Companies with regional ambitions face fiscal headaches

Differences in the tax systems of Central American countries are a barrier to companies that seek a presence throughout the region, Allan Saborío, director of the Deloitte consultancy said.

Monday, May 12, 2008

The rules are different in each country, and few companies are able to make full use of the advantages on offer, or are forced to learn by trial and error, Saborío said.
Many Central American companies are becoming regional players, but they hit fiscal headaches because each country has its own system and rates for remittances, sales tax and others, he added.

More on this topic

Comparative Ibero-American Tax Guide

May 2010

Deloitte Panama published a complete tax guide comparing the most relevant fiscal matters between Ibero-American nations.

The document includes the following topics:

0. Comparative Summary
1. Tax on company profits
2. Tax on income from employment, economic activities, capital assets, real estate, and capital gains of individuals.

Fiscal Policies and Systems

March 2010

High taxes and evasion eroding economic growth in Latin America and the Caribbean.

New IDB study says governments must simplify tax systems and reduce evasion

Complex tax systems and widespread evasion are distorting investment decisions by companies in Latin America and the Caribbean, reducing the efficiency of markets and preventing governments from investing in infrastructure, education and other key public goods.

Central America: More Taxes Necessary

November 2009

"If we want first-world services, we must pay first-world taxes" - Laura Chinchilla.

The tax burden in Central America hovers between Guatemala's 9.9% and Nicaragua's 17%. In Brazil its 29%, whereas Scandinavian countries have tax burdens around 40%.

Tax collection has been hardly hit by the economic crisis, making evident the need for fiscal reforms to solve the structural problems of the region's tax systems.

Sieca: World Crisis creates uncertainty in Central America

October 2008

The financial crisis in the US is creating an atmosphere of uncertainty in Central America and the magnitude of the impact it will have in the region still cannot be determined.

According to the report, the financial crisis in the United States can have effects such as "a reduction remittances to families, which in 2007 was at $14.19 billion, and a drop in the construction industry," as many immigrants are building their homes in their countries and they may see a decrease in their income. Thirdly, Central America will see a reduction in exports to the US as a result of the economic contraction, and fourth, the region will see a decrease in foreign investments.

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