The tax system in Costa Rica is chaotic, complex, unfair, disproportionate, inequitable, and ineffective, which affects development and competitiveness, encouraging tax evasion and smuggling.
In an analysis piece in Elfinancierocr.com items, Danilo Villalta notes the need for comprehensive reform of the Costa Rican tax system, starting with a "strategic planning process" to approve a plan "agreed with the various political forces, and subsequently according to that plan, develop bills with the participation of specialists in order to have legislation that is clear, transparent, simple and easy to apply by the administrator and the taxpayer. "
Given the failure of the monthly payment system, income tax payments will be made in three installments a year and will be calculated using estimates.
According to an article in Prensa.com "With this move the government recognizes the failure of an unwieldy mechanism and that has not generated the expected revenues. Tax consultant Osvaldo Lau said that ‘the aim was to improve cash flow, but the exercise failed, because the absolute value of tax revenues did not meet expectations. '"
Representatives from business associations are calling for discussion on drafting a project than it differs from the current one, which was approved in the Finance Committee of Congress.
The president of the Chamber of Commerce of Guatemala (GCC), Jorge Briz said that "we disagree with the suggested tax reform."
Briz believes that the reform proposed by the government "does not fit in with the reality in the country," and he added, "Guatemala needs fiscal reform and in depth restructuring, in the sense of simplifying taxes, tax rates have to be accessible , low and competitive worldwide", reports LaHora.com.gt.
A draft submitted by the Executive aims to reform six laws in order to increase tax revenues.
A press release by the Congress of the Republic of Guatemala reads:
The Board of the Congress, headed by Deputy Gudy Rivera, received on 3rd February a visit from the President of the Republic, Otto Perez Molina, who along with Finance Minister, Pavel Centeno and the Secretary General of the Presidency Gustavo Martinez, officially handed over a tax reform which seeks to reform six laws for the primary purpose of increasing tax collection and controling the pace of debt maintained by the State, which is growing.
Lawyers and auditors are contending that tax reforms in El Salvador have violated the principle of "those who earn more, pay more" and are preparing legal remedies.
Many companies are preparing to file law suits citing unconstitutionality over some of the amendments to the Law on income tax (ISR) which came into force on January 1st , because they believe that the approved taxes are "confiscatory" and makes them less competitive to the point of having to close down their businesses.
In November 2011 tax collection reached the milestone amount of $1,205 million, 30.6% more than in the same period in 2010.
The head of the Tax Authority, Rudy Villeda cited as the main causes of this growth improvements in economic activity and greater control of tax collection.
According to the analyst from the American Institute for Fiscal Studies (ICEFI) Jhonatan Mencos, the main factors that determined the increase were: 'The strong economic activity evidenced in the year and the tax amnesty decree issued by the Executive from February to August’", reported Siglo21.com.gt.
As part of the tax package currently under review in Costa Rica, industry representatives and the Minister of Finance have agreed to implement the Value Added Tax gradually over three years.
A statement by the National Chamber of Tourism reads:
Amendments to the Solidarity Tax Project mitigate negative impact on tourism
• Gradual payment of VAT for tourism activities will take place within three years.
The Superintendency of Tax Administration of Guatemala has launched the web portal "Declaraguate" which allows the declaration and payment of taxes online.
Initially the system is enabled for the payment of Value Added Tax, and it is expected to include the declaration and payment of income tax (ISR) in the first quarter of 2012.
"Taxpayers can fill out your forms and correct them from the site www.declaraguate.gt and can make online payments through Banco Industrial and Banco de Desarrollo Rural (Banrural) or pay physically at Bancasat. You do not need a password to enter and print the SAT-2000 form in order to make the payment", explained Elperiodico.com.gt
And apparently for bureaucracies in general, including those of international organizations; an "expert" from the Inter-American Development Bank is supporting tax reform in Costa Rica.
Although officially the IDB "does not advocate a tax burden or specific tax policy," one of its officials warmly supports the project to increase the tax burden to support the Costa Rican economy, to the point of suggesting that the tax burden be similar to Argentina’s.
The increase far exceeds the government's own expectations and is fueled by revenue collected from taxes on income and value-added sales.
The total collected in September was $1.17 billion, 29% more than the same period of 2010.
"The economist Adolfo Acevedo commented that the growth in tax income continues to exceed the predictions made as part of the Nicaraguan general budget this year, which predicted growth in revenue of 13.8%," reports an article for Laprensa.com.ni.
While legally the fiscal deficit may reach as high as 3% during 2011, the government had announced that it would not exceed 2%, which now looks impossible to achieve.
Tax revenues are not meeting the levels predicted at the beginning of the budget year, which seems likely to mean that Panama's fiscal deficit will go above the target of 2% of GDP set for the year
The Costa Rican Department of Taxation will audit companies that declare income below the minimum percentages required.
The thresholds for the different productive sectors will be published before 24 September and arise from the amounts that were declared previously by the taxpayers and those detected in the audits.
Francisco Villalobos, director of the Directorate General of Taxation said that the rates published (on gross profit) "will be used for each sector, and govern the tax for the fiscal year 2011", according to an article in Nacion.com
Starting this year, taxpayers must use the EDDI software for filing income tax.
According to the website of the Ministry of Finance, the electronic tool (EDDI – Digital Processing of Tax Returns) allows taxpayers to submit the following tax forms
- Declaration of Income tax D.101
- Declaration of General Sales tax D.104
- Official receipt of payments.D.110
The coffee sector has announced its opposition to a proposal to establish a 5% surcharge on Income Tax (ISR in Spanish) for the agricultural sector.
A press release by Anacafé states:
The Guatemalan coffee industry via the National Coffee Association, Anacafe, has expressed concern about the establishment of a 5 percent surcharge on Income Tax,, referred to in the draft Anti-Evasion Act II which is now being considered in the Congress of the Republic. Political parties in their current campaigns have said that they will not raise taxes, their representatives in the legislative body have already made agreements to approve them.