After the announcement of the intention to increase the tax on the distribution of cement and fuel in Guatemala, businessmen believe that in this scenario of incipient economic recovery it is not a good idea to increase the tax burden.
In order to face the effects of the economic crisis generated by the covid-19 outbreak, Guatemalan authorities are already beginning to discuss the fiscal policy to be applied in 2021.
In this scenario of economic crisis, falling tax revenues and the need to finance recovery programs, in Guatemala and Costa Rica it is already proposed to increase current taxes and create new ones.
Guatemalan authorities are already beginning to discuss the fiscal policy they will apply in 2021, when the economy will have to face the effects of the economic crisis generated by the covid-19 outbreak.
On average in Costa Rica more than one in five companies classified as Large Taxpayers do not pay taxes.
EDITORIAL COMMENT:
When the Tax Department does not fully complete its duties, competition between companies is settled not by the quality of products or services, or for the excellence of its managerial staff and their strategic direction, but for the ability of their tax advisors to reduce the amount of taxes paid.
"Of the total potential tax collection from VAT, only 50% is charged, with 19% being lost from exemptions and tax schemes, many without justification, while the remaining 30% is lost through evasion charges."
The president of the Bank of Guatemala has stated that in order to sustain the fiscal debt, the tax burden in the Guatemalan economy will have to rise from 11% today to 14%.
An article on Lahora.com.gt reports that, Edgar Barquín president of the Bank of Guatemala, said "... in order to maintain economic stability and ensure social spending for the benefit of the population, the level of taxes needs to rise to 14 percent of GDP this year. According to the official, rating agencies consistently report that one of the weaknesses in Guatemala, in financial terms, is the low level of taxes."
Extraordinary measures announced by the tax authorities will focus on reviewing withholding tax, declarations and verification of income tax.
Verification of statements of withholding agents, recalculation of retention for taxpayers with incomes over $3.886, monitoring omissions and frequent verification of cases of taxpayers of the higher tax interest, are part of the measures to be applied to the deficit of $87 million resulting from the last collection period.
Between January and August 2013 $1.135 billion was raised in VAT on imports, while in the same period in 2012 the amount was $1.137 billion.
Data from the Tax Authority (SAT) shows that in terms of customs duties $157 million was collected, down by 22% compared to the $202.2 million reported in 2012.
In order to compensate for the resources that the government will not receive from taxes vetted by the Constitutional Court, the Tax Authority will increase audit pressure.
The decrease of $64 million in revenue, has led the Tax Authority of Guatemala (SAT by its initials in Spanish) to strengthen its control plan with which it supervises companies.
The suits citing unconstitutionality presented in Guatemala against the tax reform have caused irrecoverable losses to government coffers.
The head of Collection at tax authority SAT said that " the reform does not only include income tax (ISR)" and noted that the Constitutional Court (CC), among other resolutions, suspended the collection of a 5% tax on the first registration of tractors (Iprima).
Federico Linares, CEO of G & T Continental, stated the need for fiscal reform.
Linares believes that current tax burden of around 10.5% of GDP is too low to support development of the country, adding that a tax reform is essential, though it seems difficult especially in an election year.
For now, he said, administrative measures can be taken to improve tax collection, like focusing on smuggling and tax evasion as well as lost VAT, which amounts to about $ 670 million.
Analysis is underway to charge a specific tax on mobile telephony in 2010, either to all calls or just international ones.
A 0.1 Quetzal per minute tax (approximately $0.01), is one option being considered to increase fiscal revenues, within the National Emergency and Economic Recovery Program, know for its initials as PNERE.
New measures have been put in place to improve tax collection, among them electronic embargoes of banking accounts and properties.
At customs, the government revenue authority, known as SAT, will develop a program dubbed "Aduana Segura II" (Secure Customs II), a closed circuit of TV cameras overseeing entrance and departure of merchandise.
In an attempt to make it easier to pay taxes, SAT will start allowing credit card payments.
In June, the government revenue superintendency collected $1.99 billion, less than the $2.17 billion for the same period of 2008.
Rudy Villeda, who heads the government revenue superintendency (Superintendencia de Administración Tributaria, SAT, in Spanish), indicated that preliminary figures put revenue for the month of June in $286 million.
Journalist Lorena Alvarez writes in her article in Elperiodico.com.gt: "Income tax collected $431 million, short of the $486 forecasted, due to a drop in company sales and profits. Value added tax and international trade taxes fell 21.6% when compared to last year, because of the reduction in imports."
The SAT lowered its tax collection goal for 2009 by $441.
For 2009, the Tax Administration Superintendent (SAT) in Guatemala had planned to raise $4.758 billion, but it reported yesterday that the target was adjusted to $4.32 billion, a decrease of 9.28%.
Prensalibre.com reported that the Finance Minister, Juan Alberto Fuentes Knight, addressed the impact on the fiscal deficit: "It would have to be covered by a decrease in operating expenses, plus donations and debt grants pending approval, but it is expected that the aforementioned deficit will remain at 2%."
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