in Haiti are regulated by the Employment Code, which addresses the formalities for hiring and firing employees. The law protecting workers include similar concepts to American employment laws that provide protection for certain groups such as race, sex and religious preference. Employment relationships can usually be ended with a notice period (préavis) or with a regulated pay notice amount. In the event of disputes, an arbitration panel assigned by the Ministry of Social Affairs is the initial judicial body encountered. Appeals to the panel’s findings are heard by an Employment Tribunal.
11. Are there any tax breaks for new investments in Haiti?
Haiti’s Investment Code provides significant economic incentives to new businesses in the export, agriculture, 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 done in a staggered matter. Furthermore, the capital investments of those businesses are granted an accelerated depreciation for tax purposes.
12. How will raw materials and heavy equipment needed for business in Haiti be treated by customs?
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. 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.
A Commission of Investments composed by various Ministries is responsible for granting the tax holiday and the customs franchises.
13. Will my business in Haiti be treated equally to other local businesses?
The Investment Code is particularly interesting as to its emphasis on granting equal rights to both foreign and national investors.
14. Are there any advantages to doing business in a Haitian “free zone”?
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.
DISCLAIMER: The information contained in this summary is for informational purposes only and should not be considered as legal advice. This summary is intended to briefly introduce the reader to Haitian laws that could be applicable to new corporate endeavors in Haiti. This summary is not an exhaustive overview of Haitian laws and consultation with an attorney is strongly advised in all cases.