For the second time the president of the Central Bank is proposing the elimination of bank secrecy so that cross-checks can be carried out in order to control tax evasion and increase tax revenues.
Just eight months ago, the president of the Central Bank insisted in Congress on the need to eliminate bank secrecy in order to minimize tax evasion and improve tax collection.
The tax burden was placed at 10.9%, as a result of a tax proceeds of $5.912 million, 8.1% higher than in 2012.
Guatemala's fiscal deficit ended the year at 2.2%, below the Government's initial estimate of 2.5 %.
From a press release by the Ministry of Finance:
The Ministry of Finance reports that at the close of the fiscal accounts for 2013 has been completed and given results that demonstrate the efficient and sound management of fiscal policy. The deficit stood at 2.2% of GDP, a level that fosters macroeconomic stability and economic development. The delay in approving budget support loans and behavior of tax revenues represented adversities which were properly dealt with.
The technical redefinitions that make up a successful tax reform should be based on a reformulation of the social contract which establishes national goals.
Nacion.com reports that "According to Augusto de la Torre, Chief Economist at the World Bank, the fiscal debate is more than just an economic debate, it is almost a philosophical debate about the kind of state we want to have."
The National Association of Home Builders in Guatemala believes that two articles of the Tax Reform Act, create uncertainty over how the sector is to be taxed.
This was explained by Llarena Pelayo, president of the National Association of Home Builders (Anacovi). The construction sector considers that Articles 34 and 35 of the Tax Reform Act affect the development of the sector.
Both sides are discussing three articles of the Tax Update Law, but so far have failed to reach an agreement.
According to Andres Castillo, president of the Chamber of Industry of Guatemala (CIG), one of the items that is causing disagreement is related to the payment of income tax (ISR) on the tips received by service companies.
The second article concerns a payment that is made up of a 10% income tax on the interest on loans taken out abroad.
Two or more operations may be comparable as long as there is no economic difference between them that can affect the price of a good or service.
Jose Molina Calderon's article in Prensalibre.com reports that "for the purposes of determining a price or amount that can be agreed between independent parties in comparable transactions in conditions of free competition as referred to in Chapter VI of the Tax Update Law (LAT by its initials in Spanish), comparing the conditions of transactions between related persons other comparable transactions between independent parties.
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).
The Chambers of Commerce and Agriculture submitted to the 4th Constitutional Court challenges against fifteen articles of the Tax Update Law.
These challenges are in addition to those presented last week by the Association of Coffee Exporters, and which will be submitted today, January 25, by the Guatemalan Chamber of Construction, the National Association of Home Builders and Contractors' Guild.
Business associations have submitted a constitutional complaint against the tax package approved by the government of Guatemala.
The Chamber of Commerce of Guatemala (GCC), the Chamber of Agriculture (Camagro) and the Guatemalan Association of Exporters (Agexport), have joined together in order to find a solution to the inconstitutionalities which they allege exist in the new tax rules.
Certificates of Exemption from VAT, Income Tax Worksheet 2013, VAT Submission Form 2012, and validation of invoices for small taxpayers in the VAT Form.
Tezó and Associates has released a newsletter entitled "BANCASAT News", edition No. 457, dated December 17, 2012 which includes topics of interest to taxpayers, some of which are reproduced below.
In 2010, when looking at total tax revenue as a percentage of GDP, Costa Rica has the highest ratio in Central America, and ranked fourth in Latin America, behind only Argentina, Brazil and Uruguay.
The study on Tax Statistics in Latin America, by the Organization for Economic Cooperation and Development (OECD), notes that while the ratio of tax revenue to GDP has been growing in Latin American countries, the average of the so called "tax pressure" is still below the average for countries who are members of the OECD.
From August 2012, the Superintendency of Tax Administration will formally record the "Temporary Cessation of Activities" of natural or legal persons under the General Regime of VAT.
Companies declared as having the status of temporary closure, will not be allowed to issue invoices because they have no active status with the tax office.
From a statement from the Administration Superintendency Tributaria (SAT):
Once publicized in the official newspaper, the new law passed by the Guatemalan Congress on 27th January, will take effect from February 25th .
The new law restores the higher tax rate on tobacco which had been removed last year and establishes special invoices for farmers, among other things.
Siglo21.com.gt in its publication reports, "The new law has 75 articles in which there are amendments to Value Added Tax (VAT), and taxes on land, sea and air vehicles. There are also reforms to the Tax Code, Law on Revenue Stamps and Stamped Paper Protocols, Law on Tobacco and related products, and finally a change to articles and their reforms in the Penal Code. "
Congress has restored a higher tax rate on tobacco, one that had been eliminated last year, and has decided to establish special invoices for farmers.
Guatemala's Congress has approved the so-called Anti-Evasion Act II, with 120 votes out of a total of 158, which, among other things, restores the higher tobacco tax rate, abolished in 2011.
With the elimination of this tax, the state has failed to collect Q20 million ($2.56 million) annually, according to an article in Siglo21.com.gt.