#820 – The Expat Files: Technology, Culture, and Taxation in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now as I wonder Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started You know traveling around Latin America this holiday season I see that everyone here is starting to get addicted to their devices Sure, there's lag time for everything sometimes very long sometimes very short in some things very few things

[00:47] No lag time at all, but Latin people I'll tell you there's almost no lag time with social media because it's free Yes free or virtually free as long as you have a somewhat smart device and the battery is charged anyway And you got free Wi-Fi coming at you from everywhere In other words when those dickheads at Google came up with that app what's up, you know, Google Facebook Gmail Google Maps Yahoo Google Translate almost all the social media crap is intertwined and shared. It's an incestuous relationship You know between a few big corporate giants like Google Twitter Instagram and fake book and the NSA Which is why all your data gets handed off to everyone and why you get cross-linked and cross

[01:35] Referenced ads coming out of your ears like crazy. But aside from that I'd say that one app WhatsApp as completely Revolutionized social media here in Latin America and brought everyone nearly up to speed with the first world In other words, what's up has virtually eliminated lag time for Latin's regards to social media The fact is in the last six months I don't think I've met a Latin person under 30 35 even 40 who doesn't have what's up Instagram Facebook and Twitter But it's really what's up that spend the key to putting social media here in Latin America on steroids by the way the name What's up? What a shit for brains name, huh? Anyone who first hears it whether a Spanish or English speaker has no idea how to spell it

[02:22] That said if you're here in Latin America and don't have what's up You just won't have any Latino friends at all outside of your next-door neighbors because as soon as you meet someone the first thing They're gonna say is give me your what's up number and here's the weird thing even shoeshine boys and ladies with Canastas on their heads toting two kids in a knapsack have what's up though Of course, they won't have a real computer meaning they won't have an email address. Why would they well? In fact, they do have an email address even the shoeshine boys Because to have a what's up app installed you have to have a gmail account It's part of a signup process So the coffee pickers shoeshine boys and tortilla ladies will have an email address But they'll never use it because you sort of need a big screen to use email with any efficiency

[03:12] Otherwise, it's just a big pain in the ass and what's up has precluded all that since now here in Latin America What's up has become a convenient and virtually free telephone service, too So then you might say well What's the shoeshine boy or the tortilla lady with two kids in a papoose? I know about installing an app or even playing around with all the crazy add-ons messages utilities Internet connections, etc stuff you have to deal with when you get a so-called smartphone Look, you got to admit if you just picked up a smartphone today, you'd be confused as hell. There's a huge learning curve to it I mean ask your grandma but here in Latin America, it's like this even a completely illiterate pinhead

[03:57] Like George Bush jr. Could walk into one of the big five internet slash cell phone providers and say hey I want to buy the most basic phone you have that'll hook me up with what's up and the attendant will take you doe and you Can get a what I call retarded smartphone for around 35 bucks here in Latin America now one That's capable of handling what's up and ways and pretty much anything except it's a little slower as less memory And there's a tiny little screen and the camera won't have 16 trillion Godzilla pixels They won't have a brushed titanium candy colored finish no glitz no show no glamour But it works and you know, what's cool about those 35 dollar retarded phones is the battery lasts a couple of days Hey, I have one and I like it

[04:42] But remember here in Latin America, it's all about the show and you are judged by other Latinos By the kind of phone you have or more simply you are basically what model your cell phone is Unless of course, you're a grangle. We're considered eccentric We can have our tote just about anything and we're accepted and no one really judges but for Latinos themselves It's completely different the higher your iPhone or Samsung model number the cooler you are and of course Latin's especially Latinas Can't leave it at that They got to get all kinds of special little doodads and stick-ons and glow-in-the-dark glittery attachments In fact, I know a Latina whose cell phone has clip-on whiskers like a cat Oh and synthetic fur and mirror stick-ons and clip-ons are big here, too

