tax cards | 2020 · territory and shall cause the respective tax where the direct user or recipient...

A summary of tax facts of countriesin the Central and South America region

Tax Cards | 2020

2 | Tax Cards 2020 - AGN CSA

Tax Cards | 2020

Index

Argentina 03

Brazil 11

Chile 16

Colombia 21

Costa Rica 27

Guatemala 29

Mexico 34

Nicaragua 37

Panama 40

Peru 45


ARGENTINATax Cards 2020 (Argentine peso)

1. Basic definitions

Unique Tax Identification Code Single Tax identification. The Unique Tax Identification Code (CUIT) is use in the tax system of the Argentine Republic to be able to identify unequivocally the autonomous natural or legal persons, liable to be taxes.#

Tax administrationThe tax authority in the Argentine Republic is the Federal Administration of Public Revenue (AFIP)

2. Income tax

a) Residence. Residents pay taxes on their world income. In order to avoid double international taxation, they are grante a credit for the similar taxes actually paid abroad on income from foreign sources, up to the amount of the tax obligation increase caused by their inclusion.

b) Territoriality of the source. Foreign beneficiaries pay taxes exclusively on its income from Argentina, in general, through the withholding procedure as a single and final payment.

TaxpayersDepending on income concepts and jurisdictional principles, three types of taxpayers can be distinguish:a. Human persons and undivided inheritance resident in the country.b. Capital companies incorporated in the country and permanent

establishments located in the country.c. Beneficiaries from abroad: human persons, or societies in general and sole

proprietorships not included in the preceding sections.

Fiscal yeara) General rule: The fiscal year coincides with the calendar year.b) Special cases: In the case of companies - direct or not taxpayers - who keep accounting records: the fiscal year coincides with the fiscal year.

The partners of the companies that do not pay taxes directly and the owners of companies and sole proprietorships - in relation to the results obtained by them - must impute the results of the annual business year to the calendar year in which said year ends.

Exemptionsa) Of a subjective nature: religious institutions, public benefit entities, Remuneration obtained by diplomats from foreign countries, copyright up to a certain amount, etc.

b) Of an objective nature: the savings account interest on deposits made in institutions subject to the legal regime of the financial entities by resident human persons and by beneficiaries from abroad, insofar as it is not considered that there are income transfers to Foreign Prosecutors.


3. Income Tax human people and resident individual successions

a) Net incomeIt is determined based on the real gross profit, from which the necessary expenses are deduct to obtain, maintain and conserve the source in conditions of productivity.In addition, it is allow deducing some concepts, such as: • mandatory contributions to retirement systems and social works and,

with certain limits: • life insurance premiums, • funeral expenses, • fees or payments to medical coverage institutions, • assistance expenses health, medical and paramedical, • the interest for the purchase or construction of new or used real estate

destined for home living up to $ 20,000 per year, 40% of the rents for real estate destined for home living, mobility and per diem expenses up to 40% of the non-taxable gain and contributions to private retirement insurance plans.

b) Personal DeductionsDeductions for non-taxable income, family charges and special deduction are deduct from the net gain, in order to obtain the net income subject to tax, according to the following:

• Amounts applicable to personnel in relation to dependency, retirees and self-employed workers and other income.

Concept Annual Amounts in $ 2020 Tax Year

Non Taxable Income 123.861,17

Spouse 114.471,38

Children Under 18 Years 58.232,65

Self-Employed Special Deduction 247.722,23

Special Deduction for Workers in a Dependency Relationship and Retirees

Special Deduction for Domestic Personnel 594.533,62

Deducción Especial por Personal Doméstico 123.861,17

• Amounts applicable to staff in relation to dependency and retirees living in the Patagonia area and Patagones party of the Province of Buenos Aires. Personal deductions are increase by 22% of those in the preceding table.

c) AliquotsThe tax is determined by applying to the net income subject to tax - net income minus personal deductions - a progressive rate based on a 9-profit scale, with its minimum and maximum rates being 5% and 35%, respectively.


3. Income Tax human people and resident individual successions (cont.)

Up to $ To $ $ more than Over the excess of $

0 47.669,16 0 5 % 0

47.669,16 95.338,32 2.083,46 9 % 47.669,16

95.338,32 143.007,48 6.673,68 12% 95.338,32

143.007,48 190.676,65 12.393,98 15 % 143.007,48

190.676.65 286.014,96 19.544,36 19 % 190.676.65

286.014,96 381.353,28 37.658,64 23 % 286.014,96

381.353,28 572.029,92 59.586,45 27 % 381.353,28

572.029,92 762.706,57 111.069,14 31 % 572.029,92

762.706,57 Onwards 170.178,90 35 % 762.706,57

15%: when the determination of the net profit of the human persons, includes results of foreign source, coming from operations of alienation of shares, representative securities and certificates of deposit of shares and other securities, quotas and social participations - including shares of funds investment funds and certificates of participation of trusts and any other rights over trusts and similar contracts-, digital currencies, securities, bonds and other securities, as well as for the disposal of real estate or transfers of rights over real estate.

d) cedular tax

The cedular tax applies to fiscal years beginning on January 1, 2018 and applies to interest, income and results obtained by human persons and undivided inheritance as detailed below:• Interest or yields and discounts or emission premiums:• Bank deposits, public securities, negotiable obligations, shares of common

investment funds, debt securities of financial trusts and similar contracts, bonds and other securities.

• Dividends and similar profits.• Disposal of securities, digital currencies and other securities:• Shares, representative securities and certificates of deposits of shares

and other securities, quotas and social participations - including shares of mutual funds and certificates of participation of financial trusts and any other rights over trusts and similar contracts -, digital currencies, securities, bonds and other values.

Applicable rates are 5% or 15% depending on the type of income

Special DeductionFor the residents of the country, the special deduction for the Year 2020 amounts to $ 123.861,17..

e) Settlement and payment regimeThe tax is settled by fiscal year, through the self-determination system


4. Income Tax Legal persons (companies)

a) Companies reached:i. Corporations, limited liability and limited partnership and by shares, trusts

and mutual funds established in the country.ii. Permanent establishments located in the country belonging to associations,

societies and companies incorporated abroad or to individuals or undivided estates residing abroad.

b) Taxable baseIt is determined based on the real gross profit

c) General rateThe tax is determined by applying the net income subject to tax, the rate according to the following:

• For fiscal years beginning on 01/01/2018 and until 12/31/2019: 30%.Permanent establishments must enter the additional rate of 7% at the time of remittance of profits to their parent company.

• For fiscal years beginning on 01/01/2021: 25%. Permanent establishments must enter the additional rate of 13% at the time of remittance of profits to their parent company.

d) Specific rateThe income derived from the exploitation of gambling in casinos (roulette, point and banking, blackjack, poker, and / or any other authorized game) and the placing of bets through electronic gaming machines and / or Automated bets (immediate resolution or not) and / or through digital platforms will be taxed at 41.50%. The aforementioned rate will be applicable to both human and legal persons.

e) Settlement and payment The tax is settled by commercial year, through the self-determination system. The presentation and income of the tax balance occurs the fifth month following the closing of the fiscal year to which the declaration refers.

Ten monthly advances are paid, the first of 25% and 9 of 8.33%, determined based on the tax determined in the previous fiscal year less withholdings and perceptions suffered. They are enter as of the sixth month after the close of the fiscal year for which it is necessary to settle the lien.

There are withholding regimes on certain incomes, such as sale of exchange and use goods, rentals, interests, fees, work locations and transport services of national and international cargo, transfer of trademark rights, patents, distribution of cinematographic films and distributed dividends.

5. Income Tax on Foreign Beneficiaries

a) Payment schemeArgentine source profits obtained by foreign beneficiaries are taxe through withholding at the source as a single and final payment.

b) Taxable basei. Companies not considered taxpayers, with respect to foreign partners: the

tax base is the net income determined according to the general tax rules. It should be mention that the lien must be withheld whether or not the respective utility is turned.


5. Interests - Profit Tax Deduction

ii. Other Argentine-based earnings attributable to foreign beneficiaries: the tax base are given by a presumed net gain, equivalent to a percentage of the amounts paid, which the law establishes for each type of income.

c) Fixed Assumptions for Certain Income ConceptsArticle 93 of the Income Tax Law provides for the presumption of certain income in accordance with the concept paid

USUAL RATES FOR PRESUMPTION OF FOREIGN BENEFICIARY INCOME

CONCEPT Net Income Effective Tax Rate

Incremental Tax Rate

- Technology transfer contracts governed by said law

- Technical assistance, engineering or consulting services 60% 21,00% 26,582%

- Assignment of rights or licenses (Exploitation of invention patents) 80% 28,00% 38,889%

- Technical assistance services and transfer of rights without indicating amount 80% 28,00% 38,889%

- Copyright and artists residing abroad 35% 12,25% 13,960%

- Interests on credits of any origin obtained abroad

- Loans taken by financial entities 43% 15,05% 17,716%

- Imports of depreciable movable property-except automobiles-financed by the supplier 43% 15,05% 17,716%

- Loans granted by banking or financial entities located in countries not considered tax havens, or in countries with which the Republic has signed information exchange agreements and that cannot claim bank or other secrecy. The granting financial institutions must be under the supervision of the respective central bank or equivalent entity

43% 15,05% 17,716%

- Debt bonds registered in countries with reciprocity agreements for investment protection

43% 15,05% 17,716%

- Loans not included in the preceding points 100% 35% 53,846%

- Deposits made in financial institutions 43% 15,05% 17,716%

- Salaries and professional fees derived from personal activities 70% 24,50% 32,450%

- Location of furniture 40% 14,00% 16,279%

- Real state rentals and leases 60% 21,00% 26,582%

- Transfer in a onerous title 50% 17,50% 21,212%

- Shares, bonds and other securities (from 23/9/2013 S/L. 26893)

90% x alícuota 15% 13,50% 15,61%

-Other earnings 90% 31,50% 45,985%


6. Interests Profit Tax Deduction

The Tax Reform set limits for deductibility for the years beginning on 1/1/2018, introducing substantial modifications to the meager capitalization regime.

As there are several issues to consider, it is suggest consulting the professional in the country.

