Guatemala: Entrepreneurs and Government Debate Tax Act

Both sides are discussing three articles of the Tax Update Law, but so far have failed to reach an agreement.

Monday, May 6, 2013

According to Andres Castillo, president of the Chamber of Industry of Guatemala (CIG), one of the items that is causing disagreement is related to the payment of income tax (ISR) on the tips received by service companies.

The second article concerns a payment that is made up of a 10% income tax on the interest on loans taken out abroad. "The interest payments made for a loan that is taken out outside of the country generates a 10% withholding income tax, we are of the opinion that it should not be implemented, as obviously what the private sector or investor is looking for is access to credit," said the official.

The last point is about the decision made by the Ministry of Finance (Minfin) for the payment of insurance premiums to be non deductible from income tax expenses. "The current law states that you can not deduct this expense, and in the first round of negotiations they said yes, you could deduct it, now the Minfin will not accept these agreements," said Castillo.



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Limiting the deduction of interest from income tax and eliminating the exemption from payment of 15% for dividend distribution between companies are part of the changes included in the project.

The Bill to Improve Anti-Tax Fraud, presented by the Ministry of Finance amends various tax issues that must be taken into consideration by companies operating under Costa Rican law.

Guatemala: Tax on Tips Keeps Standing

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The measure to collect value added tax on tips is being maintained despite the resistance shown by the corporate sector.

"We have reached an agreement with employers and the three articles in which they disagreed have been excluded from the proposed amendments to the Tax Update," said Pavel Centeno, Finance Minister (Minfin).

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The Pros and Cons of the Tax Reform in Guatemala

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The bill provides that no amounts may be deducted from VAT on purchases, and increases the tax base for the payment of income tax.

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