WHY ISN'T THE QUALIFIED RETIRED PERSONS PROGRAM ACHIEVING ITS FULL POTENTIAL?
By LAN SLUDER
With millions of U.S., Canadian and European Baby Boomers now reaching their late 50s and looking for a frost-free, retiree-friendly and affordable retirement spot, Belize is in an ideal position to attract retirees.
To take advantage of this, the Qualified Retired Persons Incentive law was passed in 1999 by the People's United Party government and implemented about five years ago. Retirees age 45 and over from anywhere in the world who can demonstrate that they have guaranteed incomes of US$2,000 a month to deposit in a Belizean bank and who meet certain other requirements are permitted to live in Belize, bringing in a household goods, a vehicle, boat and even an airplane free of import duties. QRPs are not supposed to work for pay in Belize, but they can own rental property and be "silent" investors in Belize businesses.
[Official information on the program is available at http://belizeretirement.org/
or by e-mailing Janine Ebanks-Alpuche at [email protected]
and is explained in detail in several of books by Lan Sluder -- see below.]
Retirement Incentive Programs in Neighboring Countries
In neighboring countries, retirement incentive programs have attracted sizeable numbers of expatriate retirees.
Costa Rica reportedly has more than 11,000 official pensionados, or expat retirees on a pension, even though most of the tax advantages of its program were eliminated more than a decade ago. In fact, the program in Costa Rica was a victim of its own success: So many potential retirees were taking advantage of the program, it created a counter-reaction by some Tico citizens. The total number of retirees living in Costa Rica is said now to be more than 20,000 and could well be higher.
Panama has more than 2,500 participants in its relatively new retiree program, and close to 500 retiree visas were issued in the past year alone.
Numbers for Mexico are in dispute, but the Mexican immigration department says that about 200,000 foreigners have been issued residency visas, of which around 125,000 are American citizens. Including expats in Mexico on various longer-term tourism visas, the total number of expats and retirees resident in Mexico is thought to be between 300,000 and 500,000.
By contrast, only about 200 participants have been enrolled in the Belize QRP program in the roughly five years of the program's life. That is fewer than 50 participants enrolled per year.
Reasons Why Belize's Program Has Stalled
Why has the Belize program not reached its potential?
I have been hearing from a few people Belize's Qualified Retired Persons program who are unhappy with what they perceive as changes in the program. (In all cases, they've asked that I not disclose their names, perhaps because they fear repercussions.)
The main bone of contention among some participants seems to be that the Government of Belize is now treating QRP participants almost as tourists rather than as residents. While the position of the Belize Tourist Board, which administers the QRP program, is that this has always been the case under the Qualified Retired Persons (Incentive) law - it states in part: "Qualified Retired Persons shall be deemed to be non-residents for the purpose of the ... Immigration Act of 2000 as amended" - these QRP participants say they think the status has changed, subtly in some cases and outright in others, and that Belize now essentially treats them more like tourists than as residents, albeit ones that bring in a lot of money every month.
One QRP participant says that cards identifying QRP participants have not been issued for more than a year, despite having paid a fee specifically for the cards, causing problems for participants who are crossing the border, getting a driver's license, etc.
One recent change, and this is highlighted in a new article on the excellent www.localgringos.com
site run by Margaret Briggs, is that that QRP participants, unlike Belizean citizens and official residents, now have to pay the regular tourist exit fee of US$35 when leaving the country by international air. To date, they are exempt from paying the US$18.75 exit fee at the land borders, but they worry that this will change as well, making it prohibitively expensive to visit Chetumal, for example. Official Permanent Residents pay the same lower rate as Belizean citizens.
Other information on the QRP program and other residency options is also available on www.belizenorth.com
It also has been noted that the sign for the line at the international airport which formerly said "Citizens-Residents" has now been changed to read just "Citizens."
With recent changes in the PUP government, and in the Belize Tourist Board, both the senior and day-to-day management of the QRP program has changed. Some observers say it is now takes longer to get QRP approval than before, and the process involves somewhat more red tape. Reportedly, the time it typically takes to get a QRP application approved is running about three months.
Comparing Income Requirements
The minimum annual qualifying income threshold for Belize QRP earlier was raised from US$12,000 to $24,000, or US$2,000 a month, and QRP status now is good for only two years, at which point it is reviewed, rather than indefinitely as before.
By contrast, here are income requirements of some other neighboring countries:
Costa Rica still requires only US$600 monthly income for pensionado status (essentially, for those on a pension or other guaranteed retirement income) and US$1,000 for rentista status, for those with incomes from investments, rental property and also from pensions and other sources. There have been so-far unsuccessful efforts to increase the income requirements, to as much as US$3,000.
Panama requires a minimum of only US$500, plus $100 for each dependent.
Nicaragua requires only US$400, plus $100 for each dependent.
Honduras requires US$1,500 for pensionados and US$2,500 for rentistas.
