The IADB loan to Guatemala for the purpose of "generating more tax revenue" is another example of the current inflation of funding promoted by international bureaucracy to pay the salaries of national bureaucracies.
EDITORIAL
An article by Jose Raul Gonzales in the blog of Guatemala's economic think tank CIEN, reveals one of the many cases in which international financial organizations, supposedly created to help nations develop, engage in financing consulting activities, which end up being just expenses instead of financing real economic sectors.
The National Competitiveness Program of Guatemala has announced that the Executive will introduce a draft bill to Congress to replace existing customs regulations.
Under pressure from the Guatemalan business sector, the executive has presented a new initiative to Congress, which has already been agreed with various chambers of commerce, said Juan Carlos Pais, Presidential Commissioner for Competitiveness.
A new draft of a constitutional reform submitted by the Guatemalan Executive includes no change in tax matters.
Two months ago the proposal included changes to 55 articles based on four pillars, security and justice, transparency, strengthening the political system, and strengthening the state prosecutor. Following recommendations received by various organizations who studied the project in detail, the new proposal includes changes to 35 articles and the chapter on taxation has been removed.
"The state’s challenge is to modernize the mining industry sector ", said Eric Clay, Minister of Energy and Mines in Guatemala.
Diálogo Libre interviewed the Minister of Energy and Mines regarding the reforms to the current mining law, and the interview was published by Prensalibre.com.
A few excerpts from the interview:
The Executive refrained from amending Articles 125 and 242 of the Constitution, which established the right of the state to an involvement of up to 40 percent in mining companies, but the law governing the industry still provides for this. What are the state’s plans?
In a forum organized by the Guatemalan American Chamber of Commerce, several concerns were expressed with the draft reform of the constitution promoted by the Perez Molina administration.
In the view of the lawyer, Gabriel Orellana, forum participant, "... the process (of reform) inspires distrust."
Jose Raul Gonzalez on behalf of the business sector said that "...
Among the changes requested by the Guatemalan private sector, are the elimination of insurance for theft of goods in transit and the current billing method.
Private sector representatives together with the Tax Authority (SAT) are working on a draft for a new law, which introduces changes to almost 80% of the current Customs Act.
"... The American Chamber of Commerce has asked for changes to the billing method prescribed in current law, which provides for the entry of the net price of the merchandise. It opposed the $250 fines for invoices that do not comply with the new format, and also severe measures such as the suspension of customs agents. It is alsoagainst criminalizing a shipment arriving which is, for example, 5 percent over weight or over value", reports Elperiodico.com. gt.
The mere announcement of reforms to the Constitution of Guatemala stops investment because of the removal of confidence and legal security for companies that might come to the country.
During a forum held by the Managers Association of Guatemala (AGG), concern was expressed over the constitutional reform process initiated by President Otto Perez Molina, and the excessive speed in the adoption of new standards such as the Customs and Tax Reform Act, whose implementation has created difficulties for companies.
By Governmental Accord administrative customs offenses punishable by a fine, and their cumulative effects, will be exempted until September 15, 2012.
The Governmental Accord 121-2012 from the Ministry of Finance states that it has “agreed to waive, for a term expiring on June 15, 2012, up to one hundred percent (100%) of fines to any individual or legal person incurred in some of the administrative customs offenses punishable by a fine established by the National Customs Law contained in Book III of Decree No. 10-2012 of the Congress.”
After further requests for extending fine exemptions and a comprehensive reform of the Customs Act, the government has responded saying that they will evaluate such requests.
The National Council for Promotion of Exports (CONAPEX), comprising representatives of the Executive and the private sector, called for an urgent reform of the Customs Act and the granting of another 90-day extension for exemptions from fines for violating the new customs regulations.
With COMIECO’s elimination of tariffs on vehicle imports, the First Registration Tax (Iprima in Spanish) on automobiles will be applied.
Sergio de la Torre, The Minister of Economy announced that now "Iprima can come into effect".
The official version, according Prensalibre.com, reads: "The Iprima was created with decree 10-2012, Tax Update Act to replace the import tariffs on vehicles, and the Ministry of Finance argues that the Iprima will eliminate discretion and gives legal certainty in order to define the basis for calculating the tax. "
Employers admit their need to improve transparency and fight corruption, but have requested extensive analysis and discussion of the proposal sent to Congress.
Hernán Guerra writes in the Journal by the Guatemalan Chamber of Industry:
The President, Otto Perez Molina, wants Congress to approve in record time another set of laws which, according to him and his staff, will become new weapons to be used to combat corruption, improve transparency of public expenditure and at the same time, leverage the recently approved tax reform. However, the objectives are not shared by analysts, representatives of civil society and business, with the common denominator being that the proposals require "more analysis, more discussion and participation."
As of March 13th, the second exchange or sale of real estate will not pay VAT, just 3% stamp duty.
The Tax Update Law (Decree 10-2012), which entered into force on Tuesday 13th March, indicates that Value Added Tax (VAT) of 12% will be paid only on the first transaction of a property. Taxpayers will pay only 3% stamp duty.
Another change is that schools may no longer benefit from VAT exemption for school transportation, sale of supplies, uniforms, etc; from now on they are required to submit invoices. The only items exempt are registration, tuition and examination fees, reports Prensalibre.com.
Guatemala's government has issued the Tax Update bill, which will take partial effect within eight days.
According to Decree 10-2012, the new National Customs Law, changes to Value Added Tax, Stamp Duty and Stamped Paper Protocols Tax will all take effect in eight days, while the changes to Income Tax, Early Registration tax and Road Tax will take effect in 2013.