7. Tax on minimum presumed gains

Repealed as of the Exercises started on 01-01-2019

8. Tax on personal property

1. Taxable eventPossession of personal property as of December 31 of each year.

2. Jurisdictional principlesa. Address or filing: Individuals domiciled in the country and undivided

inheritance based therein pay taxes on property located in the country and abroad.

b. Territoriality: Natural persons domiciled abroad and undivided inheritance located abroad tax on property located in the country.

3. Subjectsa. Individuals domiciled in the country and undivided inheritance based therein.b. Natural persons domiciled abroad and undivided inheritance located abroad.

4. ExemptionsThe main exemptions refer to assets belonging to members of foreign diplomatic and consular missions, to social quotas of cooperatives, to intangible assets, deposits in Argentine and foreign currency at a fixed term, in savings accounts and special savings accounts made in entities financial, certificates of reprogrammed deposits (CEDROS), titles and bonds issued by the Nation, provinces and municipalities.

5. Fiscal PeriodCalendar year.

6. Taxable baseTotal value of the assets owned as of December 31 of each year, valued in accordance with the legal and regulatory provisions, which seek to consider - in many cases by the monetary correction of costs - their market value at that date.

Total Value of goods located locally and abroad

Total value of goods located abroad that excess the non-taxable minimum not computed against the goods of the

country will pay the %

Legal Basis

More than $ To $

0 3.000.000, inclusive 0,70 L. 27541

D. 99/2019 3.000.000 6.500.000,

inclusive 1,20 L. 27260

6.500.000 18.000.000, inclusive 1,80 L. 27260

18.000.000 Onwards 2,25 L. 27260


8. Tax on personal property (cont.)

I. Holders of the Country. Aliquots

MINIMUM NOT TAXABLE FROM TAX YEAR 2019 AND SS.

Tax Year

Pay $More than %

Over the excess $

Amount not subject to income tax

General Percentage

PresumePercentage

(2)Law Amount Legal

Basis

2019 y ss. 0,50% 1% L. 27541

$ 255,75 RG (DGI) 3653

2018 0,25% 0,50% L. 27260

2017 0,50% 1% L. 27260

2016 0,75% 1,5% L. 27260

2007 a 2015 1,25% 2,50% L. 26317

1999 a 2006 0,75% 1,50% L. 25239

1995 a 1998 0,50% 1% L. 24468

1992 a 1994 1% - L. 23966

1991 1% - L. 23966 $ 250,00 L. 23966

(2) By L. 24631, an increase of 100% of the aliquot is established from 4/5/1996 for those assets that are presumed as belonging to natural persons and undivided successions, in accordance with art. 26 of the tax law

HOLDING OF SHARES AND PARTICIPATIONS OF COMPANIESLIQUIDATION AND INCOME BY COMPANIES ACCORDING TO LAW 19550

ALÍQUOTS

TAX YEAR INDIVIDUAL HOLDER OR LEGAL BASIS

From 2019 0,50% L. 27541

From 2016 to 2018 0,25% L. 27260

From 2002 to 2015 0,50% L. 25585

9. VAT Tax

The Value Added Tax (VAT) affects the sale of goods and services in the Argentine Republic.

ExportsExports are exempt, allowing the recovery of the tax paid in the acquisition of goods and services intended for them.

1. Aliquotsa. General rate 21%.b. Higher differential rate: 27% for sales of gas, electricity (except public

lighting), provision of services for the supply of running water, sewage and drains and benefits provided by those providing telecommunications services

c. Reduced differential rate: 10.5%, applicable to certain interests; capital goods from Mercosur and groceries

2. Tax Determination and Payment

VAT tax return is presented to the tax authorities in a monthly basis.


10. Exports Rights

Law 27541 on social solidarity and productive reactivation empowered the Executive Branch to set the rate of export duties at up to 33% of the taxable value or the official FOB price, with certain limitations.

One of the limitations is that, in the case of exports of services, the maximum rate is 5%.Through decree 99/2019, the Executive Power made the modifications that we detail below.

a. The extension of rights for 1 more year

As we indicated, Decree 1201/2018 established export duties on exports of services until 12/31/2020, which is why service exporters, especially companies in the knowledge economy, hoped that as of 1/1/2021 they will no longer apply.

However, decree 99/2019 extends export rights until 12/31/2021, that is, 1 more year.

b. The 5% rate and the elimination of the capc. The exchange rate for the payment of rights.

Import duties, export duties, as well as other taxes levied on imports and exports will be determined in US dollars.

The payment will be made by converting the amount in foreign currency at the exchange rate in effect on the day before the actual payment.

10. Tax on gross income (provincial tax)

The tax levies on autonomous activities, acts or operations and involves the application of a percentage on the turnover of a business, regardless of its profit, says the AFIP. Each province has its own aliquots and individual parameters (activity, billing levels) to decide when a company should

The rates of IIBB vary from province to province: in each jurisdiction, there is a Fiscal Code and tax laws that establish the guidelines for each year. Each jurisdiction also has its rules as to which activities are exempt. The most common is that some industrial activities out of the tax. It also happens that rates are lower in primary activities and are increasing for industry, commerce and intermediation.

Firm: EDUARDO SCHMILOVICH - Contadores PúblicosContact: Antonio Mingolla | [email protected]

UpdatedSept 2020

See AGN Firms Directory

mailto:antoniom%40estudioescp.com.ar?subject=

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BRAZILTax Card 2020 (Brazilian real)


Tax Unit

The Tax Unit is a reference value used to determine tax bases, deductions, limits, penalties and other tax obligations, for the natural person or legal entity. Brazilian companies may be subject to taxes on current or estimated income. The actual profit method is based on annual or quarterly taxable income and the presumed profit method is based on the estimated taxable income. The choice is made annually and documented by the first tax payment at the beginning of each calendar year.

Tax Payer Registry

Any natural or legal person must register in the Tax payer Register, CPF or CNPJ.

Tax Authority

The tax authority in Brazil responsible for collecting taxes from the Central Government is called Secretaria da Receita Federal do Brasil - SRFB. www.receita.fazenda.gov.br

Exchange Control Regime

There is no foreign currency exchange control regime in Brazil. The exchange rate for foreign currency buying and selling transactions is determined by the supply and demand of that currency.

Register for Foreign Investment Any foreign investment must be registered with the Central Bank of Brazil for the repatriation of the invested capital to be authorized. The registration of foreign capital entered in Brazil is done electronically, directly in the Central Bank Information System – Sisbacen.

2. Source Income

Tax residents pay taxes on worldwide income, with the possibility of a foreign tax credit for taxes paid in the country of origin (subject to an applicable tax treaty or bilateral reciprocity with the other country). Non-residents pay taxes only on income of Brazilian origin. The source of income is determined by the payer’s location, regardless of where the work is performed.

3. Corporate Income Tax

Companies (called legal entities for tax purposes) domiciled in the country are subject to income tax for their worldwide income. Corporate Income Tax rate is 34%.


3. Corporate Income Tax (cont.)

Payment in Advance for Income Tax

Companies must make monthly or three-month period payments under Income Tax and Social Contribution, in accordance with the tax regime chosen, which may be an actual gain or an presumed profit.

4. Corporate Income Tax for Branches of Foreign Companies

Net income earned from branches of foreign companies is subject to tax in the same way as domiciled entities.

5. Income Tax for Individuals

Definition of Domiciled

The following persons are considered resident for income tax purposes:

(1) A person permanently residing in the country;(2) Naturalized foreigner’s individuals; (3) Foreigners who have a permanent visa or temporary visa with a local employment contract, from the date of arrival; and (4) Foreigners who have a temporary visa but not a local employment contract, after completing 183 days (whether consecutive or not) of physical residence in Brazil in any 12-month period.

6. Income Tax Rates for Individuals

Individuals Income Tax rates vary according to income earned and can reach 27.5% taxation prior to deductions.

Dividends are not affected by income tax.

Taxpayers can deduct certain expenses when calculating the monthly income tax obligation and other expenses when they file their annual federal income tax return.

7. Value Added Tax

Taxes are paid by all private commercial entities residing in Brazil. Federal, state, and municipal governments collect taxes depending on the type of transaction.

• PiS and COFINS are monthly federal taxes on gross income earned by legal entities. The rate may vary from 3.65% to 9.25% depending on the tax scheme selected by the taxpayer. Tax credits are allowed in specific cases.

• The IPI is a federal tax on manufacturer sales and imports and sales by importers. As a VAT tax, the amount paid for imports and other taxed inputs are generally recoverable as tax credits to compensate with sales debits. Tax rates range from 0% to 330% depending on the type of goods.

• ICMS is a VAT collected by Brazilian states on the movement of goods and the provision of interstate and intermunicipial transport and communications services. Rates are 7%, 12%, 18% and 25% and vary according to the Home and Destination Address of the goods.


7. Value Added Tax (Cont.)

• The service tax or ISS, the city tax, is imposed on the provision of services, other than services subject to ICMS. ISS rates range from 2% to 5%, depending on the municipality and type of service

8. Financial Transaction Tax

The Tax on Credit, Exchange and Insurance Transactions, or Relating Securities or Securities (IOF) applies to most transactions made in Brazil’s banking system, according to the type of the transaction. The tax rate ranges from 0.38% to 6%.

9. Banking Regime

In Brazil there is excellent banking service. Brazilian banks operate with large branch networks, due to Brazil’s geographical characteristics and regional peculiarities. There is a high investment in the effective use of the most advanced technologies to make Brazil’s banks increasingly efficient and secure. In addition, Brazilian banks offer a very broad set of services (payments, financial transfers, sales of other services, investments, loans, among others), which makes them a kind of a large financial supermarket.

10. Prescription Terms

The action of the Tax Administration to determine the tax liability; as well as, the action to demand your payment and apply sanctions prescribes in 5 years.

11. Tax Filing Deadlines and Tax Payments

In the global tax community, Brazil is widely seen as an innovator in the field of tax technology. This role began with the administration of personal income tax more than 15 years ago. He went on to electronic invoicing, then the various ledgers and indirect tax returns and reached the corporate earnings tax return a few years ago. Today the Brazileiro “fiscal compliance” is 100% digital. Accounting and tax records must be submitted and sent electronically to Brazilian tax authorities on a regular basis (monthly, quarterly and annual).

