Friday, February 20, 2009

Hike in Vehicle Import Tax Delaying Tax Reform Package

Some legislators are proposing a postponement of discussions of the "first registration tax" on vehicles, which is part of the tax reform package before the Guatemalan congress. There is great difficulty in reaching agreement on the percentage to be charged and the vigorous debates are holding up the overall tax reform process.

One of the arguments against the new "first registration tax" is that it makes no sense to charge the same tax rate on used and new cars. The strongest resistance to the tax comes from the union of used car importers, who ship severely damaged or totaled cars from the United States to Guatemala, where they are repaired and put back on the road.

The Guatemalan Treasury reported that in the first six weeks of 2009, tax revenues declined by Q100 million, so there is urgency to get the reform bill passed, with or without the "first registration tax" provision.

See details in previous story on this topic.

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