Tax holidays fail to attract capital in Guatemala
The extended exemptions from paying taxes in Guatemala haven't been effective for attracting foreign direct investment (FDI).
Wednesday, June 25, 2008
The 11 billion quetzales (about 1.458 billion dollars) in tax revenues that the government has decided to forego have not achieved the goal of attracting more capital.
Honduras, Guatemala, Nicaragua and El Salvador attract investment based on the exploitation of natural resources and unskilled, but cheap, labor.
Of the $34.095 billion in Foreign Direct Investment in Central America which arrived in the last 4 years $21.925 million left the region in the form of expenses.
No matter who wins the elections, the country will need to resort to international loans to face the crisis.
If Central America does not strengthen the institutions that ensure a stable legal framework and full respect for contracts, foreign investment will not come and national investment will go to other countries, no matter how many incentives and tax exemptions are offered.
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