12. Double Taxation Treaties

Brazil has signed with several countries treaties to avoid double taxation, such as: South Africa, Argentina, Austria, Belgium, Canada, Chile, China, South Korea, Denmark, Ecuador, Spain, Philippines, Finland, France, Hungary, India, Israel, Italy, Japan, Luxembourg, Mexico, Norway, Netherlands, Peru, Portugal, Russia, Sweden, Trinidad and Tobago, Turkey, Ukraine, Venezuela.

13. COVID-19

The coronavirus pandemic has had strong impacts on the most diverse spheres of life and business in Brazil. In view of this scenario, GESCON details a multidisciplinary publication on the subject, with the aim of clarifying and providing relevant information to different areas and sectors of the economy. The Foreign Chamber of Commerce issued a resolution reducing to zero (0%), until 30 September, the Import Tax rate of several goods to be used in the fight against COVID-19.

• The Office of the Attorney General of the National Treasury suspended, for 90 days, the term of defense of taxpayers in administrative proceedings related to debt charges published in the federal government.

• The Administrative Council of Tax Appeals (CARF) suspended, until 30/04/2020, the deadlines for the practice of procedural acts in administrative proceedings within its jurisdiction.

• The Office of the Attorney General of the National Treasury suspended, for 90 days, the deadlines and charges related to tax debts within its jurisdiction.


13. COVID-19 (Cont.)

• The Office of the Attorney General of the National Treasury suspended, for 90 days, the term of defense of taxpayers in administrative proceedings related to debt charges published in the federal government.

• The Administrative Council of Tax Appeals (CARF) suspended, until 30/04/2020, the deadlines for the practice of procedural acts in administrative proceedings within its jurisdiction.

• The Office of the Attorney General of the National Treasury suspended, for 90 days, the deadlines and charges related to tax debts within its jurisdiction.

• The City Council of Sao Paulo suspended, in administrative processes and procedures, all legal and regulated deadlines, for 30 (thirty) days, without prejudice to any extension.

• The City Council of Rio de Janeiro suspended the terms established by tax legislation in relation to the filing of administrative objections and appeals, as well as compliance with administrative requirements and the cancellation of municipal registration or the exclusion of all service activities from the registration of economic activities. In addition, it extended for 60 (sixty days) the validity periods of certificates that expired sixty days before the date of publication of this Decree.

• The President of the Tax Court of the State of Sao Paulo determined the interruption of procedural deadlines, due to temporary and emergency measures to prevent COVID-19 contamination. The Secretariat of Foreign Trade issued a decree creating the COVID-19 Special Export License for Combat Products, which must be submitted to complete exports for products considered essential to combat COVID-19

• Corporations may, exceptionally, postpone their annual general meeting for seven months from the end of their fiscal year. Exceptionally during 2020, the Securities and Exchange Commission (CVM) may extend the deadlines for publicly traded companies to submit financial statements.

The Federal Government reduced to zero (0%) excise tax rates (IPI) applied to products considered essential for the current global moment with the presence of COVID-19.

Decree 10.305 /20 reduces to zero the daily rate of financial transactions (0.0041% or 0.0082% per day) and its supplementary rate (0.38%) applied to credit transactions carried out by natural and legal persons. The change takes effect for contracted transactions from 03/04/20 to 03/07/20. The reduced rate shall also apply, during the same period, in the event of extension, renewal, novation, consolidation, confession of debt and other similar transactions of the credit transaction, as well as for non-performing transactions whose tax has not reached the maximum tax rate of 1.5%.

The Brazilian government extended the deadline for the People’s Income Tax Declaration (DIRPF) related to the 2019 calendar year to June 2020.

Regulatory Instruction 1.924/20 also revoked the obligation to file on the Individual’s Income Tax Return the receipt number of the last return filed.

Regulatory Instruction 1932/20 extends the deadline for filing the Federal Tax Debt and Credit Declaration (DCTF) and the Digital Tax Accounting contribution to PIS/PASEP, the Social Security Financing Contribution (COFINS) and Social Security Contribution to Income (EFD - Contribution).


13. COVID-19 (Cont.)

• The above taxes due in April, May and June will be paid in July. • The government estimates that R$80 billion will remain in the company’s

cash. Provisional measure 932/20 reduces, until 30/06/2020, contribution rates for autonomous social services. The reductions were different for each entity belonging to autonomous social services, varying from 0.05% to 1.25

Provisional Measure 936/20 establishes complementary measures for the purpose of maintaining employment and income, during the state of public calamity resulting from coronavirus (COVID-19).

Provisions include: Payment of Emergency Work and Income Preservation Benefit; Proportional reduction of working hours and wages; and, Temporary suspension of the employment contract. The Emergency Employment and Income Preservation Benefit will be paid with federal resources, in the event of a proportional reduction in working hours and wages and the temporary suspension of the employment contract.

The agreement for the proportional reduction of working hours and wages may be up to 90 days, subject to the following requirements: (a) Preserving the value of the hourly wage of work; (b) The individual written agreement between employer and employee, made 2 days in advance; and; (c) Reduction of working hours exclusively by percentages of 25%, 50% or 70%

If the temporary suspension of employment is not take into account, the employer shall be subject to immediate payment of remuneration and social burdens throughout the period, plus sanctions laid down in the legislation and penalties determined by the trade union agreement or agreement.

Service guarantee found: FGTS, an employment obligation due by employers (compensation fund), is suspended from March to May 2020.

Suspended contributions may be paid in installments without the impact of monetary adjustments, fines, interest or other charges.

Firm: Gescon Consultoria EmpresariaContact: Luiz Bento | [email protected] Updated

April 2020




CHILETax Card 2020 (Chilean peso)


• Tax Administration: The tax authority in Chile is the Internal Revenue Service (SII); Chilean public institution dependent on the Ministry of Finance, in charge, especially, of the application and administrative control of tax provisions.

• Calendar year: It is the twelve-month period ending on December 31st.

• Business Year (CA): It is the twelve-month period ending on December 31 or June 30 of each year. The business year will not correspond to a traditional balance (twelve months) in the following case: Term of Business, the taxpayer’s first fiscal year or the first time the authorization to change the balance date operates.

• Fiscal Year: Period of time on which all public sector accounts of a nation are based. In our country it runs from January 1 to December 31.

• Tax year (AT): Year in which taxes must be declared and / or paid.

• Taxes: Mandatory payments of money required by the State to individuals and companies that are not subject to direct consideration, in order to finance the expenses of the State administration and the provision of public goods and services.

• Additional Income Tax: It is an annual tax that affects natural and legal persons that do not have domicile or residence in Chile, applied to the total income received or accrued, in accordance with the concepts and rates defined in the Law on Income tax.

• Value Added Tax (VAT): This tax consists of a 19% surcharge on the amount of the final price determined by the seller of a good or service. The tax acts in chain, moving from the seller to the buyer, who discount for the tax paid and credited on the invoices of his purchases (Tax Credit) and adds the tax collected in the sales (Tax Debit). The consumer of the good or service is the one who finally bears the tax that has been dragged into the chain from the producer to the final consumer.

• First Category Tax: Tax that applies to capital activities classified in article 20 of the Income Tax Act, such as industrial, commercial, agricultural, service services, extractive activities, among others.

• Direct Tax: These are taxes that apply directly to the holder of the income or wealth that pays them, so you can recognize who paid it and its amount. Direct taxes include those covered by the Income Act, such as corporate income taxes or personal taxes.


1. Basic definitions (cont.)

• Complementary Global Tax: It is an annual tax that affects natural persons who obtain income or income of different nature, such as fees, interest on deposits and savings, dividends for the holding of shares, withdrawals of profits from companies, income from leases, alleged income caused by transport and mining activity, among others. This tax is determined in April of each year by the income generated from January to December of the previous year, applying the tax rates defined in the income tranche table, according to the level of income that corresponds to the taxpayer according to the mechanism determined by law.

• Indirect Taxes: It is applied for the use of wealth on individuals and therefore indirectly. Taxes are indirect on sales, property, alcohol, imports, gasoline, etc.

• Second-rate Single Tax: This is a single progressive withholding tax that taxes monthly income whose generating source is work, provided that the provision of services is performed under a dependency link with an employer or employer. These include those income received, such as salaries, prizes, rewards, shares or others paid for personal services, mountains or pensions, and the amounts received for representation expenses. This tax is determined by applying the table with the effective tax rates, depending on the tranche in which the taxpayer is located according to their income.

• Taxpayers: These are natural or legal persons, or administrators or holders of third-party property affected by taxes.

• Income: Income that constitutes profits or benefits that a thing or activity

yields and all profits, profits and increases in equity that are received or accrued, whatever their origin, nature or denomination.

• Gross income: These are the income that a taxpayer-company receives, discounting the direct cost of the goods and services that are required to obtain it.

• Accrued income: Corresponds to the income on which you have a degree or right, regardless of its current enforceability and that it constitutes a credit for its holder.

• Exempt income: Income that is not affected by the payment of taxes. The law establishes a level of income under which individuals do not have tax obligations, or determines that some specific income is not taxed.

• Taxable income: Income on which the amount to be paid for taxes and/or

social laws, such as forecasting and health, is calculated.

• Presumed minimum income: Amount that is not subject to any deduction by the taxpayer.

• Liquid income: The one that is determined by deducting from gross income all the expenses necessary to produce it.

• Taxable liquid income (RLI): This is the liquid income to which aggregates or decreases are made ordered by law, the result of which is the basis for the application of the corresponding taxes.



• Perceived income: That income that has been materially credited to a person’s estate.

• Presumed income: Tax revenue that is determined when individuals cannot or are exempt from demonstrating income generated by an asset or business through accounting. Generally, the presumed income of an asset or business is determined as a percentage of its value.

• Chilean source income: Corresponds to the benefits or income obtained by the taxpayer for the goods located in the country or for the activities carried out there, whatever the domicile or residence of the taxpayer.

• Foreign source income: Those that come from local goods or activities developed abroad. For foreign source income to be taxed in Chile, it is necessary for the taxpayer to be domiciled or reside in the country.

• Second-rate income: They correspond to all those income whose predominant element in their generation consists of human work; that is to say, for the provision of personal services.

