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 Finance Minister Pavel Centeno, said the initiative also provides that those with annual revenues of Q5 billion ($640) or less do not have to pay income tax.
"The rates for the general scheme will be 6% next year and 7% in 2014, the 31% scheme will be lowered to to 28% in 2013 and 25% in 2014, but it is anticipated that there will be a tightening of the criteria that allows companies to discount their expenses against income tax", reported Prensalibre.com.
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Among other measures, the bill proposed by the government examines establishing regimes for income tax and eliminating accreditation for VAT returns, a method that has encouraged evasion.
The new Guatemalan government has refined its proposed fiscal law reform, which includes proposals such as removing the accreditation of the VAT tax and setting different levels for the deduction of income tax.
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.
A draft submitted by the Executive aims to reform six laws in order to increase tax revenues.
A press release by the Congress of the Republic of Guatemala reads:
The Board of the Congress, headed by Deputy Gudy Rivera, received on 3rd February a visit from the President of the Republic, Otto Perez Molina, who along with Finance Minister, Pavel Centeno and the Secretary General of the Presidency Gustavo Martinez, officially handed over a tax reform which seeks to reform six laws for the primary purpose of increasing tax collection and controling the pace of debt maintained by the State, which is growing.
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%. "