Tax Reform Being Prepared in Guatemala

Raising VAT from 12% to 15% and lowering income tax from 35% to 30% are part of the reforms that the Executive Branch is preparing to present to Congress.

Wednesday, July 27, 2016

Preliminary ideas being prepared by President Morales and a group of advisers also include incorporating the concept of world income. Although a formal document has not yet been submitted, the Executive has already started to give details of the proposal to members of Congress.

Jonathan Menkos, executive director of the Central Institute for Fiscal Studies (Icefi), told that he  "... stated that regarding the VAT increase 'it would not be very legitimate for this government to impose a change to VAT, which affects those who have the least resources, because at the beginning of the government they boosted tax privileges and favored big business who were well able to pay taxes'. "

"... Tax reform is an issue that has been handled in different spaces, however, until a week ago these intentions were reported by an adviser to Morales and the president of Congress. In the words of the Minister of Finance, Julio Héctor Estrada, this year was not the right time for a tax reform, but rather to create trust in institutions. But in the words of Taracena at the last meeting with the Inter-American Development Bank (IDB), tax reform is an issue that must be addressed as soon as possible. "

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