• Single Tax Role: It is a national numerical register in which all taxpayers in

the country, natural and legal persons or others are identified.

2. Tax regimes – First Category Income Tax

Until December 31, 2019; the tax regimes in force in Chile are applied in 2020 tax year, as follows:

• Income Allocated (Art. 14 A): Taxation regime based on full accounting with total credit allocation of the First Category Tax to members. Rate 25%.

• Semi Integrated (Art. 14 B): Taxation regime based on full accounting with total credit allocation of the First Category Tax to members. Rate 27%.

• Simplified taxation (Art. 14B Letter A): Simplified regime that relieves the taxpayer of certain tax obligations. Rate 25%

• Presumed Income (Art. 34): Taxation regime that pays tax on the basis of an alleged income. Rate 25%

According to Law 21240, law that established a Tax Modernization, the new tax regimes in force from 2021 tax year are the following:

• Pro Pyme General (14 D) with full accounting: Tax regime focused on small and medium-sized taxpayers, which allows you to choose between full or simplified accounting, with reduced rate of First Category Tax and taxation of owners based on effective withdrawals with total allocation of the First Category Tax credit for owners who are Pymes. It can also be carried with simplified accounting

• Pro Pyme Transparent (14 D° 8): Taxation regime with full accounting where members can make partial credit allocation of the First Category Tax of the Income Law. This scheme should be welcomed by all taxpayers whose income from the money and capital, does not allow them to be classified as Pymes.


2. Tax regimes – First Category Income Tax (cont.)

• Presume Income: Tax regime that allows to keep simplified accounting, in which taxes are paid on the basis of Alleged Income (for example, the percentage of the tax appraisal, the appraisal of vehicles, among others). This scheme is eligible for taxpayers engaged in Agricultural, Transport and Mining activities, provided that their income does not exceed the limits established by law for each type of activity.

• General Semi Integrated (14 A): Taxation regime with full accounting where members can make partial credit allocation of the First Category Tax of the Income Law. This scheme should be welcomed by all taxpayers whose income from the money and capital, does not allow them to be classified as Pymes.

• Taxpayers not subject to Article 14: A tax regime that applies to taxpayers who must keep full accounts and where their owners are not taxed with final taxes. They will be eligible for this tax regime such as: Foundations, Corporations, companies in which the State has full ownership, among others

3. Income Tax for Domiciled Entities

Companies (called legal entities) domiciled in the country are affected by income tax for their worldwide income. The Income Tax rate is 25% or 27%, depending on the tax regime.

4. Income Tax for Individuals and Legal Entities non-domiciled neither residents in Chile

General income tax rate is 35%.

5. Global Contem-poraryIncome Tax Rates for Individuals

Individuals Income Tax rates vary according to the total income earned during the tax year to be declared; at a 35% tax rate.

6. Value Added Tax

This tax consists of a 19% surcharge on the amount of the final price determined by the seller of a good or service. The tax acts in chains, moving from the seller to the buyer, who discounts for the tax paid and credited on the invoices of their purchases (Tax Credit) and adds the tax collected in the sales (Tax Debit). The consumer of the good or service is the one who finally bears the tax that has been dragged into the chain from the producer to the final consumer.

7. Stamp Tax

This tax acts such as; Bills of exchange, releases, promissory notes, simple or documentary credits and any other document, including those issued in a dematerialized form, containing a money credit transaction, [...]


7. Stamp Tax

[...] with a rate of 0.066% on its amount for each month or fraction that measures between the issuance of the document and the expiration date of the document, cannot exceed 0.8% the rate that ultimately applies.

Instruments and documents containing credit transactions of money in sight or without maturity must know the rate of 0.332% on their amount. This established fee shall also apply to documents giving an account of money credit transactions stipulating that the obligation to repay the respective credit shall be payable only or arise after a certain period of time, to the extent that it does not exceed five months, in which case the fee rated in the previous subparagraph shall apply.


Chile has signed treaties to avoid double taxation with some countries. The list of treaties signed to date is as follows: Argentina; Australia; Austria; Belgium; Brazil; Canada; China; Colombia; Korea; Croatia; Denmark; Ecuador; Spain; France; Ireland; Italy; Japan; Malaysia; Mexico; Norway; New Zealand; Paraguay; Peru; Poland; Portugal; United Kingdom; Czech Republic; Russia; South Africa; Sweden; Switzerland; Thailand; Uruguay.

Other Treaties Subscribers but not in force: United States, United Arab Emirates; Amending Protocol to the Convention with China; India;

International Transport Conventions in force: Germany (sea), Germany (air), United Arab Emirates, United States of America (air), France (air), Panama (air), Singapore (sea), Switzerland (air), Uruguay (air), Venezuela (air and sea)

Current Information Exchange Agreements: Bermuda; Multilateral Convention; Guernsey, Jersey; Uruguay.

9. COVID-19

• http://www.sii.cl/destacados/medidas_mipymes/medidaspymes.html) Anticipation of the return of Income Tax, Pymes and Individualss.

• Suspension of provisional monthly payments (PPM) of corporate income tax for the next 3 months.

• Deferment until July of the payment of Income Tax of Pymes, according to what they declare in Operation Income 2020

• Deferment of the payment of VAT for the next three months • Deferment in 6 or 12 months of the fees of March, April and May,

corresponding to the payment of VAT from October to December 2019, in accordance with Law 21.207.

• Deferment in 6 or 12 installments of payment of VAT orders due in April, May and June Return Withholdings to independent

• Deferment payment of April contributions for companies with sales less than 350,000 UF and for people with properties with tax appraisal less than $133 million.

• Extend Term to qualify for Tax Regimes.• Transitional reduction of stamp duty and stamps to 0% for all credit

operations over the next 6 months.

Firm: KAM Auditores Consultores SpA Contact: Victor Aguayo | [email protected]

Updated April 2020


http://www.sii.cl/destacados/medidas_mipymes/medidaspymes.html

http://www.kamac.cl

mailto:vaguayo%40kamac.cl?subject=



COLOMBIATax Card 2020 (Colombian Pesos)


Tax UnitThe Tax Unit (UVT) is a reference value used to determine tax bases, deductions, limits, penalties and other tax obligations for the natural or legal person. Companies in Colombia may be subject to income taxes on actual or estimated income for each year. The method is based on the taxable liquid income determined on the basis of the income and costs and expenses of the period or on the presumptive income calculated on the basis of the liquid assets of the year immediately before the taxable one.

In order to unify and facilitate the fulfilment of tax obligations, in 2006 the Tax Value Unit (UVT) was created as a value measure that allows to adjust the values contained in the provisions relating to taxes and penalties on obligations administered by the Directorate of National Taxes and Customs (DIAN), the value given to it in that year was Col$ 20,000 and annually it is readjusted in the variation of the Price Index (IPC), for 2019 was Col$ 34,270 and for 2020 the value was set at Col$ 35,607.

Tax Payer RegisterAny natural or legal person must register with the Tax Payer Register (RUT), which is managed by the Directorate of National Taxes and Customs (DIAN). It is a unique mechanism to identify, locate and classify individuals and entities according to the different obligations they have to meet before the Directorate of National Taxes and Customs (DIAN), the Single Tax Register (RUT) operates under the individual assignment of a Tax Identification Number (NIT).

Tax AuthorityThe tax authority in Colombia responsible for the collection and administration of national taxes in the country is called Directorate of National Taxes and Customs (DIAN), an entity attached to the Ministry of Finance and Public Credit. www.dian.gov.co.

Exchange Control RegimeIn Colombia from the promulgation of the Political Constitution of 1991 and Law 9 of 1991, the Colombian Government allows the free trading of foreign exchange between residents and non-residents of the country. Notwithstanding the foregoing, the Bank of the Republic (Central Bank) as a regulatory body requires compliance with requirements for the entry and exit of foreign exchange from the country, which are contained in an Exchange Regime.

The exchange rate for foreign currency buying and selling transactions is determined by the supply and demand of that currency.



Register for Foreign Investment

Any foreign investment must be registered with the Banco de La Republica which is the central bank of Colombia. Any foreign direct investment (EDI) movement in the country must be handled through the banking market and reported to the central bank for the repatriation of invested capital to be authorized.

The process of registering foreign exchange investment is done through the direct intervention of a Foreign Exchange Intermediary automatically generating the foreign exchange rights granted by law.

2. Source Income

Colombian sourced income is income from the exploitation of material and intangible goods within the country and the provision of services within its territory, on a permanent or transitional basis, with or without its own establishment. Also constitute income from a national source that is obtained in the disposal of material and intangible goods, in any title, that are located within the country at the time of disposal.

Tax residents pay taxes on all income earned both in Colombia and abroad. There is the possibility of using tax credits for taxes paid abroad (subject to applicable tax treaty or bilateral reciprocity with the other country). Non-residents pay taxes only on income of Colombian origin. The source of income is determined by the payer’s location, regardless of where the work is performed.

3. Income Tax

Companies domiciled in the country (called taxpayers for tax purposes) are subject to Income Tax for their taxable net income or on the presumptive income determined on the basis of the liquid assets of the immediately previous year (1.5% of the aforementioned assets). The income tax rate is 32%.

Companies in Colombia, with the annual tax return, must additionally make payments in advance of income tax for the following taxable year.

The general rate of income tax applicable to domiciled companies and their assimilated companies, permanent establishments of foreign entities and foreign legal entities with or without residence in the country, required to file the annual income tax return and supplementary, is thirty-two per cent (32%) 2020, thirty-one per cent (31%) 2021 and thirty per cent (30%) from the taxable year 2022.

Withholding Income Tax

The government may establish withholding tax at source in order to facilitate, accelerate and ensure the collection of income tax and its supplementary taxes, and determine percentages taking into account the amount of payments or credits and the applicable tax rates, as well as legislative changes that have an impact on those fees, which will be taken as a payment in advance.

All companies or entities in Colombia are subject to withholding tax on payments or credit memos for purchase of goods or services, such retention must be certified by the payer of the services or goods and deducted from the tax at an annual charge. Withholding tax is a payment in advance of annual taxes.


