Guatemala: Technical Assistance Report-International Taxation Challenges and Options
IMF Staff Country Reports, April 24, 2023
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- Guatemala: Technical Assistance Report-International Taxation Challenges and Options
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Bibliographic details
- Published: April 24, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400240638.002
Executive summary and context
- Focus: technical assistance report on international taxation challenges and options in Guatemala.
- Recent policy attention: treaties have garnered special attention in Guatemala and require a strategy to be devised.
- Rationale for treaties:
- Foster a better business climate.
- Can encourage foreign direct index (FDI) in sectors other than those already benefiting from special regimes.
- Can promote expansion of certain businesses operating from Guatemala, especially export services, which can currently be subject to double taxation.
- Current concern: Guatemala's FDI quota is low, even for the Central American region.
Empirical evidence and international experience
- Empirical studies do not offer conclusive results on the link between treaties and FDI.
- The economic literature could not confirm a meaningful causal relationship between signed treaties and FDI, particularly for developing countries.
- The same inconclusive finding applies to studies on Latin America.
Policy findings and options for Guatemala
- To enter into treaties, Guatemala requires the development of an own model that:
- Protects the right to tax income at source.
- Enables signing treaties with countries where a potential double-taxation problem might inhibit a likely flow of investment.
- Consideration: the increase in special regimes in Guatemala might eventually risk running into an international trend (implied risk to treaty effectiveness or compatibility).
Subject areas and keywords (as recorded)
- Subjects: Balance of payments, Double taxation, Foreign direct investment, Income, Income and capital gains taxes, International organization, Monetary policy, National accounts, Taxes, Transfer pricing
- Keywords: base erosion and profit-shifting., Caribbean, Central America, Double taxation, double-taxation avoidance treaties, FDI data, foreign direct investment, Foreign direct investment, Foreign-direct investment, Global, Income, Income and capital gains taxes, maquila regime, PwC tax specialist, tax architecture, tax context, tax practice, tax purpose, tax strategy, taxation challenge, Transfer pricing, transfer-pricing
Content in this bundle
- 1gtmea2023001