From an Article by Oscar Chile Monroy:
There are several classifications for tax exemptions. For the case at hand, it is useful to analyze objective and subjective exemptions. When an exemption is granted on income or revenue of a person, we are talking about objective exemptions. In our legislation such benefits are granted to entities classified under Decree 29-89, which are exempt from income from exports. In the case of associations, foundations and religious institutions, under the law on income tax (ISR in Spanish) and the Law of Value Added Tax (IVA in Spanish), the tax exemption is directed towards income earned, subject to compliance with the conditions imposed by the aforementioned laws. In these cases it is not the person or entity that is exempt, but their incomes, as is clearly stated in Article 6 of the Act which provides that income derived from associations, foundations and religious institutions is exempt from income tax. The VAT law, in Article 7 paragraph 13, states that are exemption are granted on services provided by associations, foundations and religious institutions. It can be concluded that the exemptions are granted on income and that the entity itself is not tax exempt.
Subjective exemptions are granted to an entity, requiring that the individual beneficiary have certain qualities and characteristics. These exemptions are found in Articles 73 and 88 of the Constitution of the Republic, which grant tax exemptions to private schools and universities. Note that in these cases the tax benefit is is given to the institution as such and people can say they are tax exempt.
The above analysis helps us to interpret the scope of Article 57 "A" of the Tax Code, embellished by Anti Evasion II law which states that an entity registered with the authorities as tax exempt, must obtain a state of financial solvency every year in order to keep its registration as an exempt person. It may be noted that this obligation only applies when the exemption is subjective, ie when it is given to the person, so it does not apply to associations, foundations and religious groups because in these cases the exemption is granted to income.
Source: MGI Chile Monroy
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What has been suggested is reforming a decree which "designates a 1.5% retention of Income Tax (ISR by its initials in Spanish) on cooperatives for their agricultural activities, which according to these entities affects them, because they generate illiquidity and this prevents coffee farming being a sustainable activity," noted an article in Laprensagrafica.com.
Seeking to overcome the collapse in public finances, a bill proposes the elimination of 70% of the tax exemptions granted by the state.
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