[05:30] But those furry ones man talk about unsanitary, you know the story people put their phones down on the table at Starbucks McDonald's or burger Yeah, I said burger. It's what they call Burger King down here burger Anyway, someone's bound to spill a coke and when your cell phones embedded in a slab of fake fur Then what I don't buy another furry cell phone case Anyway here in Latin America you are what your cell phone model number is There's no two ways about it and me with my retardo phone I can't tell you how many times a Latin person has said to me. Why don't you have a nice phone? You're a gringo and sometimes of course, they don't say it But you can see it in their faces and when they mention it, they never say it rudely It's just they're surprised because they know gringos could fork out the dough for a truck full of iPhones in a second

[06:19] And you know, it's a never-ending mystery in the minds of Latinas Anyway, why us gringos with all our supposed dough aren't dripping with real jewelry and driving new range rovers However, I have to tell you Infrequently a black guy from the hood will come down to a place like Costa Rica Cancun Expanding his horizons on a tourist trail trip to Latin America sporting a gold rack heavy gold chains and rings Ass-crack pants and all and you know what more often than not when he wanders off the reservation That is the all-inclusive hotel package. He gets mugged not kidding I have heard that story more than a couple of times Anyway when questioned by a Latino about my own retardo phone preferences my comeback

[07:05] Well, I smile and I say how many times have you had your phone stolen? Well, you'd be amazed at the answers. I spoke to a Latina just two days ago asked her that question She said five different times and she's now toting a new iPhone 7 They'll never learn and then I say, you know how many times I've had my cell phone stolen in the last 25 years Zero Though I did have a cell phone stolen around 26 years ago And back then people weren't stealing phones at all The only reason the guy got it is because he stole my briefcase and it was in it So the fact is Latinos and Latinas are well connected on social media And if you don't have what's up You are according to the shoeshine boy and the lady with two kids in a papoose and a canasta on her head They've been in the dark ages

[07:52] Although it still completely blows my mind that so many Latinos and Latinas People who don't have cars ride the chicken bus don't even have hot running water or a clothes dryer are talking on a $500 galaxy 9 or even a high-end iPhone think about it. That's two to three months of the average salary for a Latin American grunt worker Put another way It's the equivalent of the average American spending two or three months of his or her salary around 10,000 bucks for a cell phone and you got a factor into it that it's gonna get stolen a couple of times That's just the way it happens here And where does it get stolen almost always on the chicken bus or public transportation? In fact, that's what you hear from the cops and the authorities all the time and you read it in newspapers, too

[08:40] 90% of all the thefts occur in buses at bus stops and on or near Passarellas in dodgy neighborhoods those neighborhoods that gringos and expats Just don't live work play and or hang around it the exception being the gringo backpacker crowd Why because that's with living is extra cheap. So then what's a passarella? Well, those are overhead pedestrian walkways that get you from one side of a big highway to the other without Having to make a run for it dodging traffic You'll see those passarella things every half mile or so along a highway when you're in a city a lot of people just skip it And decide to dodge the traffic which is why so many pedestrians get wiped out with such regularity

[09:27] In fact yesterday, I got caught in a big bottleneck and sure enough There was a dead guy laying in the street cops standing around gapers everywhere and the nearest passarella only about a block away Like I said, a lot of people just take their chances even see mothers dragging their young kids across highways, too Yep, Darwin was right. All right back to this dumb phone smartphone retardo phone thing There's something else that doesn't make sense Note that here in Latin America, you can buy almost everything on the payment plan except cell phones Why because robbery is such a big issue and no one's gonna continue payments on a dead horse, right? However, if you're making above the minimum wage crowd and have a credit or debit card You can walk into a cell phone office by a contract plan for usually it's 18 months and plans down here

[10:19] Anyway, give you the cell phone for free you buy a high-end plan to get a high-end cell phone for free But it's of course built into the cost of that 18 month term and when you get on a plan They'll link it to a credit card or a bank account. So there'll be automatic monthly deductions So then what happens if you get the phone stolen? Well for a couple extra bucks a month, you can buy theft insurance It's often included in the plan However, it's a fact here in Latin America people who make more than minimum wage don't live in crappy neighborhoods Don't use pasarellas because they have cars though mostly Boxes therefore they don't ride chicken buses and don't mix much with the sweaty masses So they're much less likely to get robbed even though They generally stick out like sore thumbs because Latins like to display wealth

