Domican Republic’s transformation into a global production hub, Mexican government’s tax program discussions, and more from LatAm…
Entrepreneur Louis Arriola’s plans to transform the Dominican Republic into a global production hub
Louis Arriola, Brooklyn-born entrepreneur, has his sights set on transforming the Dominican Republic into a global production hub.
Arriola has made his fortune in the telecom industry with VoIP provider LDI Networks, a company valued around $500 million.
In the Dominican Republic, Arriola’s NYLA Media Group hopes to establish a $100 million, state-of-the-art film studio and a 5G network in Punta Cana, along with housing and training for entertainment tradespeople.
The company is working to design its IP to exist across multiple platforms, from games to movies and series, and to stream at least in part through Arriola’s telecom venture and in-the-works 5G network.
“Arriola intends to turn into a production, gaming and data hub for the Caribbean and all of Latin America” (Hollywood Reporter).
Mexican government discusses tax plan for drivers for ride-hailing and food delivery firms such as Uber
This Monday, the Mexican government discussed detailed plans to withhold tax from drivers for ride-hailing and food delivery firms such as Uber Technologies Inc and Rappi. China’s Didi said it would not take part in the arrangement.
The Mexican government has vowed not to create new taxes, but is looking for other ways to increase income; arguing that public revenues have been low relative to other Latin American nations.
According to a representative from Uber, beginning on June 1, the monthly value-added tax (VAT) withholding rate will be set at 8% and the income tax rate will range from 3% to 9%.
Uber responded with a statement, saying
“With this new scheme, Uber will be able to calculate, withhold and pay directly to the Mexican tax authorities the amount of income tax and VAT that its drivers and delivery drivers owe every month” (Reuters).
This new program won’t change drivers’ employment status, which has historically been a key issue for Uber due to the fact that Mexican law allows for retention of taxes without an employment relationship. Historically, drivers have had to declare their own taxes in Mexico.
According to the Mexican Finance Ministry, other companies that have agreed to the new tax program include Cabify, Bolt, Beat, Cornershop, Rappi, SinDelantal and Uber Eats.
Chinese ride-hailing giant Didi was expected to participate in the program, but withdrew last week.
The company announced that it would not join the voluntary program but would consider participating in the future once they fully understand the implications this measure will have for its drivers. Didi expressed that their operations are in “full compliance” with current regulations in Mexico.
Brazlian rental car startup Kovi raises $10.5 million USD
Brazilian on-demand car rental startup, Kovi raised $10.5 million USD in their recent seed round, allowing the company to expand its vehicle fleet from 600 to 5,000.
Kovi’s app offers car rentals, managing entire fleets of vehicles while developing its very own niche.
“Compared to competitors, Kovi cooperates with automakers and small rental companies to lease transportation out to last-mile delivery drivers. Automakers rent cars to Kovi at economic prices and then the firm resells them to users”. (Contxto)
Kovi already contracts cars from Volkswagen’s fleet management extension, FleetSolution.
Leasing companies and small automakers benefit from Kovi’s unique business model that has differentiated itself from traditional car rental companies.
According to Joao Costa, CTO of Kovi and former executive from 99,
“We are in the beginning stages of an urban mobility revolution, like what happened with e-commerce 10 years ago… Carmakers are already realizing that cars will become more than a service but also an asset. They are beginning to adapt to that reality”.
Mexico orders end to corporate tax breaks
This Monday, President Lopez Obrador said in a news conference that the Mexican government will order an end to tax forgiveness for the country’s largest companies.
The President claims that $20 billion in exemptions given by his predecessors was “akin to theft by gangsters”.
According to Mexico’s tax chief Margarita Rios-Farjat,
“Of the firms that benefited from tax breaks totaling more than 400 billion pesos, 58 are listed on the stock exchange” (Reuters).
She added that nearly one third of the companies listed on the benchmark S&P/BMV IPC received tax breaks.
While President Lopez Obrador didn’t identify any of the companies, he did make commentary on the widespread stealing of gasoline from pipelines by organized crime that the government has been working to crack down on.
“It’s like white collar fuel theft… this mechanism has been abused and it will be eliminated”
Brazilian private equity form Vinci Capital Partners raises $1B USD
Brazil’s Vinci Capital Partners announced the final closing of its most recent private equity fundraising round, with Fund III closing with US$1billion (R$3.962 billion) of capital commitments.
Among funds managed by local and independent fund managers, Vinci Capital Partners Fund III is the largest Brazil-focused private equity fund raised in over a decade in terms of US dollars.
Founded in 2009, Vinci Partners credits the firm’s success to the its key competitive advantage of having a “home-grown” team with significant local knowledge, networks and proprietary deal flow in Brazil.
Bruno Zaremba, Partner and Head of Private Equity, said in a press release
“We are very pleased with the significant level of interest in our fund and we’re eager to put this capital to work investing in high-growth opportunities in Brazil” (LAVCA).
Podcast: Private equity firm Abraaj’s downfall
“Everybody believed what he said, and investors followed him” (The Economist)