4. Corporate Income Tax for Branches of Foreign Companies

Net income earned from branches of foreign companies is subject to income tax in the same way as domiciled companies. The general rate of income tax applicable to permanent establishments of foreign entities and foreign legal entities with or without residence in the country, required to file the annual income tax return and supplementary, is thirty-three per cent (33%) 2019, thirty-two percent (32%) 2020, thirty-one per cent (31%) 2021 and thirty per cent (30%) from the taxable year 2022.


Definition of domiciled

The following persons are considered residents for income tax purposes:

• Remain continuously or discontinuously in the country for more than one hundred and eighty-three (183) calendar days including days of entry and departure from the country, for any period of any three hundred and sixty-five (365) consecutive calendar days, on the understanding that, when continuous or discontinuous stay in the country falls over more than one taxable year or period, the person shall be deemed to be resident from the second year or taxable period.

• To find themselves, because of their relationship with the foreign service of the Colombian Government or with persons in the foreign service of the Colombian Government, and under the Vienna conventions on diplomatic and consular relations, exempt from taxation in the country in which they are on a mission in respect of all or part of their occasional income and profits during the respective taxable year or period.

• Be national during the respective taxable year: Your spouse or permanent partner not legally separated or dependent children under age, have tax residence in the country; or, Fifty percent (50%) or more of your income is nationally sourced; or, Fifty percent (50%) or more of their assets are managed in the country; or, Fifty percent (50%) or more of their assets are understood to have been held in the country; or. Having been required by the Tax Administration to do so, do not prove your status as residents abroad for tax purposes; or, Have tax residence in a jurisdiction classified by the National Government as tax haven.

Individuals, national or foreign, resident in the country and the liquid successions of causes residing in the country at the time of their death, are subject to income tax and supplemental in respect of their occasional income and earnings, both Colombian sourced and foreign-sourced, and their assets held in and out of the country.

Individuals, national or foreign, who are not resident in the country and the liquid successions of non-resident causes in the country at the time of their death, are only subject to income tax and supplemental in respect of their occasional income and earnings from a national source and in respect of their assets held in the country.


6. Income Tax Rates for Individuals (Art.241 ET)

Income tax for Individuals residing in the country, inheritances of causes residing in the country, and goods intended for special purposes, on the basis of donations or modal assignments, shall be determined in accordance with the following table:

Range UTVPERCENTAGE INCOME TAX

FROM TO

>0 1090 0% 0

>1090 1700 19% (Taxable basis in UVT less 1090 UVT) x 19%

>1700 4100 28% (Taxable basis in UVT less 1700 UVT) x 28% + 116 UVT




>31000 ONWARDS 39% (Taxable basis in UVT less 31000 UVT) x 39% + 10352 UVT

7. Income Tax Rate on Dividends

The income tax rate applicable to dividends and shares paid or paid into account to permanent establishments in Colombia of foreign companies shall be ten percent (10%), where they come from profits that have been distributed as non-income or occasional gain.

Where dividends or shares correspond to income, which has been taxed, they shall be subject to the thirty-three per cent rate (33%) if they are from 2019, thirty-two percent (32%) if they correspond to the taxable year 2020, thirty-one per cent (31%) whether they correspond to the 2021 taxable year and thirty per cent (30%) from the taxable year 2022, in which case the tax pointed to in the previous subparagraph, will be applied once this tax has been reduced.

8. Value Added Tax (VAT)

VAT or sales tax shall apply on:

1. The sale of movable and immovable bodily property, with the exception of those expressly excluded under the tax regime.

2. The sale or assignment of rights in intangible assets, only associated with industrial property.

3. The provision of services in the national territory, or from abroad, with the exception of those expressly excluded in the tax statute.

4. The importation of bodily goods that have not been expressly excluded. 5. The circulation, sale or operation of games of luck and chance, with the

exception of lotteries and games of luck and chance, operated exclusively online.

VAT on games of luck and chance is caused at the time of placing the bet, issuing the document, form, ballot or instrument that entitles you to participate in the game. The game operator is responsible for the tax.

In games of luck and chance, the general sales tax rate provided for in this Statute shall apply.


8. Value Added Tax (VAT) (Cont.)

The tax shall not apply to sales of fixed assets, unless they are the exceptions provided for residential real estate, motor vehicles and other fixed assets commonly sold in the name and on behalf of third parties and for airports.

The following rules shall apply for the provision of services in the Colombian territory:

1. Services related to real estate shall be deemed to be provided at the place of their location.

2. The following services shall be provided at the place where they are performed materially:

• Those of a cultural, artistic nature, as well as those related to the organization of them.

• Loading and unloading, transshipment and storage.

For the purposes of VAT, services provided and intangibles acquired or licensed from abroad shall be deemed to be provided, licensed or acquired in the national territory and shall cause the respective tax where the direct user or recipient thereof has his tax residence, domicile, permanent establishment, or the seat of his economic activity in the national territory.

The overall sales tax rate is nineteen percent (19%) except for the exceptions provided for in the statute.

9. Financial Transaction Tax (GMF)

The Financial Transaction Tax, in charge of the users of the financial system and the entities that make up it. The tax on financial movements shall be four per thousand (4x 1,000). This tax will be deductible by fifty percent (50%) that has actually been paid by taxpayers during the respective taxable year, regardless of whether or not it has a causal relationship with the taxpayer’s economic activity, provided that it is duly certified by the retaining agent.

The generating fact of the Financial Transaction Tax is the realization of financial transactions, through which resources deposited in current or savings accounts are available,

10. Banking Regime

In Colombia there is a state-regulated financial and banking system through the financial superintendency. Banks operate with large branch networks, throughout our country with major economic and business centers in Bogota, Medellin, Cali and Barranquilla. There is a high investment in the effective use of the most advanced technologies to make Colombia’s banks increasingly efficient and secure. In addition, banks offer a very broad set of services (payments, financial transfers, sales of other services, investments, loans, among others), which makes them a kind of a large financial market.


The action of the Tax Administration to determine the tax liability; as well as, the action to demand your payment and apply sanctions prescribes in 5 years.

The tax return shall be final if, within three (3) years of the expiry of the filing period, no special request has been notified. Where the initial declaration has been submitted extemporaneously, the three (3) years shall be counted from the date of submission of the declaration.


11. Prescription Terms (Cont.)

The tax return on which a balance is filed in favor of the taxpayer or responsible shall be final yes, three (3) years after the date of submission of the application for repayment or compensation, no special request has been notified. Where the balance is imposed in favor of tax returns for the following tax periods, the term of firmness of the tax return in which a balance is filed in favor shall be that given in paragraph 1o of this Article.

The tax return will also be signed if, after the term for review settlement, it was not notified.

The tax return on which a tax loss is settled shall be final in the same term as the taxpayer has to compensate it, in accordance with the rules of this Statute.

The term of finality of the income tax return and supplemental income tax of taxpayers subject to the Transfer Price Scheme shall be five years from the expiry of the filing period. If the declaration was submitted extemporaneously, the previous term shall be counted from the date of submission of the declaration.


The filing of returns and tax payments in Colombia have been handled electronically for several years through the muisca system, DIAN’s electronic platform. Colombia is currently in the e-invoicing process for all transactions in our country.


Double Taxation Treaties in force as of December 31, 2019 to avoid double taxation and prevent tax evasion have been signed with: Canada, Chile, South Korea, Ecuador, Spain, India, Mexico, Peru, Portugal, Czech Republic, Switzerland, United Kingdom and Northern Ireland.

In the process of formalization, France, Italy, United Arab Emirates, and Japan.

Colombia has signed other agreements with several countries to tax treatment some activities and combat tax evasion.

14. COVID-19

On the occasion of COVID-19, the Colombian government issued Decree 417 of March 17, 2020 to declare the state of economic, social, health and environmental emergency in the country and based on which decrees affecting business activities in Colombia are issued.

Firm: A&CO Auditoría, Consultoría & Outsourcing Contact: Juan Carlos Buitrago | [email protected] Updated

April 2020




COSTA RICATax Card 2020 (Colones Costarricenses)


Fiscal Plan 2019• During the period 2019, a tax plan for the improvement and sanitation of

Costa Rica’s Public Finances took effect, this plan includes 3 main axes: a. Modification of the Sales Tax Act to become a Value Added Tax b. Amendment to the Income Tax c. Act one chapter regarding public service regulations in terms of wages

and others. • For companies or investments in Costa Rica, the main effects have been

related to points a) and b) above.

2.Value Added Tax

As of July 2019, Costa Rica adopted value added tax, with major changes in:

a. Rent taxes (Income) for both room and commercial; with the following exceptions:

• Room rentals under 1.5 Base wages are not taxed• Wages Commercial rents under 1.5 Base Wages are not taxed, as long as the company is registered as SMEs (Small and Medium Entity) b. Services in general are taxed with 13%, with specific exceptions in some

categories, are taxed at 1%, 2% and 4%. c. These statements are filed on the 15th of each month.

3. Income Tax

With the entry into force of the Tax Plan, some amendments were made to the Income Tax Act, among the main ones are:

• Capital gains are taxed and capital losses become income tax deductible. • All companies that in a fiscal period obtain loss results; may defer these

losses within 3 years and use them as deductible expenses (5 years in agricultural companies)

Income tax rates are defined on a staggered basis, directly related to income obtained by Companies or Individuals; with this, income tax rates range from 10% to 30%, from the tax base in each period.

As part of the existing changes, as a result of the Tax Plan, all companies become fiscal, equal to the calendar year (previously the tax close in Costa Rica was September 30 of each year);However, subsidiaries whose parent company or holdings of their shares are located outside the country may request special periods at their convenience.

This declaration is filed on March 15 of each year.

There are also regulations for wages of persons working for entities, where amounts of income tax on wages must be with a staggered basis; and that must be retained by the Patrons, and reported and cancelled to the Tax Administration on the 15th of each month.


4. Generality

From 2018 to date, Costa Rica has enabled the electronic invoicing system, as part of tax control measures, and so all commercial activities must be carried out by electronic invoices; the billing process communicates directly to the Tax Administration of each of the invoices issued by a taxpayer, allowing the improvement of controls.

All taxation systems in the country are electronic and payments are made from any of the countries banking platforms; thus generating important facilities in the processes of declaration and cancellation of taxes.

