Numerous countries in the region have made tax reforms in recent years. In its report Fiscal Panorama of Latin America and the Caribbean 2015: Policy Space and Dilemmas, released in March, ECLAC presents a summary of the modifications implemented by 16 countries in 2014.
Among the broad variety of reforms, one that stands out is the emphasis a number of countries have placed on income tax, indicating an aim to improve the impact of their tax systems on income distribution, one of the weakest points in the region’s tax policy.
The reforms encompassed distinct aspects of taxation, such as modifications to the tax base (to strengthen taxation on capital gains in particular), changes in aliquots and rules of international taxation.
Of the reforms implemented in 2014, those carried out in Chile, Colombia, Ecuador, Honduras, Peru and Venezuela stand out for having affected several taxes.
In September 2014, Chile implemented a broad tax reform aimed at improving the distributive impact of its tax system and instituting more effective tax collection. It includes the creation of two tax systems for businesses, the elimination of instant depreciation for large corporations, and the taxation of capital gains on real estate for high-income sectors, among other measures.
In Colombia, the extraordinary wealth tax was created, with a surcharge on income tax for more equitable distribution, the tax on financial transactions was increased and certain income tax benefits were expanded for the acquisition of capital assets, among other modifications.
Several changes were implemented in Ecuador, including an increase in income tax for businesses in the case of companies with shareholders or beneficiaries in fiscal paradises. The country also created a new tax on certain credit operations, intended to go toward financing cancer treatment, among other measures.
The reform in Honduras includes an increase in the general VAT and the creation of a new minimum income tax. The country also reestablished solidarity contributions, began taxing dividends, eliminated income tax exemptions and established a tax on increased property values.
In Peru, tax measures were passed to promote economic growth, including the establishment of a new depreciation regime on buildings for income tax purposes and the advance recovery of general sales tax for microenterprises that acquire machinery and equipment.
Venezuela reformed its Income Tax Law to eliminate the adjustment for inflation previously allowed to financial entities, and put an end to exemptions for corporations, associations and foundations, among others.
The attached table provides a detailed breakdown of the measures approved by country (available only in Spanish).
