Tax Incentives to Encourage Tourism

In Guatemala, Congress is discussing a bill that seeks to increase the arrival of flights to the country through tax incentives for airlines, which would be coupled with the elimination of improper tax charges.

Thursday, November 7, 2019

On August 14, 2019, the President of the Legislative Branch, Álvaro Arzú Escobar, presented to Congress initiative 5585, which has the support of the International Air Transport Association (IATA), the Latin American and Caribbean Air Transport Association (ALTA) and the Guatemalan Association of Air Lines (AGLA). See full bill.

In the opinion of the entities that support the bill, with the application of the proposed changes, it will be possible to adapt the international methods for calculating the amount of rent and thus not tax the sector with taxes, fines and interest that are considered inappropriate.

You may be interested in "Tourism and Travel: Consumer Interests and Preferences"

Peter Cerdá, IATA regional vice-president for the Americas, explained to that "... while initiative 5585 is being discussed in Congress, administrative processes have been initiated whose conclusions contradict the aforementioned criteria and resolve the payment of taxes, fines and interest in amounts that make the operations of our members in Guatemala unsustainable. Because of the impact on our members, we have, as an industry, approached several instances of the Guatemalan government in order to expose the issue in question. These have achieved, among other things, the generation of bill 5585 that is currently in Congress to convert it into law."

Also see "Guatemala: Tourist Arrivals Accelerate"

Francis Argueta, head of the General Directorate of Civil Aeronautics (DGAC), said that "... this initiative seeks to avoid the double taxation that currently affects airlines and as a government should encourage the tourism economy and this will be done through this law. The Open Skies Policy is the one that should be followed, everything depends on this initiative of law, and when approved more airlines would come to the country and that would generate more tourism and thus activate in a way the economy, to have more airlines there will be more competition and will generate lower prices on air tickets, you can also sign an agreement with Canadian air transport and thus will be given way for airlines such as Air Canada and Air Transat come to Guatemala on a regular basis."

If the double taxation referred to by aviation authorities is eliminated, Guatemala would have the opportunity to sign 22 air transport agreements.

Official figures detail that in the first half of 2019 in the country registered the entry of 1.29 million visitors, a figure that exceeds 7% reported in the same period of 2018.

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