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.
The member countries of the Framework Convention for the Control of Tobacco have approved raising taxes on the tobacco industry.
This new document seeks to "... strengthen measures relating to applicable taxes and prices in order to reduce consumption and the number of deaths from consumption of tobacco, as it is closely related to the cost of the product."
A new commission set up by the Ministry of Health will regulate advertising of tobacco and alcohol and will look at increasing taxes.
The National Commission for the Prevention of Chronic Noncommunicable Diseases and Cancer, established by the Ministry of Health and Welfare will be responsible for the regulation of advertising of snuff and alcohol and also promote the consumption of healthy foods.
Guatemala will reduce the grounds for tax sanction from 75 to 25, and will reduce fines up to 75%.
S21.com.gt reports that "A new initiative of the National Customs Act, has the backing of both the Government, business, customs and shipping offices, to reduce the number of grounds for sanctions to 25, from a list of 78 established in the regulation which despite being in force since February 2012, is currently suspended by government decision. "
Although rates of income tax for employees have decreased, so have deductions and exemptions, meaning that ultimately the taxpayer will pay more than before.
Prensalibre.com reports that "the rates still in effect in 2012 are those of 15%, 20%, 25% and 31%, which will be charged up to 2012, and the new rates in 2013 are 5% and 7%. "
"Medical expenses and certain insurance or pension funds can no longer be deducted.
The House of the Congress of the Republic of Guatemala has approved Decree 10-2012, the "Tax Law Update."
A statement from the Congress of the Republic of Guatemala reads:
Due to a national emergency and with votes from 122 ministers, the House of Congress has approved decree 10-2012, the "Tax Law Update," on its final reading and with revisions included, which was put forward by the Executive in order to increase tax collection by at least Q4.5 billion ($575.4 million) over four years.
The Ministry of Finance in Guatemala has accepted demands made by the Union of Used Vehicle Importers and announced changes to the draft Tax Update.
The government has backtracked on its plans for fiscal reform in light of strong reactions from used-vehicle importers. They suggested using the same system for calculating the tax on entry of used cars into the country, and permitting entry of used cars up to 15 years old, rather than the 7 years proposed by the Ministry of Finance.
Cacif, leader of the Guatemalan private sector, said that "we must all do our part" and promised a consensus with the government.
The presidents of business chambers of Guatemala met on Wednesday with President Otto Perez and Finance Minister Pavel Centeno, to hear a proposal for tax reform law, and adopted a positive approach to the coming changes.
The bill provides that no amounts may be deducted from VAT on purchases, and increases the tax base for the payment of income tax.
The Guatemalan government’s tax reform law is ready, and contains several new points: employees ability to deduct VAT from annual purchases from their taxes has been eliminated, the tax base has been increased, and the road tax for vehicles has been doubled.
The Superintendency of Tax Administration of Guatemala has reported revenues of Q10 billion ($ 1.27 billion) in 2011, a record in the collection of income tax.
Revenues for the payment of income tax (ISR) totaled about Q10 billion ($ 1.27 billion), in 2011 according to the Superintendency of Tax Administration of Guatemala (SAT).
"The good results obtained by the companies are due to the recovery of the Guatemalan economy, and measures implemented to combat tax evasion by the SAT also helped the collection of income tax (ISR) to exceed Q 10 billion in 2011, an increase of 30 percent compared to the Q7.74 billion ($ 989 million) in 2010 , " published ElPeriodico.com.
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 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.
The lead candidate in the polls for president, Otto Perez Molina, has said that the percentage paid by mining companies to the State should be between 7 and 10%.
The rate currently being charged by the country as royalties for the extraction of gold, nickel and silver is 1%, the lowest in Latin America.
"Guatemala's mining industry has become a hot political issue in the Central American nation ahead of the presidential elections on 11 September, in which Pérez Molina ranks highest in the polls", reported Reuters.com.
Governments should control tax evasion, expand the tax base and combat corruption, increasing revenue to finance the fight against insecurity.
A statement by the Federation of Chambers of Commerce of Central America (FECAMCO) reads:
THE FIGHT AGAINST DRUG TRAFFICKING AND SOCIAL VIOLENCE DOES NOT SOLEY DEPEND ON MORE TAXES
The social costs that violence and organized crime bring are embodied in several dimensions, among which is the irreparable loss of lives, physical and emotional toll of victims and the costs related to private security in homes or businesses. The current violence that Central America is experiencing has significantly impacted on companies' productivity and has therefore hindered the economic growth of our countries. We therefore condemn all kinds of populist measures that directly affect productivity, competitiveness and economic growth in the region.
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