[11:08] Which makes a person a bigger target, but that doesn't seem to concern people much They figure it's worth the risk Especially considering the case of a 27 year old college graduate with a master's degree who's had her cell phone stolen five times Oh, and if you're down here and some local does happen to tell you the story of how he got his cell phone robbed Ask him where it's pretty much a guarantee. It happened in a bad neighborhood on a chicken bus a Passarella or at a bus stop. All right, let's take me a guy who hasn't had his cell phone stolen in more than 25 years If you asked me when the last time I was on a chicken bus standing at a bus stop Walking across a passarella or hanging out in a skanky neighborhood. I'll tell you it's been years since I've done any of that So it's not to say I don't drive through bad neighborhoods, but tell you it's not like Chicago

[11:55] You can drive through skanky bad neighborhoods here in Latin America No one's gonna come up to your car and bust your window and haul you out Fact is you can drive through ninety nine point nine percent of bad neighborhoods During the day anyway and never get ass. Oh, which is absolutely not true where I come from, Chicago That a neighborhoods there I can tell you if you got your windows rolled down or you're wearing the wrong colored hat you ain't coming out because you know In Chicago neighborhoods were gangs rule yet the wrong colored tennis shoes or hat They'll kill you because that's an opposing gang's color, but where were we? Oh, yeah talking about smart dumb Retired of phones and apps right and how that one single app was up has brought all of Latin America Into the age of social media with almost zero lag time

[12:44] In fact, it seems these days with all the thousands of apps out there It's an app for everything or so you'd think well the other day I was sitting around shooting the breeze with a couple of expats and one of them a young guy 24 He said Johnny you're right everyone under 30 35 even 40 are totally addicted to the devices And he said there is an app for everything. There's two apps for everything In fact, there are apps for things we didn't even know existed However, I said I can think of three things. They don't have an app for number one There ain't no app for job satisfaction number two. There ain't no app for happiness number three There ain't no app for success especially Relationship success then I said and another thing there are a million apps out there

[13:34] For dieting to lose weight get healthy and all that but it doesn't matter how many of those things you download The app won't make it happen So for all you heavy social media and app users you're somewhat deluded into thinking you've got the answers at your fingertips Whereas these days most social psychologists will tell you our devices are so called conveniences are doing just the opposite Making lives more complicated and things less convenient and here in Latin America much more than up in the states and in the first world the conveniences the devices cell phones and such are setting the stage for a lot of Jealousy and class envy with a high monetary and social and even criminal cost, too Because think about it here in Latin America if you want

[14:22] Let's say a Samsung 7 you can go to a legit cell phone outlet and buy one for or 500 bucks But you can also buy that phone at any one of the thousands of little corner kiosks Where you might pay half of that. Wait a minute. How's that possible? It's possible because there's a huge business and stolen phones that have been cracked and resold to these little kiosks So in large part the market is driven by people who've had their phones already stolen Who don't want to buy a brand new one because it's too expensive They can't afford it So they go to the corner kiosk and buy the same phone for half price knowing full well It's likely a phone that's been stolen and cracked. Who knows some of those people could be buying their own phone back stranger Yeah, then this says a lot. I've noticed that almost every Latino and Latina who doesn't have a car

[15:11] But has a nice smartphone. I'm talking about Latins who use public transportation now That means they can't afford to have a real 18 month payment plan because they've got no credit That means there's a good chance they bought it at one of those kiosks. It's probably stolen and cracked now As far as actual phone time and internet data time there on the pay-as-you-go plan You've heard me talk about that before that means you have no monthly plan You just buy phone minutes and data and use it as you go now Remember when you ride the chicken bus or public transportation, you're living from day to day Most minimum wage earners can't afford a contract plan your pay-as-you-go So what normally happens when your time runs out and you have to rebuy minutes at a local kiosk