5. COVID-19

As a result of the COVID crisis – 19, the Government of the Republic of Costa Rica, took the following measures for relief:

a. Moratorium on the payment of value added tax for the months of April, May and June 2020 (entities will have a deadline until December 2020, to settle the amounts owed).

b. Exemption from payment of partial payments of income tax, for entities whose payment must be made in the months of April, May or June 2020.

c. The Government of the Republic approved reductions in working hours, by 25% and 50% of the day, in specific cases as a product of the Crisis by COVID-19; the suspension of contracts for the Crisis season, which has been estimated to range from March to June 2020, has also been enabled.

Firm: Despacho Cruz & AsociadosContact: Luis Chinchilla | [email protected] Updated

May 2020


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GUATEMALATax Cards 2020 (US Dollars)


Basis of TaxationIncome is taxed on territorial basis, in other words, tax is chargeable on income accrued in or derived from Guatemala origin, for Guatemalans and Foreigners. Foreign sourced income is exempt

Tax Payers Registry

Every person or corporation of any kind, Guatemalan or foreigner, tax contributor responsible of the tax payment must be registered at the Registro Tributario Unificado (RTU).

Tax Authority

In Guatemala the Tax Authority in charge to collect taxes for the Central Government is Superintendencia de Administración Tributaria (SAT).

Exchange Control

In Guatemala there is not an exchange control of foreign currency. The exchange rate for purchase or sale operations of foreign currency is established by the free offer and demand of currencies.

2. Guatemalan Source Income

Domiciled tax payers are subject to income tax on the all taxable income that they obtain without considering the nationality of the individuals, the place the companies are established and neither the place of the generation of the income.

Non-Domiciled tax payers, such as branches, agencies and other permanent establishments of entities constituted abroad are subject to income tax on the Guatemalan source income.

3. Corporate Tax

All income originated in Guatemala is subject to Income Tax. It doesn´t matter the nationality of the persons, place of constitution of corporations or the place of establishment of the production source.

All income produced by goods, services, capitals, rights, investment in Guatemala are considered income on Guatemalan basis.

The current corporate tax is 25% over profit of the year. In addition, the distribution of profits (dividends) is subject to a withholding income tax at a 5% tax rate.

The corporate tax rate is applied after deduction from the income, all costs and expenses needed to produce and maintain the source income.

Foreign expenses are deductible if they are fully documented and they have been necessary to produce taxable income.


3. Corporate Tax (cont.)

Payments in Advance to Income Tax

Payments in advance can be calculated as follows:

• 8% over total quarterly income considered an estimated profit applying an income tax rate of 25%

• 25% income tax rate over a quarterly net profit.

Monthly Income Tax

Income Tax rate of 5% on a monthly basis up to US $ 4,000.00 and 7% over the excess. Solidarity Tax

Solidarity Tax (ISO) is applied over the total amount of assets of income of the previous fiscal year. Tax rate is 1% over the higher amount over that base. ISO is used as credit against to Income Tax payments in advance and annual Corporate Tax. If ISO is not used in the fiscal year, it could be carried forward for the next three years. The amount of ISO, which was not applied as a fiscal credit after the three years, could be recorded as an expense of the year.

4. Corporate Income Tax to Branches of Foreign Companies

Any branch, agency or other permanent establishments of foreign companies are considered domiciled in Guatemala, due to the income produced by Guatemalan source.

Net profit produced by foreign companies is subject to a 25% Income Tax as well as Guatemalan companies.

5. Withholding Tax Rate (Non-Treaty)

Resident Non-resident Individual/Corporation

Interests 10% 10%

Dividends 5% 5%

Ships and plane rent 25% 25%

Royalties/know-how 15% 15%

Technical services 25% 25%

6. Basis of Tax Residence Corporate Residence

A company will be considered to be a Guatemala tax resident if the control and management of its business was exercised in Guatemala in the preceding calendar year.

“Control and management” is the making of decisions on strategic matters, such as those on company policy and strategy. The location of the company’s Board of Directors meetings, during which strategic decisions are made, is a key factor in determining where the control and management is exercised. The place of incorporation of a company is not necessarily indicative of the tax residence of a company.


6. Income Tax Individual Residence

INTERNATIONAL ACTIVITY NET PROFIT RATE

1. Insurance 5%

2. Ships and plane rent 25%

3. Communications 5%

4. Air Transport 5%

5. Freights 5%

6. News and television networking 3%

7. Movies and digital material 25%

8. Containers 25%

A 25% Income Tax rate will be applied on the net profit determined as mentioned in the last chart.

7. Income Tax Individual Residence

An individual would generally be a tax resident of Guatemala if the individual is physically present or exercises an employment in Guatemala for more than 183 days over a 12 month period.

In addition, under the qualitative test, a Guatemala citizen or a Guatemala permanent resident with a permanent home in Guatemala will ordinarily be regarded as a Guatemala tax resident, even if the individual has been physically away from Guatemala on a temporary basis, so long as the period of absence is reasonable.

Same Income Tax rates are applied to individuals and companies.

For individuals employed, Income Tax over salaries is 5% for Annual net Income up to US $ 40,000.00 and 7% over the excess of US $ 40,000.00

8. Capital Rent Tax Rates

Capital profit: Over income from rent, and rights over goods. Interest, royalties and capital gains apply at a 10% for Income Tax rate.

Dividends and any other profit distribution are subject to a 5% Income Tax rate.

Non-Residence Individual Tax Rates

The non-residence individual income as employee is subject to 25%.

9. Goods and Services Tax

The current Value Added Tax (VAT) rate is at 12%. It is a requirement to register for VAT for all amount of operations. Also VAT is calculated over services provided in Guatemala by non-residece individuals or companies, construction contract, first sale of a property and goods imports.

10. Transactions Financial Tax

Transactions Financial Tax (IPF) is applied to operations made with bank accounts debit or credit. The IPF rate is 1%.Any payments made without using the authorized methods of payment will result in no deductible costs or expenses to calculate Income Tax.


11. Mandatory banking support

According to legal standards, every payment made in the benefit of a corporation or individual above US $ 4,000.00 must be made through the National Banking System (private authorized banks) using checks, bank deposit notes, wire transfers, credit or debit cards.

Any payments made without using the authorized methods of payment will result in non-deductible costs or expenses for Income Tax purposes.

12. Terms for Expiration

The right for the Tax Authority to audit the accounting records of corporation or individuals expires after 4 years.

13. Declarations and Tax Payments

Tax payers calculate their taxes and used digital records and books, as well as tax forms authorized by SAT. Tax declarations are monthly for IVA, quarterly or monthly according to the selected regime for Income Tax and Annual Tax declarations for all tax payers

It is mandatory to present declarations even without tax payments.

14.Stamp Duty

For property transfer ranges 3% on second and further purchases. For share transfer, stamp duty is exempt.

15. Property Tax

Owner occupied residence property is subject to 9 per thousand tax over the property value, paid quarterly.

16.Double taxation prevention treaties

Guatemala does not sign any treaty with other countries to avoid double taxation.

17. COVID-19

In Guatemala, the COVID pandemic has been on board since March 16, 2020 with the closure of borders and a quarantine limiting the mobilization of people. It also established a time restriction from 16.00 to 04.00 of the next day.

In relation to the tax issues, Tax Authorities established the postponement of the expiration for the presentation of the 2019 annual income tax return and the VAT return corresponding to February 2020, in these cases the new deadline was April 15, 2020. Also, the quarterly tax returns corresponding to January-March period was postponement to April 30, 2020; and the Solidarity Tax corresponding to the quarterly period from April to June 2020 was postponement to September 2020.

Tax Authorities did not establish additional tax exceptions neither deadline terms for fiscal obligations.


17. COVID-19(cont.)

Guatemalan Social Security Institute established that the payments for social security corresponding to companies could be paid in 18 monthly quotes.

Finally, the Labor Ministry established that the suspension of labor contracts does not imply a dismissal or loss of the employment relationship.

Firm: PANCHITA AGUIRRE DE KAEHLER Y ASOCIADOS Contact: Marielos de Rueda | [email protected]

UpdatedMay 2020


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MEXICOTax Card 2020 (Mexican Pesos)

1. Basis of Taxation

Taxable Fiscal Unit (UIT) is the value of reference to determine the taxable basis, deductions, limits, penalties and other tax obligations for persons and corporations. Income is taxed for all profits around the world produced by individuals and corporations based in Brazil.

PERIOD FROM TO DAILY MONTHLY ANNUAL1-II-2019 31-I-2020 $84.49 $2,568.50 $30,822.501-II-2018 31-I-2019 $80.60 $2,450.24 $29,402.881-II-2017 31-I-2018 $75.49 $2,294.90 $ 27,538.801-I-2016 31-I-2017 $73.04 $2,220.42 $ 26,645.04

Tax Payers Registry

Every person or corporation of any kind, Brazilian or foreigner, tax contributor responsible of the tax payment must be registered at the Registro Federal de Contribuyentes RFC.

Tax Authority

In Mexico the Tax Authority in charge to collect taxes for the Central Government is Secretaria de Hacienda y Crédito Público through Service of Public Administration. The Tax Authority is able to review tax payer operations in a period of 5 years form the deadline of presentation of annual declaration of the period.

Exchange Control

In Mexico there is not exchange control of foreign currency. The exchange rate for purchase or sale operations of foreign currency is established by the offer and demand of currencies.

Foreign Investment

All foreign investment in Mexico is authorized automatically with some clauses of exclusion to foreigners in:a. Passenger transport, tourism and cargo, not including messenger and

courier services.b. Bank developmentc. Professional and technical services

There is a maximum limit to foreign investment as follows:a. 10% of the capital stock of a cooperative productive society.b. 49% of capital stock in activities like explosives, fishing, ports administration,

radios

There are some activities and societies where foreign capital could exceed 49% with approval of authorities and when its total assets exceed $18 thousand million Mexican Pesos.



All income produced by individuals and corporations based in Mexico is subject to Income Tax. It doesn´t matter the nationality of the persons, place of constitution of corporations or the place of establishment of the production source.

Are considered income of Mexican basis all income produced by goods, services, capitals, rights, investment in Mexico and all their income around the world.

The current corporate tax is 30% over profit of the year.

Payments in Advance to Income Tax

Payments in advance to Income Tax should be done monthly according to a coefficient of rent of previous five years.

