Free zones: Reforms Stagnate

Two years after having been presented at the Guatemalan Congress, the initiative to reform the Free Zones Law is still awaiting approval.

Thursday, September 20, 2018

In 2016, initiative 5174 was presented to the Congress of the Republic, and has been debated in speeches made by deputies and in meetings of the Economic Cabinet of the Executive Power, none of which have resulted in its approval.

One of the biggest obstacles that the initiative faces is that the deputies requested that the proposal be modified, since, in the opinion of the legislators, the fiscal losses that would be caused by the law reform as it is currently proposed must be reduced.

In regards to this topic Acisclo Valladares, Minister of Economy, explained to that " ... he is still working to present a concrete initiative to the Congress. The proposal said that the balance of "generation of employment, without opening up a fiscal gap" should be made by proposing the necessary locks."

Valladares added that " ...The modifications would include locks so that companies that are already operating and contributing to the treasury do not change their regime and that the free zones do not operate as fiscal warehouses, for example." 

The article reports that "... Although the proposed reform of the Free Zones Law is part of a package of laws that the Executive considers are a priority for reactivating the economy, it will depend on speed, in order to present the modification that has been sought for almost five months and the time for discussion and approval in Congress. If it happens before the end of the legislative period in November, the changes will have an impact on the fiscal estimates for 2019."

See Initiative 5174. (In Spanish)

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