Companies that operate under the free zone regime will be included in the list of companies required to use the electronic invoicing and receipt system, starting this year.
Authorities at the Ministry of Finance stated that in the coming days they will be make public a resolution with the inclusion of all taxpayers who until now have not been obliged to issue invoices electronically.
The ICEFI states that the proposed reforms to the Free Zones Law in Guatemala encourage a public investment model based on tax privileges for specific groups of companies.
The Central American Institute of Fiscal Studies (Icefi) reiterates its arguments against continuing an obsolete and ineffective model of attracting public investment based on tax privileges for specific groups of companies and encourages the initiation of the discussion on a general investment law. For this reason, it does not recommend to the Congress of the Republic the approval of the reforms to the Law on Free Zones contained in the legal initiative with the registry number 5174.
In 2016 exports from the free zone regime fell by 4% compared to 2015, and those from companies covered under the maquila incentive law, fell by 6%.
The negative results in foreign sales of companies operating under one of the two incentive schemes is due in part to the departure of several companies from the free zone regime, having been affected by the Emergent Employment Act.
Free Zone users require another type of measures on top of the proposals the government has discussed in the Assembly, such as reducing the charges for renting.
The bill that was discussed in Congress and which seeks to increase the competitiveness of the Colon Free Zone (CFZ), (already approved in the first debate) is not enough for entrepreneurs. Marco Tellez, president of the Association of Users (AU), told Prensa.com that "...
In the absence of a law to renew tax incentives, some 1,223 companies in the maquila sector and the free zone will have to pay income tax in 2016.
After the lapse on December 31 of tax benefits for companies working under these special arrangements, the Superintendency of Tax Administration of Guatemala will officially begin charging ISR, a measure that will bring in revenue to the state in the order of $258.4 million (a Q2 billion).
The new legislation extends the tax benefits enjoyed at current export processing zones, to free trade zones in other sectors such as logistics, outsourcing and agricultural exports.
From a statement issued by the National Assembly:
The legislative approved on October 8 the draft Reform Law Decree Nº46-91 "Export Processing Zones".
The 28 articles of the bill establish: the purpose, definition, location and security of the zones; plus benefits, administration and operation of Free Zones Corporation; the scheme under which the operators and users of c ompanies in Free Zones work ; and the creation, incorporation of members and mandate of the National Commission of Free Zones.
The government is promoting a bill that will modernize the tax status of high-value services and the movement of goods from the zone to other countries.
From the preamble to the draft submitted to the National Assembly of Panama:
Law 41 of July 20, 2004, created the Panama-Pacific Special Economic Area as a scheme for legal matters, tax, customs, labor, immigration and special business, oriented towards encouraging and promoting investment, job creation and to make the Republic of Panama more competitive in the global economy.
Investors are on the alert over possible modification to the Law on Free Zones while analysts are warning that this would generate legal uncertainty.
The government will be revising the law on free zones in order to avoid companies who are not operating under the regime from moving into it and avoiding paying taxes.
The Ministry of the Treasury announced that it will be revising in detail the modification made in 2009 to the law on Free Zones, which since 2010 allowed non exporting companies into the regime as, "there is a fear that there could be a mass movement of local companies into the scheme, which currently pay taxes, and this could lead to a drop in collections."
The Constitutional Court is examining an appeal by a mayor against the exemptions from municipal taxes for companies operating under the free zone regime.
The constitutional motion filed seeks to eliminate Article 20 of the Law on Free Zones, which exempt from tax capital net assets, property and land transfer fees for a period of ten years from the commencement of operations. It also exempts tax on profits and all taxes and municipal licenses.
The Chamber of Textile, Clothing Companies and Free Zones states that if the new law on Free Zone included the tax, it would drive away millions of dollars in investments.
Elmundo.com.sv reports that "The Chamber of Textile, Clothing Companies and Free Zones of El Salvador (Camtex) on Wednesday opposed changes made by the Finance Minister Carlos Cáceres to the proposed amendments to the Law on Free Zones, agreed with the sector since October 2011."
In Costa Rica, pressure from employers to maintain tax exemptions in free zones is increasing.
According to an article in Elfinancierocr.com at a meeting of a group of businessmen which included the main force behind the increase in taxes in the free zones, the former presidential candidate Otton Solis, there were no positive results, and the same outcome was seen at a meeting held with the full bench of the Citizen Action Party, of which Solis is the leader.
If a reform of the law is approved, tax exemptions enjoyed by members of the scheme would be limited.
Although the purpose of the law reform is to modernize the free zones scheme and meet the requirements established by the World Trade Organization, companies currently operating under the scheme would be affected.
One of the proposed changes is the elimination of unlimited tax exemptions based on export performance, which up until now has applied to all companies in free zones.
The Foreign Trade Promoter has revealed in a study the benefits that free trade zones contribute to the country, including the 58 thousand jobs that pay 60% above the average private sector salary.
From a press release by PROCOMER:
A study by PROCOMER reveals the benefits of free zones in Costa Rica:
- Companies under this regime have become a source of employment for 58,000 Costa Ricans whose wages are 60% higher (1.6 times) than the average national wage in the private sector.
The Executive and Ministry of Commerce are clashing over the collection of taxes from 2015 from companies in free zones or industrial parks, included in the tax reform bill.
The new regulations are included in the proposed fiscal reform presented by the government to the Legislative Assembly.
President Laura Chinchilla, was emphatic on the need to approve the fiscal plan in Congress,” ‘so that the country does not go straight into a highly volatile economic situation’.
The goal of the new law is to provide optimal conditions for generating maximum efficiency and competitiveness.
In April this year a new law was approved governing the operation of free zones in the country, where many foreign companies have decided to settle because of the benefits the scheme provides.
The new law aims to establish a framework within which these workspaces will operate, ranging from the kind of activities that can be developed there, the systems that can be installed to the legal conditions that must be met.