3. Corporate Income Tax to Branches of Foreign Companies

Any branch, agency or other permanent establishments of foreign companies are considered home based in Mexico, due to the income produced by Mexican source.

Net profit produced by foreign companies is subject to 30% Income Tax as well as Mexican companies.

4. Basis of Tax Residence Corporate Residence

A company will be considered to be a Mexican tax resident if the control and management of its business was exercised in Mexico in the preceding calendar year.

5. Individuals Income Tax

Residents

Following persons are considered residents for tax purposesa. Person resident permanently in Mexicob. Naturalized foreignersc. Foreigners with a permanent visa or temporary visa with a local work

contract d. Foreigners with a temporary visa but no work contract after 183 days of stay

in Mexico in a 12 months period.

6. Individuals Income Tax Rates

Individuals tax rates are according to profit up to 34% before deductions.

Dividends and any other profit distribution are subject to 10% Income Tax.

Tax payers can deduct some expenses when calculation monthly income tax and other expenses when they present their annual federal taxes over profit.


The current Value Added Tax rate is at 16%.(IVA) It is a requirement to register for VAT for all amount of operations. Also IVA is calculated over services provided in Mexico by non residential individuals or companies, construction contract, first sale of a property and goods imports.



There is 0% VAT over medicine and food products, agricultural equipment, also exports are subject to 0% VAT.

Also there is an incentive to tax payers with businesses at the northern border of Mexico and United States of America, with reduction of VAT rate from 16% to 8%.

8. Financial Transactions Tax

Financial Transactions Tax (IPF) is not a tax applicable in Mexico.

9. Mandatory banking support

In Mexico all bank accounts of tax payers are subject to review from Tax Authorities.

10. Terms for Expiration

The right for the Tax Authority to audit the accounting records of corporation or individuals expires after 5 years.

11. Declarations and Tax Payments

Tax payers calculate their taxes and used digital records and books, as well as tax forms authorized by Tax Authority, also Electronic Invoice. Tax declarations are monthly for IVA, quarterly or monthly according to the selected regime for Income Tax and Annual Tax declarations for all tax payers

It is mandatory to present declarations even without tax payments.

12. Double taxation prevention treaties

Mexico has signed treaties with 97 countries.

Firm: Rangel, Castillo, Carrillo, Rodríguez y Asociados, S.CContact: Luis Norberto Rangel Gutiérrez | [email protected]

UpdatedApril 2020


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NICARAGUATax Card 2020 (Soles)


Basis of TaxationThe Tax Unit (UIT) is a reference value used to determine the tax bases, deductions, limits, penalties and other tax obligations, for the natural person or the legal person. Nicaragua companies may be subject to current or estimated income taxes. The actual profit method is based on annual or quarterly taxable income and the presumed profit method is based on estimated taxable income. The election is made annually and documented by the first tax payment at the beginning of each year.

Tax Payer RegistryAny natural or legal person must register in the Single Taxpayers Registry (RUC)

Tax AuthorityThe DIRECTORATE GENERAL OF INCOME (DGI) is in charge of collecting taxes from the Central Government ( www.dgi.com)

Exchange Control RegimeIn Nicaragua, there is a reference from the Central Bank of Nicaragua who gives reference parameters in the control of foreign currency exchange. The exchange rate for the purchase and sale of foreign currency is determined by the supply and demand of said currency.

Register for Foreign InvestmentAll foreign investment must be registered in the Central Bank of Nicaragua but there is also a Ministry called MIFIC, which means the Ministry of Industry and Commerce, which is also a support arm in the sectorial laws for Investment according to Law 344 that speaks of the promotion of Investments. And the Double Taxation is maintained. Double external taxation will be subject to the agreements and treaties that the State of Nicaragua signs with other countries on the matter.

2. Source Income

Residents pay taxes on income received from services or the matter that regulates this activity. Non-residents pay taxes only on income. The source of income is determined by the location of the payer, regardless of where the work is performed.

3. Corporate Income Tax for Domiciled Entitites

Companies (called legal entities for tax purposes) domiciled in the country are subject to Income Tax for their worldwide source income. The annual Income Tax rate is 30%.

Payments in advance of Corporate Income Tax

Companies must make monthly payments for Income and Contribution Tax, in accordance with the chosen tax regime.


4. Corporate Income Tax for Branches of Non-domiciled Entities

The net income obtained by branches of foreign companies is subject to tax in the same way as domiciled companies


Definition of domiciled

The following people are considered residents for tax purposes:

a. a person who permanently resides in the country;b. naturalized aliens;c. Foreigners who have a permanent visa or a temporary visa with a local

employment contract, from the date of arrival.


Income Tax rates for Individuas vary according to the income obtained through strata, the minimum in Cordoba’s is C $ 103,000.00, annually onwards and may reach 30% of taxation before deductions. Dividends are subject to Income Tax.

Individuals Taxpayers can deduct certain expenses when calculating the obligation of monthly income tax and other expenses when they file their annual income tax return to the general direction of income.


VAT are paid by all private commercial entities resident in Nicaragua and collect taxes depending on the type of transaction.

1. VAT are monthly on gross income2. VAT rates are 15%, for any type of service in a profit-making company.

8. Financial Transaction Tax

The Tax on Credit, Exchange and Insurance Operations, or related to securities or securities (IOF) is applied on most transactions made in the banking system, according to the type of operation. The tax rate varies from 0.38% to 6%.

9. Banking Regime

In Nicaragua there is an excellent banking service. They operate with large branch networks, due to geographic characteristics and regional peculiarities. There is a high investment in the effective use of the most advanced technologies to make banks more efficient and secure. Additionally, banks offer a very broad set of services (payments, financial transfers, sales of other services, investments, loans, among others), which makes them a kind of a large financial supermarket


10. Deadline Terms

The action of the Tax Administration to determine the tax obligation; as well as, the action to demand payment and apply sanctions prescribes in 5 years.

11. Presentation of declarations and payment

The annual declarations are presented as a maximum date in the month of February of the following year, date to make their declarations. Likewise there is the technology to do it online; and online or digital payments. (Monthly and yearly).

12. COVID-19

Government did not establish special actions in order to apply to the Pandemic.

Firm: Gutierrez Guadamuz & Cia Ltd Contact: Luiz Bento | [email protected]

UpdatedApril 2020


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PANAMATax Card 2020 (Balboas)


Tax Payer RegistryAny natural or legal person must register in the RUC Single Taxpayer Registry, it is the number that each taxpayer uses to be able to pay taxes.

The tax identification number is a key that allows the taxpayer to access online services such as: sending of affidavits, payments, corrections, verification of account statements, issuing peace and salvo, authorizing other taxpayers among others.https://etax2.mef.gob.pa/etax2web/Login.aspx

2. General Directorate of Income

The General Directorate of Income (DGI) is in charge of collecting taxes at the national level.

3. Régimen de Control de Cambios

In Panama there is not a foreign currency exchange control regime.

4. Panamaniam Source Income

The taxable income that occurs, from any source, within the territory of the Republic of Panama is subject to this tax, regardless of the place where it is received.

The following shall be considered taxable income produced within the territory of the Republic of Panama:

a. Income from personal work when it consists of salaries and other remuneration that the State pays to its diplomatic or consular representatives or to other people to whom it entrusts the performance of functions outside the country.

b. That from personal work paid with salaries, salaries, representation expenses or other remuneration in money or in kind that is paid to workers or people hired by reason of the exercise of their profession or trade.

c. The income obtained by international transport companies in the part that corresponds to freight, tickets, loads and other services whose origin or final destination is the Republic of Panama, regardless of the place of incorporation or domicile. Income derived from freight, tickets and services to passengers or cargo in transit in the territory of the Republic of Panama are not considered taxable income.

d. The income derived from maritime passages and other services will not be considered taxable income produced within the territory of the Republic of Panama when they are obtained by international companies operating cruise ships that have their base as a cruise port or home port of the Republic of Panama.

https://etax2.mef.gob.pa/etax2web/Login.aspx


4. Panamaniam Source Income (cont.)

e. Received by natural or legal persons whose domicile is outside the Republic of Panama as a result of any service or act, documented or not, that benefits natural or legal persons, national or foreign, located within the Republic of Panama, which includes, but is not limited to fees and income from copyrights, royalties, key rights, factory or trade marks, invention patents, know-how, technological and scientific knowledge, industrial or commercial secrets, insofar as said services affect the production of income from a Panamanian source or its conservation and its expenditure has been considered as deductible expenses by the person who received them. However, all income from Panamanian source, paid or accredited, by entities public law, be these from the Central Government, autonomous entities, in which the State owns 51% or more of its shares, entities not taxpayers of income tax and / or taxpayers who are in loss, to a person natural or legal non-resident in the Republic of Panama, is subject to the tax and consequently is subject to the withholding referred to in this rule.


Non-domiciled entities are subject to income tax for their Panaman source income, as follows:

General Tax Rate 25%

Companies in which the State has a shareholding greater than forty percent (40%)

of the shares30%

Presume Income 30%

Legal persons whose taxable income exceeds one million five hundred thousand balboas (B /

.1,500,000.00) annually

They will pay as Income Tax the greater amount that results between:

1.The net taxable income calculated by the method established in this title, or

2. The net taxable income resulting from applying four point sixty-seven percent

(4.67%) to the total taxable income.

6. Tax on Dividends(comple-mentarytax)

Any legal entity that requires the notice of operations is obliged to withhold the tax on dividend of 10% of the sums distributed to its shareholders or partners of subsidiary companies, when these are from Panamanian source and of 5% when it comes to foreign source, foreign or export income.

Same tax treatment, but 5% will have the income from international maritime trade, the interests that are recognized as a result of savings accounts, installments or of any kind that are maintained in banks established in the Republic of Panama. In addition, 5% will be taxed on the amounts received or accrued by people abroad as royalties from people living in the Colon Free Zone.

Bearer shares are taxed 20% on the same resulting balance used on the basis of 5% and 10% respectively.

Companies that are constituted as foreign branches that are extensions of foreign entities pay 10% of 100% of the net taxable income.

7. Withholding Income Tax

Payments abroad from legal entities will be subject to 25% calculated on the 50% of the total credited remittances.


