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.
Peter Cerdá, IATA regional vice-president for the Americas, explained to Prensalibre.com 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."
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.
In order for Guatemalan producers to compete under the same conditions as neighboring countries, the government is preparing a bill that seeks to exempt agricultural inputs from VAT.
The initiative, known as the "Fiscal Equity Law", is being prepared by the Ministry of Agriculture, Livestock and Food (Maga), because, according to the institution's top official, other Central American countries do not charge value-added tax (VAT) on agricultural inputs.
The Guatemalan Congress approved a bill that contemplates the creation of a special tax regime for agricultural activity.
Although this bill was involved in controversy days ago, as the chambers of industry and commerce expressed their opposition, Congress decided to approve the bill. See full bill.
A bill proposing to charge $5 for each passenger in transit was presented, whose funds, which would reach $65 million, would be given to airlines as incentives to attract more tourists to the country.
Bill 150, called "Airline Incentive Law", was presented to the National Assembly on August 26.
Between August and September a new law could be approved that would grant exemptions and other incentives to investments in hotel infrastructure and other tourist activities.
The tourism incentives bill was presented by President Hernández to the National Congress, which expects to complete the approval process no later than September.If approved, the new law would grant various tax benefits and incentives to investors developing tourism projects.
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