As a result of the tax reform implemented in February 2019, at the beginning of 2020 the prices of beverages increased, mainly soft drinks sold in plastic containers.
In February of last year, the Ortega regime approved the reform of the Tax Agreement Law, which consisted of increasing income tax from 1% to 2% for medium sized companies with higher incomes, and from 1% to 3% for large taxpayers.
Experts warn that the draft law which aims to raise income tax and convert sales tax into value added tax might not be approved for two years.
The lack of consensus between the Ministry of Finance and the President of the Republic, Luis Guillermo Solis, is sending mixed signals on some aspects of the tax reform. One example in the case of corporation tax, an issue that the president himself has stated he disagrees with.
Requests have been made for the clarification of which telecommunications services are to be taxed with VAT, since it is unclear whether it is information services or telecommunications which would be taxed.
Currently telecommunications services are charged sales tax, even though the Costa Rican government aims to close the digital divide. With this new reform proposal, a Value Added Tax (VAT) of 15%, "would be incurred ...
The Executive is proposing to reform the scope of the law and charge a "registration for coffee production fee" of $0.50 per hundredweight.
Despite the outbreak of coffee rust, the debt of $200 million and the funding crisis facing the coffee sector, the Salvadoran government intends to collect more taxes. Currently the bill raised by the Executive Branch is being analyzed by the agricultural legislative committee.
The Costa Rican Chamber of Food Industry notes that new taxes will lead to the informalisation of the activity.
From a press release by the Costa Rican Chamber of Food Industry (CACIA):
An encouragement to informal work and unemployment, is how the Costa Rican Chamber of Food Industry, CACIA, sees the proposed Fiscal Consolidation Programme of the Government, as part of an economic situation which is in no way adequate for the collection of taxes.
The fiscal consolidation document presented by the Ministry of Finance of Costa Rica proposes considering surplus capital distributed by cooperatives and solidarity associations as passive income.
"Capital passive income, is, for example, dividends, mutual funds and bank deposits, among other things, which currently have different rates. The initiative proposes a single rate of tax for them. "
The tax system in Costa Rica is chaotic, complex, unfair, disproportionate, inequitable, and ineffective, which affects development and competitiveness, encouraging tax evasion and smuggling.
In an analysis piece in Elfinancierocr.com items, Danilo Villalta notes the need for comprehensive reform of the Costa Rican tax system, starting with a "strategic planning process" to approve a plan "agreed with the various political forces, and subsequently according to that plan, develop bills with the participation of specialists in order to have legislation that is clear, transparent, simple and easy to apply by the administrator and the taxpayer. "
It would affect the banking sector in El Salvador, lowering the volume of transactions in the financial system, and increasing the price of money.
The Salvadoran Banking Association (Abansa) is studying a proposal by the Ministry of Finance to tax the issuance of checks and electronic transactions, but its representative Marcela de Jimenez has already indicated her criticism, noting that it has not been ruled out "that this tax will affect the banking system, ie, there will be a decrease in the level of resources that are traded through the financial system and therefore an increase in the price of money. "
The bill proposed by the government will levy a tax of 0.25% on the amount of electronic transactions and checks.
The bill entitled "Law on Taxes for Financial Operations", introduces a tax on checks and electronic transfers and a tax to control liquidity that applies to those transactions amounting to over $3,000.
The project must still be approved by the Legislature and signed by the President.
The Supreme Court has rejected a constitutional challenge filed by employers against the 1% tax levied on companies' gross revenue.
Latribuna.hn reports that "In April last year, Congress approved the legislation which amended Article 22 of the Income Tax Act, to improve government revenues, and the decree was issued on 31 May 2011 in the official Gazette. "
If passed the new reform would create taxes for financial transactions, unproductive properties and newspapers.
Elsalvador.com reports that Carlos Caceres, head of the Ministry of Finance stated that "The President (of the Republic) has instructed the Ministry to evaluate a proposal acceptable to him and to society, that is politically acceptable and not damaging to the productive sectors and to the poorest people. "
The Honduran Council of Private Enterprise is warning about a potential loss of competitiveness for companies investing in the country.
Through its president, Aline Flores, the COHEP (Honduran Council of Private Enterprise) is opposing a new tax package sent to Congress by the government.
According to Flores, the "Law of rationalization of tax breaks and control of public spending in order to strengthen public finances" will affect the competitiveness of businesses and the investment climate, which could be a disadvantage in terms of regional competition, reported LaPrensa.hn.
In light of the failure of the first draft of the tax reform, the Government has announced more taxes, the end of exemptions on luxury goods and tax on remitted abroad.
After the defeat of the so-called 'Solidarity Tax Act' in the country's Supreme Court, the Government has been forced to re-do their fiscal and tax plans and launch a new legal package in Parliament.
The Sala IV has rejected the tax reform bill that was approved in the first instance in Congress, citing procedure errors in the legislative treatment.
The court decision means, in principle, that the bill that the government calls the "Solidarity Tax" will be returned for consideration by congressional representatives and it will therefore be at least another four months before it can be approved.
The recently approved tax reform seriously affects operating conditions for this market.
The recently approved tax reform prevents vehicles which are more than 7 years old from being imported and establishes a tax known as First Registration of Vehicles (Iprima in Spanish), representing a rate calculated on the estimated market price and not the import price.