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.
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 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.
The Executive is considering increasing taxes on cigarettes and alcoholic beverages as an option for balancing the 2015 budget.
With the provisional suspension of the tax on telephone lines the Guatemalan government is left with a deficit $237 million, approximately, which is why it is looking at bridging the gap using new taxes on liquor and cigarettes, as the main alternative.
The application of tax of $0.65 per mobile phone line that had been proposed by the Executive to fund part of the 2015 budget has been temporarily suspended.
The Constitutional Court temporarily suspended the collection of the tax on telephone lines after the Chamber of Industry and the three phone companies operating in the country submitted an appeal against the tax.
In order to finance the 2015 budget, Congress has approved a tax of $0.65 for the distribution of each sack of cement weighing 42.5 kg and the same amount for each mobile or fixed telephone line.
Between the two taxes it is hoped that a total of approximately $2,607 million will be raised to finance the General Budget of the Nation in 2015.
In the case of taxes on mobiles and fixed telephone lines, "...
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 Chamber of Industry of Guatemala has submitted to the Constitutional Court an appeal against 14 items in the Laws of Taxation and Anti Evasion II.
"We see abuse in the functions that the SAT is acquiring in this new law," said Andres Castillo, president of the Chamber of Industry of Guatemala (CIG).
The actions are in addition to those raised weeks ago by MPs, businessmen and the chambers of Commerce and Agriculture, noted an article in Siglo21.com.gt.
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.
Experts agree Alvaro Colom’s successor will face a difficult fiscal, economic and political situation.
First, it will be difficult to achieve the tax reform needed to tackle the decline in tax revenues which is set to continue into 2012. Ricardo Barrientos, Central Institute for Fiscal Studies (ICEFI in Spanish), also said that the losing candidate in the election will become the main opposition, and will complicate any reform attempts or approval of additional financing for the state.
If many large companies are granted tax exemptions for long periods of time, why not give the same exemptions to SMEs?
The analysis of the topic in an article in Laprensa.hn on the high rate of informality in microenterprises in Honduras, can be extrapolated to all Central American countries.
"Figures from the deputy minister for micro, small and medium businesses indicate that of the approximately 297.000 companies that fall under the micro category, 60% remain in the informal sector, mainly due to tax burdens they would have to face in order to take that step. "
Guatemala´s BB+ sovereign risk rating and stable perspective, which is so close to the desired “Investment Grade,” is facing four threats.
According to an article by C.Véliz and J. Gramajo in Sigloxxi.com, Mauricio Choussy, the director of Fitch Central America, notes that four weaknesses persist in the country: “Low tax revenue, weak social indicators, social instability, and high levels of delinquency.”