[15:56] Most of those public transportation chicken bus riding minimum wage earners Don't even have the extra money to pump up their data plans. They've just got possibly lunch money Even though in some Latin countries you could get a week-long Unlimited data plan for something like three bucks But three bucks to someone who makes $300 a month is like 30 bucks to a first world person Which is why so many Latinos with really nice cell phones aren't running on a data plan or even a prepaid Plan at all if they're just going from Wi-Fi spot to Wi-Fi spot because that always works That's why you see so many people texting like mad at malls and food courts and people here realize that What's up, which is the heart and blood of social media here in Latin America doesn't need a plan at all

[16:43] You can just keep sucking off other people's Wi-Fi and what's up works exactly like having a telephone too As long as the other person has what's up and you could have conference calls and live video feeds Everything you might possibly need and virtually free. That's why everyone and his incarcerated brother has what's up down here Now you might wonder how'd I find all this out? Well, I'd say just in the last six months or so every time I'd say to a Latin person Give me a call or I'll call you he'd say give me your what's up and I'd say I don't have it Just call me on your regular phone and you know what I'd say at least half the time that person would say oh You don't have what's up. Hmm. You call me then because I don't have any extra minutes now

[17:29] You know here in Latin America if you don't pay your minutes up You can still receive calls because you just can't make them which is why everyone uses what's up because you can use it anywhere There's Wi-Fi and thus the reason why what's up has taken over Latin America and get this It's spread like such wildfire and it's taken up so much internet bandwidth You'll find at certain malls and certain Latin airports where they have free Wi-Fi, of course You'll sometimes get a pop-up message that says welcome to our free Wi-Fi service. It works for everything but What's up? Why because so many people will get on it'll clock up the local servers. So what's my opinion on what's up? Well, I'll tell you one thing It's really great when you're traveling because then you don't need those expensive phone roaming services

[18:17] Which can cost you up to ten bucks a day You know that if you travel outside the country because it really is like having roaming The only thing is the other person who you're gonna call has to have what's up, too Not a problem in Latin America because everyone has what's up but the rest of the world not so sure in fact It's so popular. I'm hearing most Latinos don't even use their email much anymore at all Some people tell me they rarely check it. In fact, I've been told more than once by Latinos Just lately Johnny when you send me an email shoot me a what's up first advising me so I can check it now Of course any social media service has big privacy issues, you know that but truth be told I've never met a Latino or Latina that gave one hot damn about privacy

[19:04] That is until they've become a statistic a victim of identity theft or credit card fraud Then they whine like big babies even though they set themselves up for it You know Latinos and Latinas both put everything on what's up everything credit card numbers bank information nude photos drunken binge shots secret love messages to people they're cheating with Thing is this is another thing. I don't like about what's up those messages never really go away Neither do your contacts once you've set up a contact with someone else you could never really get rid of them You can block them and prohibit them from sending you messages, but you can never really delete them permanently as a contact

[19:49] Anyway, the bottom line is after all that ranting when you come down here to Latin America Get that plan be going whether it's part-time or full-time You're gonna have to install what's up If you don't you just won't be able to communicate with anybody your doctor your lawyer your insurance guy Mechanic maintenance guy cleaning lady. They're all gonna say here's my what's up What's yours which brings us to this rather shocking news article? entitled ominously US expats face hammering from new tax rules Let me give you some of the highlights It starts by saying the for employee business of Travis Baldwin who hasn't lived in the US for nearly a decade It's about to get hammered by a pair of tax provisions that were aimed at corporate behemoths like Microsoft

[20:38] But now affect individuals to a Republican law signed by a president Donald Trump Last December created new taxes for corporations that have shifted their profits offshore for years But unlike other provisions in the bill these international changes don't set a floor on The annual gross receipts for when they kick in when who owns a small industrial design company in the United Kingdom Is on the hook even though he says his business never made more than a hundred grand annually the two new taxes that US expatriates who own businesses abroad are most concerned about is this a one-time repatriation levy of about 17 and a half percent on any foreign profits and

[21:25] What's called the guilty tax? What a name? A global intangible low tax income provision on expat foreign profits going forward The new law is terrifying says Baldwin who's added that he's had trouble finding a local tax attorney. We even Understands anything about the new law. It's gotten so complicated He said I feel like I have this burden that no one else has Then it goes on to say the new tax changes are likely to convince many expats That it's no longer worth keeping their US citizenship Then it says nor at Newton Miller who helps run the tax committee for American residents overseas Says that many US citizens who have not been paying taxes at all on their foreign-earned business income

