President Laurentino Cortizo sanctioned Law 208 of April 6, 2021, which extends until December 31 of this year the validity of the tax amnesty, which initially arose in 2019.
With this initiative of the Executive, enacted in Official Gazette and which is part of the Economic Recovery Plan (phase 1), taxpayers will have until August 31, 2021 to make payments or enter into payment arrangements with respect to tax obligations not fulfilled until January 31 of this year, official sources informed.
In order to access the $1.75 billion credit requested from the IMF, the Costa Rican government proposes to tax financial transactions, increase the tax on the profits of companies and individuals, and increase the tax on real estate.
On the afternoon of September 17, and in the context of a severe economic crisis that had been going on since before the beginning of the pandemic, the Alvarado administration presented the plan with which it intends to mitigate the fiscal impact of the Covid-19 crisis, a proposal to negotiate an agreement with the International Monetary Fund (IMF) to obtain a credit of $1.75 billion.
In Guatemala, the chambers of industry and commerce oppose the bill that proposes to create a special tax regime for agricultural activity.
The project "Law on Simplification, Updating and Tax Incorporation", which has been in Congress for more than two years, was scheduled for final discussion until September 10. See full bill.
Although Costa Rica and Nicaragua approved fiscal reforms this year, it is predicted that the expected results in terms of tax collection will not be achieved.
The document "Centroamérica: análisis sintético, por país, del desempeño de la recaudación tributaria en 2019", prepared by the Instituto Centroamericano de Estudios Fiscales (Icefi), explains that, in the case of Costa Rica and Nicaragua, the expected results in terms of improved collection are still in doubt.
In Costa Rica, the central government's financial deficit at the fifth month of the year maintained its upward trend as a result of higher interest expenditure and stood at 2.6% of GDP.
While the behavior of the financial deficit is largely due to interest payments, the increase in capital spending also shows significant variation, which translates into better infrastructure conditions needed to facilitate the mobility of goods and people, explains a newsletter from the Costa Rican Ministry of Finance.
In the midst of Nicaragua's political and economic crisis, the National Assembly approved a tax reform that increases the income tax of large taxpayers from 1% to 3%.
On the morning of February 27th, the reform of the Tax Concentration Law was approved, which also contemplates raising from 1% to 2% the income tax for medium sized companies with higher incomes.
The business sector welcomes the progress achieved with the tax reform approval in the first debate, but notes that it does not fully solve the financial problems facing the government.
In the debate last Friday, the representatives approved the file number 20.580, known as the tax reform law. The approval was optimistically received by the Costa Rican Union of Chambers and Associations of Private Business Sector (Uccaep).
In Panama, a bill that regulates the activities of call centers has been approved, leaving companies in the sector free of direct and indirect taxes.
The National Assembly reported that, in a third debate, approval was given to Bill 653 which regulates the activity of call centers for commercial use.
According to a statement from the Assembly during the discussion, it was learned that only 32 call centers are operating in the country, despite the existence of 134 licenses issued by the Public Services Authority(ASEP).It was said thatthis activity generates around nine thousand jobs in the country.
The tax burden grew from 13.4% in 2013 to 14% in 2016, both due to the delayed effect of the tax reforms in Honduras and Nicaragua, as well as better management on the part of tax entities in Guatemala and Panama.
From the Regional Economic Report (IER) 2016-2017: Opportunities and challenges for Central America, by the SIECA:
The amendment to the Tax Code, partially approved by Congress, omits the concept of "global income", and establishes "territorial income".
Latribuna.hn reports that "...The Bill for a new Tax Code was drafted by the government, employers and a sector in the social economy, and during the dissemination it was said that the change to "Territorial Income represents a setback in the fight against capital flight."
Transfer pricing and double taxation are two of the topics covered in three bills to reform regulations which the Ministry of Finance has put to public consultation.
One of the proposals is the bill on "Informational declaration of transfer pricing".Crhoy.com explains that"...This empowers the tax authorities to check that transactions between related parties are valued at prices similar to those that would be agreed between independent parties in comparable transactions. "
The business sector is opposed the bill with which aims to increase the tax applicable to dividends, earnings and profits from 5% to 6%.
There's a proposal in Congress to increase the income tax (ISR) paid on dividends, profits and earnings by 1%. The intention is to allocate those funds to the creation of a Ministry for Youth.
"... The tax changes should be subject to prior consultation with the Ministry of Finance and analysis carried out to determine the impact on the business sector. When it was raised to 5% there was an explanation. It does not seem fair to us that reforms be made casuistically without consultation and with a specific assignment made," said Julio Héctor Estrada, Minister of Finance to Elperiodico.com.gt regarding the tax change which would mean revenues to the treasury of up to $10 million, according the legislators who proposed it.
In Congress doubts are being voiced over the effectiveness of the application of a tax of $0.65 per phone line and $13 for call centers.
Among the nine challenges presented by deputies to the proposal to place a tax on phones, the lack of definition of the use of funds and details about who should pay the tax stand out the most, in particular whether it should be the user or the business who pays.
Taking advantage of the low price of oil the government is discussing increasing the tax base on the distribution of petroleum and petroleum products.
The proposal seeks to raise the fuel tax which is currently around $0.60 for gasoline and $0.17 for diesel. Moreover, the measure would also provide an increase in the rate for petroleum products such as kerosene, naphtha and liquefied petroleum gas.