With the hope of getting exemptions reinstated, maquila sector union representatives are calling on a thousand companies to avoid the payment of the income tax until the exemptions are reactivated.
The Superintendency of Tax Administration (SAT) confirmed in early January that both administrators and users of free zones and maquilas (by decree 65-89 and 29-89 respectively) must pay income tax (ISR) for the fiscal year 2016.
The transfer of three Korean operations operating in the country and an uncertainty in fiscal terms for the new period, have kept the sector in suspense.
Historically Guatemala has been one of the most competitive countries in the textile industry, but the legislative backlog in extending incentives to maquila companies and free zones regimes, and the departure of three Korean companies in the country in the last year, have placed the sector in a state of uncertainty.
Although in recent years the more expensive bunker fule has been less and less used to generate electricity, the energy cost for manufacturers has increased by 44%.
Data from the Wholesale Market Administrator (AMM) shows that the energy generated from renewable resources went from covering 47.3% of demand in 2007 to 60.8% in 2012. Besides this electricity generation with bunker fuel decreased going from 36.4% to 20% in the same period.
Between January and May, recycled plastic exports generated revenues of $2.2 million.
Jalil de Leon, executive director of the union of plastics companies attached to the Chamber of Industry of Guatemala (CIG), said that the domestic industry is also taking advantage of this market, a sector which reported growth of 12% in terms of the volume of what is recycled and transformed. "Because of the interest shown in the industry, new businesses have also opened up in order to engage in the activity. We can say that so far this year, 5% more companies have been reported," he added.
Textile and apparel production is threatened by the lack of threads, cotton and canvas.
Since the beginning of the year, the textile industry has experienced a shortage of raw materials. The situation worsened in the last month, causing delays for exporting and reduced supply for the domestic market.
"Selim Guatemala S.A." was one of the few producers of colored yarn in the country.
The company moved its Guatemalan operations to Singapore, which employed 100 people.
Alejandro Ceballos, president of Vestex, the Apparel and Textile Commission, told local newspaper 'El Periódico': "...the company had been looking for financing for a long time, but finally decided to relocate to Singapore".
At the fair which ends today, Guatemalan garment companies have received purchase orders for $40 million.
As is customary, business deals will be completed during the weeks following the even which could total $40 million.
Orders have been made for clothing, raw material purchases and machinery.
Urías Gamarro wrote in his article in Prensalibre.com: "Carmen Sowa, administrative manager of the Jerry Leigh Company, signed a contract for national companies to supply 200 thousand garments per month during the second half of the year. In turn, these garments will be sold in stores like Wal-Mart, Sears and Kemmore."
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