[22:14] Some who have lately been thinking about becoming compliant Surely we'll decide after this new law to stay off the radar completely. She said it's hard to know exactly How many expats will be affected since the Internal Revenue Service doesn't release numbers of how many expats actually own? businesses abroad the Aaro a Paris-based association of expats says they estimate there are nearly 9 million US expats with an unknown portion of that number owning businesses some above board and some under the radar Then it says expat business owners often pay themselves a small salary That's only a fraction of their profits keeping the rest in their companies for retirement or a rainy day

[23:02] However, the new tax laws it stands would require expats to pay the one-time Repatriation tax on their profits even though in reality the money is never returning to the US at all to pay those taxes Many expats will have to give themselves a large dividend from their business triggering more local taxes too because of course if the expat business is on the books in another country They are paying taxes on their business profits in that country, too Now in the case of mr. Baldwin, he said he found out about the tax changes from a Facebook group for expats He hired a firm in Florida that specializes in expat tax issues But the firm hasn't yet told them how much he'll owe for sure so far The firm has estimated his new tax bill and the preparation costs just for next year could total an additional

[23:53] 20,000 bucks and again, he said his business has never made even a hundred grand a year Then the article says however struggling expat business owners got a little win last month The IRS said it would let businesses that owe less than a million dollars in Repatriation taxes wait until next year to pay the first installment payment had originally been due in 2018 then it says Alicia Vincent who runs part of a furniture business in Montfort Lomare France says she's written letters to lawmakers in her native, Texas state and Recruited family and friends living in that state to join her She said her accountant who's charging about

[24:39] 350 bucks an hour to calculate that new tax estimate her company's effective tax rate will now be get this nearly 70% between France's high taxes and that of the new US tax law making it hardly worth being in business at all She says quote, how could you pay? 70% in Effin taxes you won't make any profits. We'll have to close up our business It's just not worth it anymore She said and then there were a number of other expat businesspersons who were interviewed for this article And many of them have said off the record. It's clear. What's gonna happen. We're gonna become tax

[25:26] Violators, they of course asked not to be identified Enough said about that except to say that's why so many gringos and expats I know prefer to have internet based businesses That is they don't have a brick and mortar office that way They can run their businesses from anywhere and do it any way they please and as far as taxes go Well, it's the honor system, you know When here is a little email made me chuckle Johnny. My name is Julie. I'm living in Chile husband's a successful Businessman works for a transnational I'm 50 something now But in fact in my high school on college days, I was the prom queen and all that in fact I have to admit looks really did open the door for me

[26:11] But once I got in I had to show I had a brain and the purpose of this email is that I'd like to say For all those gringas and expat ladies who come down the Latin America and are upset at the fact that Latin men will whistle and hiss when you walk by well I'd just like to say if you're outraged by all that and you're in the feminist camp. Don't worry It will stop now that made me laugh, but she also goes out to say that Johnny You know, there's also here in Latin America lag time in the hissing and hooting department, too So ladies whether you love or hate that sort of thing Yes, it will stop but some years later than you think or even some years later than you deserve then she says and Johnny I understand that up in the United States. Anyway, the so-called quote male gaze

[27:00] Gaze is Considered sexual harassment if it goes over three or four seconds. I've read that Well for sure if they institute that down here every single Latin guy I'd be doing time Oh, and I understand in California now if you date someone You have to get verbal permission every step of the way That is you have to ask permission first to hold hands to hug then to kiss Well, once again, if they were to try that here in Latin America, everyone would be under house arrest You've been listening to the expat files living in Latin America If you need some help with your own plan B, you can schedule a one-on-one phone call with me But first download my free plan B questionnaire at www.thenewexpat.com

[27:46] Better yet if you want to get your plan B going from right up there in the States Just sign up for my 9-hour expat essentials course Get the perfect plan B blueprint by going to the expat files comm Academy