How Excessive Bureaucracy Favors Corruption

The new charges of tax evasion against Aceros de Guatemala demonstrates how the cumbersome procedures for receiving tax returns foster dishonesty among officials and businessmen.

Tuesday, February 16, 2016

The Justice Department and the International Commission against Impunity in Guatemala have accused the company Aceros de Guatemala of committing tax fraud and customs fraud offenses, worth more than the $33 million, and which could be linked to the of customs fraud network dismantled a few months ago known as "The Line".

See statements from the Public Ministry "Impunity and fraud: a network of corruption in the SAT"
See: "Perception of Corruption in Central America" and "Businesspeople Involved in Corruption"

Elperiodico.com.gt reports that "... This case has brought up discussions on the lack of transparency in processes for obtaining tax returns in the country. A process which according to entrepreneurs is slow and sometimes takes years to be made. Rolando Paiz, president of the board of the Guatemala Exporters Association (AGEXPORT) explained that the main problem is the return of the tax credits and the long time it takes, which makes it a very complicated and not very transparent process, which leads to cases of corruption. For this reason there are urgent calls for the process to be made transparent so that the rules are clear and bad practices can be avoided. "

In this regard, Jorge Briz, president of CACIF believes they should ''ensure due process and the presumption of innocence" and he adds:". We are doing it badly if we take a decision against a company without respect to institutional guarantees." According to the explanation given by Javier Zepeda, executive director of the IGC, "they will be respectful of due process and the statutes which say that to make a decision on the expulsion or suspension of one of its partners, they must [first] be convicted in a trial."

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More on this topic

Guatemala: Business Owners Involved in Corruption

October 2015

The General Attorney noted that the number of employers allegedly involved in customs fraud related to the case known as "The Line", could reach 1,500.

An article on S21.com reports that after consulting the Attorney General over the possible flight of businesspeople, Thelma Aldana said that "it has been ruled out because they do not know 'who is going to be cited'.

Guatemala: Corruption is Not the Only Problem in the SAT

May 2015

Problems in making online payments and in the operation of customs have worsened since the fraud network was dismantled.

The dismantling of the network of officials taking advantage of their positions to commit customs fraud has worsened the problems that often affect businesses which have to interact with the Tax Administration.

Guatemala: CICIG to Remain Active

April 2015

President Perez Molina has announced he will be making a request to extend until 2017 the mandate of the International Commission Against Impunity in the country.

From a statement issued by the Government of Guatemala:

President Otto Perez Molina has announced the decision of his government to ask the United Nations for a new mandate of the International Commission Against Impunity in Guatemala (CICIG) so that it will continue in office until 2017.

More CICIG ... and Not Only for Guatemala

April 2015

The dismantling of the network of corruption at the highest level of the taxation system shows the validity and the necessity that Central America has for having bodies such as the International Commission against Impunity in Guatemala.

EDITORIAL

Guatemalan business leaders have been talking about the matter, after the release of the CICIG updates which shed light on a group of criminals who, from the highest level of customs administration, engineered smuggling and tax fraud in the country. See: "Customs Fraud Network in Guatemala".

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