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The Investment Guide presented here was prepared by the Executive Secretariat of the Manufacturers Association of Haiti (Association des Industries d'Haïti - ADIH) and reviewed by the Commercial Section of the Embassy of Haiti in Washington, D.C. for publication to the World Wide Web. Our mutual goal is to provide an overview of the business climate in Haiti for those interested in doing business there. Thus, no claim is made that the subjects treated below have been explored exhaustively. It will often be necessary for the user to refer directly to the laws and regulations in force and/or obtain appropriate legal advice from a competent attorney or business associations. |
Official Name: Republic of Haiti
Location and Area: Western part of the island of Hispaniola with an area of 27,750 square Km (10,714 square miles); 50 mi. east of Cuba; 800 mi. southeast of Miami
Capital: Port-au-Prince
Official Languages: Creole, French
Population: 8 million with a growth rate of 1.8% per annum; 95% African descent, 5% mixed
Government: Republic type of government with a President directly elected by the people; a Prime Minister designated by the President from the majority party in the two-chamber Parliament, or in the absence of a majority, in consultation with the legislative leadership. President, H.E. René G. Préval (1996-2000); Prime Minister : Post vacant (December 1997).
Currency: Gourde; US$ 1 = Gdes 16.75 (September 1997)
GDP: Gdes 4,312 million; annual rate of growth; +5% (projected 1997)
Minimum Wage: 36 gourdes per day
Time Zone: EST; GMT-5
Climate: Temperature is warm, ranging year-round from 70-93° F in the coastal regions, and 50-75 in the mountainous areas; rainy seasons are April-May and August-October.
Highways: The highway system includes 4,050 km (2,515.5 miles) of roads; 950 km (590 miles) paved; 950 km (590 miles) otherwise improved; 2150 km (1,335 miles) unimproved.
Ports: Port-au-Prince and Cap-Haïtien are the two major ports. Other ports include Miragoâne and St. Marc.
Airports: Maïs Gaté International Airport in Port-au-Prince; served by the following carriers: ALM, Air Canada, Air France, American Airlines, COPA, Haiti Trans-Air, Halisa Air, Air Jamaica
Telecommunications: 55,000 telephone lines; 49 AM/FM radio stations; 5 television stations in Port-au-Prince (cable television from Canada and the United States is also available); 1 Atlantic Ocean satellite station. {To call Haiti from the United States dial : 011 (Access Code) + 509 (Country Code) + Local Phone Number (6-digit number).}
Energy: Three electric plants serve the Port-au-Prince area. Their installed capacities are 141 Megawatts, but their actual production is 50 Mw. Haiti uses a 110 Volt, 60 cycle system.
Trade: The United States is the main commercial partner of Haiti. It accounts for about 60% of the flows of exports and imports. Primarily Haiti exports coffee, mangoes, sisal and essential oils, while it imports petroleum products, foods, beverages and fats. For the fiscal year of 1992-93, exports (FOB) and imports (CIF) total respectively US$88.30 million and US$181.50 million.
The Haitian Government is committed to a free-market system. It guarantees to all persons and corporations involved in business in the country the following rights and privileges:
Free disposal of their properties;
Freedom to hire and fire in accordance with the provisions of the Labor Code;
Freedom to engage in commercial and industrial activities within the limitations of the Constitution and the Commercial Regulations Code;
Protection of trademarks, patents, labels, and all other forms of intellectual property rights;
Minimal intervention by the State in the market: Government regulated prices are reduced for five products and services including: oil, energy, telecommunications, transportation, and the minimum wage.
Furthermore, Haiti has signed treaties and conventions with many industrialized countries, in order to reciprocally protect foreign investments: with the United States in 1953 and 1983; France in 1973 and 1984; Germany in 1975, and Canada in 1980.
In order to operate a commercial enterprise Haiti, foreigners need four basic documents:
Residence Visa: an applicant presents his/her request in person or by mail to a Haitian diplomatic or consular mission abroad which transmits it to the Ministry of Interior via the Ministry of Foreign Affairs in Port-au-Prince, Haiti. The applicant will be notified of acceptance or denial of his/her request within two or three months. If the applicant is introducing his/her request in Haiti, he/she must contact directly the Ministry of Interior;
Work Permit issued by the Ministry of Social Works following submission by the applicant of his/her passport, residence visa, job offer and a receipt from the Tax Office (Direction Générale des Impôts);
License from the Tax Office (Direction Générale des Impôts);
Registration Certificate from the Ministry of Commerce and Industry.
