How Increased Motor Vehicle Importation related to Americans dodging FATCA

“The completion of our state-of-the-art Total Logistics Facility; world-class information technology infrastructure; enhanced cost management; and the commitment of our team and stakeholders will allow us to maintain our position as the leading multipurpose and multi-user terminal in the Caribbean”

Kingston Wharves Limited Chairman Jeffrey Hall commenting on their Earnings for the First Quarter of 2016

Jamaicans, it seems, are buying more motor vehicles.

This has resulted in motor vehicle imports to Jamaica increasing by some 20% as reported in the article “Car Imports Spike, Kingston Wharves Gears Up For More Business”, Published Friday May 20, 2016, by Steven Jackson, The Jamaica Gleaner.

To be exact, Kingston Wharves Limited saw the following increases in Motor vehicle imports in the Q1 of 2016:

1.      20% increase in Domestic container unit volumes

2.      20% increase in trans-shipment motor unit volumes

3.      64% increase in domestic motor units

Kingston Wharves Limited is the direct beneficiary of this increase in motor vehicle importation activity as evidence from their earnings:

1.         JA$3.3 billion in earnings year-on-year in 2015

2.         JA$560 million in earnings year-on-year in 2014

Kingston Wharves earnings for January 2016 reflect just two (2) key operating units:

1.      Terminal operations

2.      Logistics and ancillary services

The earnings for Q1 2016 from these two (2) units are as follows:

1.      JA$943 million for Terminal operations

2.      JA$257 million for Logistics and ancillary services

In summary, the increasing in port activity for Q1 2016 resulted in the following overall revenues:

1.      JA$1.2 billion revenue

2.      JAS$279.8 million profit

This represents 49% higher profit for Q1 2016 when compared to Q1 2015.

So why is motor vehicle importation on the rise?

Increase Vehicle purchases - American Tax dodgers hiding form Uncle Sam

Port activity gives a glimpse into Jamaica's consumption patterns. It indicates that despite the economic climate in Jamaica and the relatively high cost of fuel, there are Jamaicans with money to purchase and maintain motor vehicles.

This is evidenced from companies such as Magna Motors Dealership Ltd opening up yet another Hyundai dealership at the famed 27 Old Hope Road, St Andrew location as reported in “New Car Hub Above Cross Roads”, Published Sunday May 8, 2016, by Mel Cooke, The Jamaica Gleaner.

This location was the source of much controversy with protestors showing up at the location during its launch on Wednesday April 27 2016 as noted in the article “Hyundai Adds To Kingston Presence”, Published May 1, 2016, by Mel Cooke, The Jamaica Gleaner.

Most Jamaicans haven't gotten a pay increase in quite awhile. They mostly live on a combination of Remittances as well as money borrowed from money lenders. Remittances is a US$2 billion a year activity in Jamaica as noted in my blog article entitled “World Bank's Global Remittance Slowdown - Why Jamaica's Remittance will slow in 2016 as Saudi Arabia Runs out of US Dollars”. 

The gap in spending in made up with money from micro-lending, which is being associated with an increase risk of CVD (Cardio-Vascular disease) due to increase fast food consumption as explained in my blog article entitled “How UWI and FSU study of JNBS micro-credit Database indicates CVD's increase in Jamaica”.

None of these additional sources of revenue account for the purchase of new motor vehicles. Hence those purchasing those vehicles must be people with extraordinarily high taste and possibly foreigners. My theory is that many of these vehicle purchases may not just be returning residents purchasing their dream vehicle.

Rather they are being purchased by Americans trying to dodge FATCA and the long arm of the IRS (Internal Revenue Service) by becoming Jamaicans as explained in my blog article entitled “How Americans becoming Jamaican citizens can evade IRS and FATCA Taxation”.

Kingston Wharves Limited, expecting more motor vehicle importation, has beefed up their multi-stage upgrade programme, spending another JA$77 million. Growth from increase motor vehicle importation is expected, to quote Kingston Wharves Limited: “Kingston Wharves anticipates continued growth in this key segment for the remainder of 2016 as we perfect both our business development and marketing strategies and continue to gain greater operational efficiencies”.

So Americans are coming to Jamaica in droves, using lawyers to purchase land, houses, set up businesses and yes, purchase high-end motor vehicles, all in a bid to avoid paying taxes to Uncle Sam. Even more interesting is that investment in businesses here in Jamaica may be related to these American tax-dodgers move to change their citizen ship to avoid the long arm of the IRS.

More on that in another article tracking the Americans coming to Jamaica to dodge the IRS!