In the government's review of Nicaragua's tax reform that has been in place since February, businessmen consider that no tax cuts will be made, even though production costs in the country have risen considerably.
After the approval on February 27, 2019 of the amendment to the Tax Concertation Law, which consists of raising from 1% to 2% the income tax for medium sized companies with higher income, and for large taxpayers from 1% to 3%, the productive sector has reported increases in its production costs.
Businessmen in the industrial sector in Nicaragua say that since the tax reform was implemented in the first quarter of the year, employment has fallen between 30% and 35%.
On February 27, 2019 was approved the amendment to the Law of Tax Concertation, which consists of raising from 1% to 2% income tax for medium enterprises with higher income. Another of the measures contemplated by the reform is to raise the income tax of large taxpayers from 1% to 3%.
The Legislative Assembly approved a moratorium of three non-extendable months, in sanctions, arrears, interests, fines or any other sanctioning disposition, related to the collection of the value added tax, which became effective last July 1.
Taxpayers qualified by the Tax Administration as large national taxpayers and large territorial companies are excluded from this moratorium, explains a statement from the Legislative Assembly.
In Costa Rica, modifications to the salary tax brackets establish that income of up to $1,394 will be exempt from collection of the tax, and those exceeding $1,394 and up to $2,046 will pay 10%.
On June 25, the Ministry of Finance published in La Gaceta the new income tax brackets to be applied to salaries between July 1 and September 30, 2019.
The publication details that the tranches will remain like this:
In Nicaragua, authorities reported a decision to suspend collection of the additional fee of $0.05 for each kilogram exported or imported by air.
The extra charge came into effect last April 25, but from the beginning the private sector spoke out against it, because it was argued that the tariff that the Nicaraguan government would apply, would put some local companies on the border of closure and cause a decrease of about $50 million annually.
For the Guatemalan business sector, the conditions are in place to facilitate the exoneration of fines and interest despite being an election year, but for the government, a tax amnesty will not be an option this year.
Because of the tax credit repayment problem that has been reported for several years in Guatemala, businessmen believe it is feasible to make a tax amnesty, but the authorities do not consider it, because they argue that it is not the way to improve tax revenues.
Since April 21, the agreement that avoids double taxation and mitigates its effects has been in force, as well as helping to eliminate barriers to trade and prevent tax evasion.
On March 21, Law 9644 was published in La Gaceta, corresponding to the agreement between the Republic of Costa Rica and the United Mexican States, which avoids the double taxation of income and wealth taxes.
During its last visit to Guatemala, the IMF warned that if banking secrecy is not lifted in the country, compliance with "international transparency treaties" could be undermined.
After the last visit of the International Monetary Fund (IMF) to Guatemala, the international organization warned that reversing the decrease in tax collection involves strengthening the control of large taxpayers, improving the use of tax information to reduce non-compliance, reallocating resources to risk-based audits, and reconsidering the lifting of bank secrecy for tax auditing purposes.
In Costa Rica, the banking sector won a lawsuit it imposed against the Ministry of Finance, arising from disagreements over the method used to calculate tax payments.
The legal dispute dates back several years, since in 2003 the General Directorate of Taxation (DGT) validated the methodology suggested by the Costa Rican Banking Association (ABC) to calculate the payment of taxes on the income of financial intermediaries.
Since April 25, the Ortega administration in Nicaragua is charging an additional fee of $0.05 for each kilogram exported or imported by air.
For the country's business sector, the charge applied by the Nicaraguan government has some local companies on the verge of closure and will cause a drop of about $50 million annually.
For the IMF, the country "may need additional fiscal measures, focused on the short term, to alleviate financing pressures and improve debt dynamics.”
After analyzing the current economic situation in Costa Rica, the directors of the International Monetary Fund (IMF) commended the recent fiscal reform, which is important to restore fiscal sustainability.
Until April 26 will be in public consultation the regulations of the Income Tax Law in Costa Rica.
From the Ministry of Finance statement:
April 12, 2019. As was done with the first proposal of the regulation to the Law of Value Added Tax (VAT), the Ministry of Finance made available on its website, the first draft of the project "Modifications and Additions to the Income Tax Law Regulation", which regulates Title II of the Law to Strengthen Finance, No. 9635, of December 3, 2018.
It is estimated that construction costs in Costa Rica could increase up to 9% once the new fiscal plan comes into effect.
From next July 1, the collection of value added tax (VAT) will be staggered, because in the first year new buildings will not pay taxes, in the second pay 4%, in the third 8% and in the fourth 13%.
Although at the request of the business sector, President Varela vetoed the bill establishing an 8% tax on local and imported sugary beverages, Panama's National Assembly will insist on approving it.
The National Assembly approved in third session the new taxes, however, the business sector asked the Panamanian president at the end of February 2019 to veto the bill, which establishes a tax of 8% for sugared drinks of national production and imported and 10% for syrups and concentrates.