In order to satisfy the Troika, the Madeira Free Trade zone will loose most of the tax exemptions that made it attractive to non-resident depositors and other clients, including the absence of the WHT withholding tax of 21.5% on interest income which applies in Portugal.
As a result, even the Portuguese banks are shifting their business to other, less regulated, offshore financial centers. Thus Portugal will lose the non-resident deposits which played such an important role in the Balance of Payments recoveries in earlier periods such as the 1980's. In the 1990's, non-resident deposits, most consisting of emigrants' remittances from Portuguese workers abroad, amounted to about EUR 2.7 billion/year, and consistently represented about 30% of the total banking deposits in Portugal, thanks to a positive real interest rates and good tax benefits.
No such help can be expected this time around, as policy errors work to promote capital outflows rather than capital inflows.
We know, from McKinnon and other authors, that promoting savings and capital inflows is not just necessary but essential as Portugal struggles to cope with the financial crash.
What are they thinking?
Mariana Abrantes de Sousa
Sources:http://economico.sapo.pt/noticias/futuro-do-offshore-da-madeira-nas-maos-da-troika_133310.html , Emigrants remittances in Jornal de Negocios
See also Eurozone tests the limits of divergence and What the Troika overlooks
Emigrantes como parceiros previlegiados
Caixa Geral de Depósitos (CGD) está a transferir a operação que tem na zona franca da Madeira para o paraíso fiscal das ilhas Caimão, segundo noticiou esta terça-feira a RTP.
Em causa está o fim de alguns benefícios fiscais no offshore da região portuguesa, particularmente a tributação dos juros nas contas dos não-residentes a 21 e meio por cento.
A Caixa já informou os clientes da transferência para as Caimão. Na Madeira, a opção do banco estatal está a ser muito criticada, segundo o canal público de televisão.Fonte:http://dinheirodigital.sapo.pt/news.asp?id_news=172641