The private sector has denounced the fact that 67 companies have already closed or are in the process of leaving the free zone regime because of the implications of the Emergent Employment Act.
With the Emergent Act for Conservation of Employment, rules for enterprise zones have changed, prohibiting them from carrying out 42 activities, among them some related medicines, electronics, cosmetics, animal feed, leather and footwear, plastics, toys, building materials, furniture and importing machinery and equipment.
The formal closure of 15 companies in free zones has been reported from October 2015 to date and sixty other users have already suspended their operations.
The problems facing the free zone regime have not stopped increasing since the Emergent Law for the Conservation of Employment came into force, which eliminates tax exemptions which used to benefit companies operating under the free zone regime.
It has been reported that one of the 17 free zones operating in the country has started the process of closing its operations entirely due to the legal uncertainty generated by the emergent employment law.
Companies operating in free zones have spent several months denouncing the serious situation they have faced since the Emergent Act for the Conservation of Employment was implemented, instead of encouraging investment and job creation, it has become a good example of how to discourage investment in a country.
By filing of a lawsuit arguing unconstitutionality the union of free zones aims to once again include the 25 sectors which were excluded from receiving tax benefits under the new law.
The regulations of the controversial Emergent Act for the Conservation of Employment are still under review by the Attorney General's Office and authorities at the Ministry of Economy stated they would evaluate the possibility of modifying it, since the law is already in force and can only be revised by Congress.
Free zone companies denounce lack of legal certainty in the implementation of a new law (Ley Emergente de Empleo), which established a list of activities and goods that they can no longer make or sell.
The Association of Free Zones of Guatemala expects jobs and foreign investment to be lost if there are no modifications to the Agreement 65-89 "Ley Emergente de Conservación de Empleo", a law which came into effect in March.
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