Absence of initiatives to cut spending and lack of dialogue with the business sector are the main criticisms of the tax reform bill proposed by the Executive Power.
In addition to the expected impact on the productive activities that will be affected, such as mining, one of the criticisms of the project is the absence of issues related to transparency in the use of resources, a key issue after the corruption cases revealed in 2015.
Raising VAT from 12% to 15% and lowering income tax from 35% to 30% are part of the reforms that the Executive Branch is preparing to present to Congress.
Preliminary ideas being prepared by President Morales and a group of advisers also include incorporating the concept of world income.Although a formal document has not yet been submitted, the Executive has already started to give details of the proposal to members of Congress.
Presenting a tax declaration will be a requirement for some companies seeking bank loans.
The move is part of the Regulation on the Qualification of the Debtors, which has been in effect since June 17.The companies that will be asked for this requirement are those who "... have a good credit record, low currency risk in the event of abrupt changes in the dollar and have audited financial statements."
The Government is once again bringing to the table the concept of global income, to force tax residents in the country to declare and pay taxes on profits earned abroad.
The Ministry of Finance has announced that"... they are working on a substitute text to a reform of income tax, which would mean a profound change to the initiative which is in Congress."This proposal is for tax any income generated from commercial activities outside of Costa Rica, by those tax residents who stay at least 183 days a year in the country.
Since the beginning of the 2015/16 harvest up until April, a 9% drop in the value of exports has been registered along with an increase of only 0.7% in volume.
The fall in international prices continues to impact the results of the coffee harvest, added to which are "... problems still faced by small and medium - sized exporters, who since March 2015 have had to make an advance payment of income tax on all of their sales, as required by the Directorate General of Revenue (DGI). "
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.
In the absence of a law to renew tax incentives, some 1,223 companies in the maquila sector and the free zone will have to pay income tax in 2016.
After the lapse on December 31 of tax benefits for companies working under these special arrangements, the Superintendency of Tax Administration of Guatemala will officially begin charging ISR, a measure that will bring in revenue to the state in the order of $258.4 million (a Q2 billion).
The Supreme Court has not ruled in favor of the union of private companies, which sought to suspend the collection of income taxes of 1.5%.
Businessmen from different sectors showed their discontent after the Supreme Court rejected the appeal by the Honduran Council of Private Enterprise (COHEP) and announced that the collection of the (ISR) tax will remain in place.
Work is being done on a draft amendment to the Law on Tax Incentives for Renewable Energy Development to include new sources of renewable energy and expand the coverage of incentives for large projects.
From a statement issued by the Legislature:
Agreement to amend Fiscal Incentives Act for the Development of Renewable Energy in Electricity Generation
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