For its visitante rentista program, providing for a temporary retirement visa, (FM-3) Mexico has an income requirement of 250 times the minimum legal daily wage in Mexico City, so the exact amount changes frequently. An FM-2 visa for immigrant status requires 400 times the minimum daily wage in Mexico City. Currently for FM-3 Mexico requires US$1,150 monthly income, plus US$550 for each dependent. This amount is reduced by 50% if one owns a home in Mexico.
Alternatives to the QRP Program
Of course, some would-be retirees in Belize opt for the Permanent Residency program rather than QRP status. The Permanent Residency status is similar in many ways to QRP, except that it requires a year's residency before application, leaving the country for no more than two weeks. There are some significant advantages to PR status. For example, Permanent Residents can work for pay in Belize. But the long "pre-application" period, higher application fees and other drawbacks make it not a good choice for some retirees. As a practical matter,
Also, many, if not most, expats who live in Belize for part of the year are in the country only on a tourist card. Under new regulations in 2005, after 30 days tourist card holders can apply for a monthly renewal for up to three months at US$25 a month, and thereafter, for a total of up to one year, at US$50 a month. But there are no guarantees that the tourist card will be renewed, and renewals usually require visits to immigration offices. After a year, the individual has to leave Belize and return to start the process over again.
Positive Impact of Retirees in Belize
Remember, for each 100 new QRPs, the Belizean economy receives a minimum infusion of US$2,400,000 in hard currency each year. As a practical matter, the impact of relatively wealthy expats in Belize is far greater than this. Considering all the goods and services consumed by expats and the tax revenues (sales and environmental tax, import duties, etc.) paid by them, each 100 new QRPs probably generate US$5 million or more annually in positive economic impact in Belize. With, say, 2,500 QRPs - the same number as in Panama - the annual economic impact might be US$125 million or more.
Also, throughout their residency most QRPs employ Belizeans in construction (building, repairing or expanding homes), building furniture, housekeeping, yard maintenance and for other work. They invest in real estate, buy new cars and make other large durable goods purchases.
Retirees in Belize, as in other areas, also bring significant intangible advantages to their new communities. They frequently spend much time in volunteer and charitable work. They also help create new cultural and civic programs and activities, since they have the time and extra money to do so.
Suggestions for Improving the QRP Program
Based on interviews with dozens of expats in Belize and on my own experiences in Belize over the past 15 years, I think the following changes would enhance the QRP program. While these changes might reduce Belize government tax revenues in the short term, in the long run it would greatly enhance revenues and give a dramatic boost to the Belizean economy.
Revise the income qualification to include all sources of income, not just pensions, Social Security, annuities and similar
Give QRP participants residency status similar to Permanent Residents
Allow QRP participants to pay only the 5% Belize citizen stamp tax rate on property purchases, rather than the 10% rate they now pay
Allow QRP participants to pay exit fees as if they were Belizean citizens
Allow QRP participants to operate a small business if the business employs a minimum number of Belizeans
Consider a tiered income qualification program - say starting at US$1,000 and going to $2,000 or $2,500 a month - depending on the total investment made in the country by the QRP participant. For example, if a QRP participant invests $100,000 or more in real estate or another investment, the participant would qualify for the lowest tier of monthly deposit
Allow QRP participants to enjoy the "Belizean rate" at Maya sites, national parks and, where applicable, at hotels that offer a Belizean rate off-season
Begin a government public campaign explaining the benefits to Belizeans of QRPs in Belize - higher tax receipts, infusion of hard currency, volunteer involvement by QRP participants in Belizean community and charitable organizations, employment of Belizeans and so on
Consider tax incentives for developers, builders and entrepreneurs who create medical, real estate, recreation and other projects directed to expat retirees
For More Information on Retirement Options
Besides my books and eBooks on living/retiring in Belize (see below), individuals considering retirement or permanent residency in the region might be interested in the following books:
Living Abroad in Costa Rica, by Erin Van Rheenen (Avalon, 2005)
New Golden Door to Retirement and Living in Costa Rica by Christopher Howard (Costa Rica Books, 2005)
Choose Costa Rica, by John Howells (Globe Pequot, 2004)
Choose Panama, by William Hutchings (AuthorHouse, 2004)
Choose Mexico, by John Howells and Don Merwin (Globe Pequot, 2003)
Live Better South of the Border, by Mike Nelson (Fulcrum Books, 2000)
Live Well in Mexico, by Ken Luboff (Avalon, 1999)
Live Well in Honduras, by Frank Ford (Avalon, 1998)
Living and Investing in the New Nicaragua, by Christopher Howard (Costa Rica Books, 2001)
Belize Retirement Guide, by Bill and Claire Gray (Preview Pub, 1999)
About the Author: Lan Sluder is the author of Adapter Kit: Belize (Avalon, 2002), the only comprehensive guide to living, retiring and investing in Belize; Easy Belize, an eBook (2004) on becoming an expat in Belize; and the upcoming Living Abroad in Belize (Avalon, 2005). In addition, Sluder is editor/publisher of the on-line magazine, Belize First at www.belizefirst.com,
and is author or co-author of other books on Belize, including Fodor's Belize & Guatemala 2005, San Pedro Coo, Belize Book of Lists and the Belize First Guide to Mainland Belize.