Intensive and efficient exploitation of available local resources;
Creation of new jobs and improvement of the professional qualification level;
Introduction or extension of new technology more appropriate to local conditions;
Creation and/or intensification of backward or forward linkages in the industrial sector;
Export-oriented production;
Utilization of local inputs at a rate equal or superior to 35% of the production costs;
Preparation, modification, assembly or finishing of products imported in bulk, or loose parts, provided that the final products will be re-exported.
Broadly speaking, for investments that fit one or more of the criteria described above, the Government of Haiti provides two types of incentives: customs duty incentives and income tax incentives.
Customs Duty Incentives
Incentives vary according to whether the production of the beneficiary is intended for the domestic market or for export.
Domestic Market-Oriented Activity
Any firm producing for the local market and duly qualified is entitled to:
Full exemption, phased over the life of the firm, on import of capital equipments;
10 years of total exemption on import of raw materials, and materials needed for packaging. Export-Oriented Activity
Qualified export-oriented firms are during their whole life exempt from:
Duties on import of materials, equipments, and accessories needed in the process of production;
The Consular Fee;
The Taxe sur le Chiffre d'Affaires (T.C.A.), and other internal duties but not storage charges and handling fees.
Income Tax Incentives
In addition to custom privileges, eligible firms may benefit from income tax exemption according to a maturity schedule which varies with their location. The investment code distinguishes three systems of tax incentives:
System A for firms located in the Port-au-Prince Metropolitan Area;
System B for firms operated outside the Port-au-Prince Metropolitan Area;
System C for firms established within the industrial zones.
Table I : Maturity Schedule for Income Tax Exemption
Administrative Procedures to Obtain the Investment Incentives
The formalities for obtaining such privileges might be divided in three stages:
First Stage:
The applicant must submit a formal request to the Ministry of Commerce and Industry with documents (five copies) regarding:
The nature and the form of the company; location; bylaws, constitution, power of the signer(s), and bank references;
The list and origin of raw materials including technology choices;
Working patents and granting justification; the norms and specifications to be followed; provisions for quality control; energy sources to be used;
Detailed list of equipment and materials for production, handling, transport and maintenance that will be used, their origin and comparative costs;
A comprehensive five year business plan. Upon receipt of that request the Ministry of Commerce and Industry will issue a deposit certificate in favor of the applicant.
Second Stage:
The request is transmitted to an advisory commission for review and sends it's comments to the appropriate institutions.
Third Stage:
The Ministry of Commerce and Industry notifies the applicant of its decision in 40-90 days. The decision notice is then published in the Government's official gazette; Le Moniteur as well as two highly circulated newspapers in Port-au-Prince.
Privileged Access to World Markets
Products originating from Haiti have preferential access on most markets in the industrialized countries. Here are the main schemes:
The Generalized System of Preferences / USA
The General System of Preferences is offered by most of the industrialized nations in favor of the developing countries. Each country has developed its own scheme. The United States provides a system whereby products designated in over 2,500 tariff positions under the Harmonized Tariff Schedules may be imported in duty free or with tariff reductions if:
the exporter country is a beneficiary country; the products are shipped directly to the U.S.;and their value added in the country of origin is greater than or equal to 35% of its "appraised value". The 807th Article of the Harmonized Tariff Schedule of the USA
The 807/HTSUS program takes its root in the principle of the international division of work. It provides that a product assembled off-shore with U.S. origin components _ such a way that the physical identity of these components is not modified _ is subject to custom duties only on its value added abroad.
The Caribbean Basin Initiative (CBI)
The CBI is a preferential system established by the U.S. in favor of the Caribbean and Central American countries. It provides duty free entry into the U.S. for approximately 3,500 products. The following products are excluded:
Textiles, except those made from linen or silk, or qualified as craft work Watches and parts Petroleum and its byproducts Prepared or canned tuna Sugar, molasses and syrup Beef Spirits Footwear Requirements:
The product must come from an eligible country and be shipped directly to the U.S.; The value-added in the beneficiary country for the exported product must be at least 35% of the value determined for custom purposes. The value of materials originating from other CBI beneficiary nations may be included in the above-mentioned 35% figure; Materials of U.S. origin may be included up to a maximum of 15% of the value determined for customs purposes.
