Tax holidays fail to attract capital in Guatemala

The extended exemptions from paying taxes in Guatemala haven't been effective for attracting foreign direct investment (FDI).

Wednesday, June 25, 2008

The 11 billion quetzales (about 1.458 billion dollars) in tax revenues that the government has decided to forego have not achieved the goal of attracting more capital.
A study released Tuesday says that reducing tax breaks and focusing on making taxes to existing business less onerous would be more productive for the nation.
The analysis by the Central American Institute of Tax Studies says the tax holidays are an ineffective strategy for Guatemala.



More on this topic

Opposition to Reforms to Free Trade Zone Law

February 2018

The ICEFI states that the proposed reforms to the Free Zones Law in Guatemala encourage a public investment model based on tax privileges for specific groups of companies.

The Central American Institute of Fiscal Studies (Icefi) reiterates its arguments against continuing an obsolete and ineffective model of attracting public investment based on tax privileges for specific groups of companies and encourages the initiation of the discussion on a general investment law.  For this reason, it does not recommend to the Congress of the Republic the approval of the reforms to the Law on Free Zones contained in the legal initiative with the registry number 5174.

Tax Transparency Between Panama and Argentina  

December 2013

Both governments have agreed to launch negotiations for the South American country to remove Panama from the list of countries with low or no taxation.

From a press release issued by the Ministry of Foreign Affairs of Panama:

"As a result of the official visit to Buenos Aires by the Minister of Foreign Affairs, Fernando Nunez Fabrega, a roadmap has been established that will allow Panama to join the group of countries friendly to Argentina on the issue of fiscal transparency.

How Much is Left of FDI Income?

September 2013

Of the $34.095 billion in Foreign Direct Investment in Central America which arrived in the last 4 years $21.925 million left the region in the form of expenses.

The information comes from a report by the Central Institute for Fiscal Studies (ICEFI), which reveals that the most affected country is Guatemala, where outflows were 1.3 times more than income.

The Lure of Cheap Labor

June 2013

Honduras, Guatemala, Nicaragua and El Salvador attract investment based on the exploitation of natural resources and unskilled, but cheap, labor.  

A report by the Central American Institute for Fiscal Studies (ICEF), reveals that Central America recorded last year $9.70 billion in foreign direct investment (FDI), with Panama and Costa Rica being the recipients of about 60% of these flows.

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