The Varela administration will be submitting a bill so that the company that wins the concession for the construction and operation of the port in Corozal can enjoy the same tax benefits as other port companies in Panama.
An article on Panamaamerica.com.pa reports that "... According to the administrator of the Panama Canal, Jorge Quijano, the National Assembly could be presented with the proposal in July, in an effort to provide the same incentives that ports enjoy today, to the company which wins the tender to build the port of Corozal. "
From 2014 to 2015 the size of central governments remained constant at an average 18.5% of gross domestic product (GDP).
From the introduction of the report: "Macrofiscal Profiles: 6th Edition" by the Central American Institute for Fiscal Studies (Icefi):
2015 proved to be a period of low tax advance for the Central American region. On average, the size of central governments remained constant compared to 2014, at 18.5% of gross domestic product (GDP). However, not all nations maintained this trend in the same way. While the governments of Nicaragua, Costa Rica and El Salvador, some of the largest fiscally in the region, continued to increase their participation in the economy, reporting increases of 1.5, 0.7 and 0.7% of GDP, respectively, the Government of Guatemala - one of the smallest in the world became even smaller, being reduced by 1.2% of GDP. For its part, the Government of Honduras reported a small decrease of 0.2% of GDP, fully converged with its policy of fiscal austerity, while that of Panama had a transient contraction of 1.4%, reflecting a reorganization established by the new administration and that, according to the plans for 2016, will be reversed in full.
The legislature has finally passed the Employment Act granting exemptions for 10 years for call centers and maquilas operating in the country.
From a statement issued by the Congress of Guatemala:
With 113 votes in favor, members of the National Emergency Congress approved Decree 19-2016, Emerging Act for the Conservation of Employment, which exempts import tax for 10 years for call centers and maquilas operating in the country .
Reforms have been made to a proposed Emerging Act for Conservation of Employment in order to maintain tax incentives only for textile sectors and call centers, leaving out other activities that were previously exempt.
Deputy Ovidio Monzon, president of the Congress Working Committee confirmed that the aim is to maintain the privileges and exemptions for textile companies and call centers. The other companies that had benefited the regime will be left out. "Our concern is for the more than 150,000 jobs that these sectors provide to Guatemalans to be maintained," he said.
The organization has once again supported the initiative that the Costa Rican government has control over the register of shareholders of companies classified as large taxpayers.
"The state must have in its hands information on the shareholders of companies and where dividends go to. In a democracy like this it is very difficult to understand how, who and why people can oppose the state having that information, " said the secretary general of the Organisation for Economic Co-operation and Development (OECD) Angel Gurria to Nacion.com.
Noting that the country´s tax burden is only 10% of GDP, the Minister of Finance has announced a review of 110 laws on subsidies, exemptions and distribution of resources.
Evoking the Panamanian commitment to achieve the Sustainable Development Goals of the United Nations for the elimination of poverty, the minister Dulcidio De La Guardia has emphasized the need to increase tax revenues, which in Panama are "... the equivalent of 10% of gross domestic product (GDP), while in medium developed countries they are equivalent to 20% and in those of the Organization for Economic Cooperation and Development (OECD), they are 30%. "
The mandatory use of the Exonet system has been established for carrying out procedures related to tax exemptions.
Decree No. 39037-H Ministry of Finance:
"Article 9. Mandatory use of EXONET System. One month after the publication of this decree, the EXONET system will be compulsory for all beneficiaries applying for tax exemptions to the laws mentioned in this article, as well as their legal representatives and to all those classified as system users and who are involved in the management and processing of applications for exemption.
A bill creates the regime of "Social Solidarity Economy", which creates exemptions from virtually all taxes for companies registered in the scheme.
The vice president of the Chamber of Commerce of Costa Rica, Victor Ruiz, said that "... the model of the ESS (Social Solidarity Economy) represents unfair competition against formal private companies and contributes nothing to the serious fiscal problems of the country because it reduces the question of tax collection. "
If free zones -with their tax breaks and other privileges- are good for the economy, why isn't the entire country made into a free zone?
Why not provide companies founded with Central America capital the same benefits and privileges enjoyed by foreign firms operating under free zone regimes? The job creation and contribution to the economy that can be made by companies in free zones because they enjoy these privileges should be able to come from business founded with Central American capital as well, which in contrast to foreign firms, have to deal with excessive regulations and bureaucracy in the States of Central America.
The problem with income tax exemptions is that they favor high-return projects that would probably have been made anyway.
From an IDB document entitled "The effectiveness of tax incentives: The case of export processing zones in Costa Rica, El Salvador and the Dominican Republic".
Introduction and Summary
Policies encouraging investment make use of a variety of instruments. On the one hand, there are reductions in the tax burden on companies, such as development loans, import protection and export subsidies and, on the other hand, government measures aimed at correcting information externalities or coordination problems that may prevent a company from accessing new markets or developing new technologies by itself.
An agreement has been made to postpone until May 25 the effectiveness of various lists of tax breaks for the purchase of raw materials in order to work on a single document and add new products.
At a meeting between representatives of the government and the private sector it was agreed to extend the validity of the lists for tax exemptions in order to negotiate within that period the inclusion of other products and the creation of a single document. It was also agreed to remove fines for importers starting from 1 April.
Exemption from taxes and municipal fees are some of the incentives that the Mayor of the Central District of Tegucigalpa is granting to those building parking lots in areas of high road traffic.
Other incentives being offered include the payment of only $0.05 per building permit, regardless of the size of the land where it the parking lot will be built. Also included is "... exemption on payment of the fee for Sales Volume or property tax over a period of between three and five years."
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