The Lomé Convention Trade Preferences
Since December 15, 1989, Haiti is a signatory of the ACP/EC Convention, better known as the Lomé Convention. Products originating from ACP (Africa, Caribbean and Pacific) countries are exempt from import duties or equivalent taxes upon entry to the European Community countries. The E.C. puts no quantitative restrictions or equivalent measures on imports from ACP countries except on certain goods considered to be hazardous to public or moral security health and life of persons and arrivals, the environment or sites of historic value.
The Labor Code and its Implications
The relations between workers and their employers are determined and regulated by the Labor Code. The provisions of the Labor Code were updated in 1984 to take into account new international guidelines established by the International Labor Office (ILO). The Ministry of Social Affairs and a Tripartite Committee are responsible for enforcing the provisions of the Labor Code, and for maintaining a climate of mutual confidence among all parties.
Subjects of Interest for Entities in the Manufacturing Sector
Duration of work: In all agricultural and business establishments, the normal duration of work is eight hours per day and 48 hours per week. However, the parties may agree to distribute the 48 hours per week in patterns other than eight-hour days, provided that work day does not exceed nine hours in industrial establishments or ten hours in commercial establishments and offices. Normally the working day ends at 4:00 or 5:00 p.m., depending on the season of the year: 4:00 p.m. from May 1 through September 30, and 5:00 p.m. from October 1 through April 30.
Overtime: Time worked beyond normal working hours is regarded as overtime, and is compensated at a 50% premium. The number of overtime hours which may be worked is limited to 80 per quarter for industrial establishments and two hours per day _ up to a maximum of 320 hours per year _ for commercial establishments.
Weekly time off: Workers must be given 24 hours off on Sundays if they have worked for 6 consecutive days during the week.
Night work: Night work is that performed between 6:00 p.m. and 6:00 a.m. Night work is compensated at a premium of 50% over daytime work, without prejudice to the premium prescribed for overtime work.
Paid vacations: The Code provides for at least 15 consecutive days of paid vacation per year, including two Sundays.
Sick leave: An employee is likewise entitled to a total of 15 days sick leave per year, without any reduction in wages. To take sick leave, the employee must submit a medical certificate issued by the company physician or a Public Health Service office. Sick leave (like vacation days) cannot be accumulated.
Maternity Leave: In addition, pregnant women are entitled to 6 paid weeks of maternity leave. The employer must keep the employee's position open for them for the duration of their leave.
Holidays: There are 11.5 holidays in Haiti. Work performed on a non-regular basis on Sundays and holidays is compensated at a 50% premium, without prejudice to the premiums for night work and overtime, as well as compensa tion in lieu of weekly time off.
Unions and Collective-Bargaining Agreements: The Code provides to workers the right to form unions and to negotiate collective-bargaining agreements. Union activities are protected. Collective agreements may be negotiated at any time between unions and employers; if at least two-thirds of the employees of a given business enterprise belong to a single union, the negotiations become binding if the employer or the union requests so. Strikes are legal if voted, by at least one-third of the employees.
Labor disputes: In the event of a labor dispute, the Labor Department, asks the Inspectorate General of Labor to conduct an investigation of the facts reported. If a dispute exists, the matter is referred to the conciliation and Arbitration Service, which in turn, if conciliation is not achieved and at the request of the parties, submits the case to the Labor Tribunal.
Employee Benefits
Every company operating in Haiti must assume responsibility for payment of certain employee benefits. Recent studies of the industrial sector indicate that those benefits might reach 37-38% of the basic wages.
Bonus: Between December 24 and 31 of each year, employers are required to pay to their employees complementary wages or bonuses, regardless of length of service.
Annual vacation: Fifteen days, to which all employees are entitled.
Tax on workers' salaries is borne solely by the employer. It represents 2% of the total labor expenses (wages, salaries, bonuses and other compensation). This tax is due on the 10th day of each month.
