Taxes in Central America: When and How Much is paid

Central American companies on average spend 217 hours and perform 34 different procedures in order to comply with the payment of taxes.

Tuesday, December 10, 2013

Even though the process for paying taxes are slower than in other regions, the overall tax rate paid by corporations in Central America is still lower than in other countries.

This is indicated in an annual study by PriceWaterHouseCoopers and the World Bank, which analyzes tax systems in 189 countries and compares them according to three indicators: the time it takes to make the payments, the number of procedures that must be carried out and the overall tax rate, which takes into account labour taxes, those on profits and others.

The report states: "The total tax rate (42.8%) is slightly lower than the global average rate (43.1%).

Although the time devoted to tax payments in Central America is lower than in other regions, in the nine years of the study it has only been reduced by 20 hours and only an hour in the past year.

The average number of payments to be made is still the second highest after Africa and is well below the overall average (26.7)."



More on this topic

The Tax Burden of Companies Central America

October 2017

On average, companies in the region pay 45.8% tax on profits, while companies in OECD countries pay 41%.

From the study Evolution of the fiscal situation in Central America, by the Federation of Chambers of Commerce of the Central American Isthmus (FECAMCO):

Costa Rica: Paying Taxes Takes Up 226 Hours Per Year

April 2013

Although there are countries in Latin American where paying taxes is an even more cumbersome task, the country needs to improve both the rules and the operation of the tax collection system.

According to PricewaterhouseCoopers (PWC), the country is located at No. 125 in the world rankings on how easy, or difficult, it is to pay taxes.

Complexity of Paying Taxes in Panama

December 2012

In China three payments a year are required, in Chile the figure can be up to six, and in Panama up to 60 payments are required in the same period.

According to an article in Laestrella.com.pa, "Panama should continue efforts to reduce the administrative complexity in the payment of taxes, recommended the global consultancy Price Waterhouse Coopers (PWC) and the World Bank (WB) on Monday."

El Salvador and the Income Tax Reform

January 2012

From 1st January reforms to the current income tax have come into force, affecting declarations filed in 2013, which correspond to 2012 revenues.

Reporters Daniel Trujillo and Velasco Sury writing for the newspaper El Mundo, explain the main changes introduced by the reform.

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