Six weeks of maternity leave are paid by the employer. In addition, the employer is required to keep the employee's job open for the duration of the maternity leave.
Health card (Gdes 50 per employee), is paid by the employer. It is mandatory for all employees, and must be obtained within three months of hiring.
In-house medical services are paid for by the employer. Every industrial enterprise must hire a physician to take care of the sick workers.
OFATMA (Worker's Compensation, Health and Maternity Insurance) covers work-related accidents and maternity expenses. The premium is paid entirely by the employer according to the following rates:
2% of the total wages paid by commercial business enterprises; 3% of the total wages paid by agricultural, industrial and construction enterprises, and by agencies of shipping lines 6% of the total wages paid by mining enterprises. ONA (Age and Disability Insurance) must be paid monthly by the employer and the workers. The premium schedule based on monthly wages can be seen in the following table:
Table II : Monthly Premium Schedule for ONA Internal Taxes and Fees
Haiti has a fair system of taxation. The fiscal year runs from October through September. The principal taxes and fees are the following:
Taxes on Income, Profits and Capital Gains: By decree of October 2, 1988, the progressive system of tax brackets applicable to income, profits and capital gains received by individuals and artificial persons was extensively revised. The top bracket being reduced from 50% to 35% and the number of brackets reduced to five, as indicated in the following table:
Table III : Income Tax Schedule
Tax on Workers' Salaries: Paid by the employer at the rate of 2% of total labor-related expenses.Real Property Tax on Buildings (Tax on Rental Value): All buildings, whether or not occupied by their owners, are subject to an annual tax: 6.6% for properties having an annual rental value of Gdes 2,400 or less; 15.4% for those having an annual rental value between Gdes 19,201 and Gdes 21,600; and 16.5% for those exceeding Gdes 21,600.
Tax on Shares: Companies are subject to a tax on shares payable quarterly at the rate of 0.3% of the subscribed capital.
Pro Rata Stamp Tax on Corporate Capital: At the time a corporation is established, its capital is subject to a 2% tax, up to a maximum of Gdes 5,000, unless this corporation enjoys a special status (called Title III status) reserved for corporations which dedicate their services to the agricultural, industrial or transportation sector, and offer at least 20% of their shares to the public.
Certificate and Stock Transfer Tax: At the time of a transfer of shares, the new shareholder pays a transfer tax at the rate of 0.2% of the amount transferred, except in the case of a Title III beneficiary.
Inheritance Tax: Real and chattel property transferred by death is subject to inheritance tax at a rate of 1% to 8% of its estimated value, depending on the degree of family relationship between the descendant and the heir.
Inter Vivo Transfer Tax: Real and chattel property transferred between living persons is subject to a tax rate of 2% to 9% of its estimated value, depending on the degree of family relationship existing between the parties.
Fees for Registration and Transcription of Instruments of Sale: Instruments for the sale of real or chattel property are subject to fees payable by the purchaser at the rate of 4% and 3%, respectively.
Turnover Tax (TCA): By law of September 19, 1982, business transactions effected in Haiti by persons who purchase for resale or perform acts relating to an activity other than salaried employment or agriculture are subject to 10% TCA tax (Taxe sur le Chiffre d'Affaires).
Excise Taxes: TCA has replaced the vast majority of the excise taxes which were collected prior to September 1982; however, certain locally manufactured or imported products remain subject to excise tax (for instance, petroleum products, alcoholic and non-alcoholic beverages, sugar, matches, tobacco, etc.)
Industrial license fee: Businesses working for the export market under the provisions of the Industrial Investment code are required to pay an occupational license fee consisting only of a fixed charge of Gdes 7,500.00.
Business License: The business license is an authorization issued to an individual or a company to enable them to engage in certain business, industries or professions within the territory of Haiti. Industrial or business licenses are paid annually (maximum fee: Gdes 2,500). Individuals and companies not exempt under the Industrial Investment Code pay a business license fee equal, respectively, to 1.5 or 2.5 times the charge for the occupational license.
Operating Permit: Artificial persons pay a charge of Gdes 100 per year.
Identification Card for Artificial Persons (corporations): This card is issued for a period of five years, and must be revalidated annually.
Occupational Identification Card: Any person engaging in trade business within the territory of Haiti must pay an annual fee of Gdes 6.00.
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