8. Deadline for submission and payments

Presentation of the declarations and payment of the tax caused

Individuals March 15

Corporations March 31

A one-month extension is granted for filing. Additionally, the estimated income tax must be paid in three tax periods such as June, September and December.

9. Capital Gains

Sale of shares is subject to a 10%. Buyer is obligate to withhold 5% of the sale price which can be considered the final tax.

Sale of personal property the rate is 10%

Sale of real estate 10%, if it is an activity that is not within the ordinary course of business, the taxpayer will have the obligation to pay a sum equivalent to 3% of the total value of the sale or the cadastral value, whichever is greater, as an advance on income tax, but when 3% is greater than the application of 10% of the profit, a refund of the tax may be requested.


If the taxable income is: The tax rate is:

Up to B/.11,000.00 0%

From B/.11,000.00 to B/.50,000.00 15% for the excess from B/.11,000.00 to B/.50,000.00

Over to B/.50,000.00 It will pay B/.5,850.00 for the first B/.50,000.00 and a 25% over the excess of B/.50,000.00

11. Tax Residence

Individuals

Individuals who remain in the national territory for more than one hundred eighty-three (183) consecutive or alternate days in a fiscal year or in the immediately preceding year are considered tax residents of the Republic of Panama. Likewise, those individuals who have established their permanent home in the territory of the Republic of Panama will be considered tax residents of the Republic of Panama.

Corporations/Companies

Companies/Corporations constituted in accordance with the laws of the Republic of Panama and that have material means of direction and administration within Panamanian territory are considered tax residents of the Republic of Panama.Companies/Corporations incorporated abroad that have material means of management and administration within Panamanian territory and that are duly registered in the Public Registry are also considered tax residents of the Republic of Panama.


12. Tax on commercial and industrial patents (Capital Tax)

The capital tax of the company will be 2% with a minimum of one hundred balboas (B / .100.00) and a maximum of sixty thousand balboas (B /. 60,000.00). Individuals and Companies with invested capital less than ten thousand balboas (B / .10 000.00) are exempt. Companies established in the Colon Free Zone, Free Zones, Panama Pacifico Special Economic Area will pay half a percent (0.5%) annually on the capital of the company with a minimum of one hundred balboas (B /. 100.00) and a maximum of fifty thousand balboas (B /. 50,000.00)


Valued added tax, for local puproses named Impuesto de Transferencia de Bienes Corporales Muebles y Servicios (I.T.B.M.S.) will cause as follows:

1. Carrying out works with or without delivery of materials.2. Intermediation in general.3. The personal use by the owner, partners, directors, legal representatives,

dignitaries or shareholders of the company, of the services provided by it.4. The leasing of real estate and personal property or any other convention

or act that implies or has the purpose of giving the use or enjoyment of the property.

5. Services of a personal nature provided in a dependency relationship are those performed by those who are included in article 62 of the Labor Code; the activity of directors, managers and administrators of entities with or without legal status; and the activity carried out by the employees of the Central Government, autonomous and semi-autonomous entities, decentralized and municipal entities.

6. Public shows, events, seminars, conferences, talks, presentations of artistic or musical groups, artists, singers, concert performers, sports professionals and professionals in general, not free, that are held within the territory of the Republic of Panama. Sporting events carried out by non-profit organizations recognized by the Panamanian Institute of Sports are excepted from the above.

7. Local and international passenger air transport. Seventy-five percent (75%) of the sums collected for ITBMS from local and international passenger air transport will be remitted to the Panama Tourism Authority.

8. The hosting service or public accommodation. The totality of the sums collected for ITBMS from room service in all tourist types of lodging or accommodation will be remitted to the Tourism Authority of Panama.

9. The commissions charged for the transfers of negotiable documents and titles and securities in general, the commission payments generated by banking and / or financial services provided by the entities legally authorized to provide this type of services, as well as the commissions or remuneration charged by people engaged in real estate and personal property brokerage. The commissions charged on the credit facilities granted by financial institutions to natural and legal persons and not domiciled in Panama are excluded from the payment of this tax.


Income tax 7 years

Withholding income tax 15 years

Value added tax 5 years

As of January 1, 2021, the prescription of direct and indirect taxes will be five years.



Panama has signed treaties to avoid double taxation with: Barbados, South Korea, United Arab Emirates, Spain, France, Ireland, Italy, Israel, Luxembourg, Mexico, Netherlands, Portugal, Qatar, United Kingdom, Czech Republic, Singapore, and Vietnam.


As of January 1, 2021, the Tax Procedure Code enters into force, although some articles are currently in force.

17.COVID-19

The main fiscal measures that the Government has taken are:

• Extension of tax amnesty, forgiving up to 85% of interest and surcharges. Taxpayers who sign payment arrangements have a place to cancel until December 2020, on any competition tax of the General Directorate of Revenue.

• Extension of the deadline for filing returns to May 30• Extension of 120 days for filing returns and payments without interest and

surcharges• Suspension of the use of fiscal equipment for certain activities.• Modification of the Working Hours• Suspension of Employment Contracts• Extension of the suspension of employment contracts• The General Directorate of Revenue has enabled the presentation of its

services through its web platform.• Donations to the Panama Solidario Plan are deductible from income tax.• The Municipality of Panama, grants an extension for the payment of tax for

three months.• The Teleworking system is adopted in the Republic of Panama• The General Directorate of Revenue, the Ministry of Labor and the

Administrative Tax Court have suspended administrative appeals and judicial terms.

• A Law is adopted for the use of electronic means for government procedures.

• Procedures before the Public Registry are carried out online.

Firm: Correa Leon y Asociados- Auditores, S.C: Contact: Oreana Correa Gonzalez | [email protected]

April 2020


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PERUTax Card 2020 (Peruvian Soles)


Tax Unit (UIT) Tax Unit is a reference value used to determine the tax bases, deductions, limits, penalties and other tax obligations. For the year 2020, Tax Unit has been established at 4,300 Soles (US $ 1,265 at an exchange rate of S / 3.40 per US $ 1).

Tax Payer Registry (RUC) Any natural or legal person, undivided succession, de facto partnership or other collective entity, whether Peruvian or foreign, domiciled or not, that is a taxpayer or responsible for taxes that are administered by the tax authority, must be registered with the Tax Payer Registry.

Tax Authority

The National Superintendency of Customs and Tax Administration (SUNAT) is the tax authority in Peru in charge of collecting taxes from the Central Government.

Exchange Control Regime In Peru there is not a foreign currency exchange control regime. The exchange rate for the purchase and sale of foreign currency is determined by the supply and demand of said currency.

Register for Foreign Investment Any foreign investment made in Peru is automatically authorized. After the investment is made, it must be registered with the Agency for the Promotion of Private Investment in Peru (PROINVERSION).

2. Peruvian Source Income

All of the taxable income obtained by taxpayers who consider themselves domiciled in the country are subject to Income Tax, without taking into account the nationality of the natural persons, the place of incorporation of the legal entities, or the location of the source producer.

In the case of taxpayers not domiciled in the country, of branches, agencies or other permanent establishments of sole proprietorships, companies and entities of any nature constituted abroad, the tax falls only on income taxed from Peruvian sources.


Companies domiciled in the country are subject to Income Tax for their worldwide source income. This definition includes branches of foreign companies duly registered in Peru.

Corporate Income Tax rate is 29.5%. On the other hand, the distribution of profits to shareholders is subject to a 5% withholding income tax


3. Corporate Income Tax (cont.)

This additional tax must be withheld and paid by the domiciled legal person making the distribution, unless the shareholder is another legal person domiciled in Peru, in which case no withholding shall be made.

Corporate Income Tax Payments in Advance Companies must make monthly payments on account (advances) of Income Tax. The amount of the monthly payment on account is the greater of applying the following:

• One point five percent (1.5%) of the net income for the month.• Dividing the income tax calculated for the previous year by the total net

income for the same year; and then apply the coefficient determined on the net income obtained each month.

Temporary Tax on Net Assets (ITAN) ITAN is applied on the value of the net assets consigned in the balance sheet as of December 31 of the previous year. The tax rate is 0.4% on the excess of S /. 1’000,000 (US $ 294,118 at an exchange rate of S / 3.40 per US $ 1). ITAN paid is used as a credit against the payments on account and regularization of the corporate income tax. If it is not applied in its entirety, its return must be requested.

4. Income Tax for Non-Domiciled Entities

Non-domiciled entities are subject to income tax for their Peruvian source income, as follows:

PAYMENT TYPE INCOME TAX RATE

1. Interest from external credits (with certain requirements) 4.99%

2. Interest paid abroad by multi-operating companies established in Peru such as banking companies and financial companies established in Peru as a

result of the use of their credit lines abroad in the country4.99%

3. Income from the rental of ships and aircraft 10%

4. Royalties 30%

5. Dividends 5%

6. Technical assistance (with certain requirements) 15%

7. Income from sale of securities carried out within of the country 5%

8. Income from sale of securities carried out outside of the country 30%

9. Interests from bonds and other debt instruments, deposits made in accordance with Law 26702, General Law of the Financial System 5%

10. Other income 30%

Net income for the purposes of withholding income tax to non-domiciled companies is defined as follows:

• All the amounts paid or accrued corresponding to other income of the third category.

• The amount that results from deducting the recovery of the invested capital in cases of disposal of assets or rights and the depreciation in cases of exploitation of assets that suffer wear and tear, upon submission of a request to the Tax Administration

This definition of net income is not applicable to cases of presumption of income, which is indicated below.


5. Income Tax for Not Domiciled Entities according to their international activities

Peruvian Income Tax Law establishes a presumption for non-domiciled companies that carry out part of their operations in the country equivalent to the following percentages of their gross income:

Types of International Acitvities% of Peruvian

Source Income

1. Insurance 7.00

2. Aircraft rental 60.00

3. Ship Rental 80.00

4. Telecommunications services 5.00

5. Air transport 1.00

6.Maritime Transport 2.00

7. News supply or informational material 10.00

8. Distribution of films or similar 20.00

9. Container supply 15.00

10. Conveyance of transport containers 80.00

11. Transfer of television broadcasting rights 20.00

On above net income obtained by, a 30% Income Tax rate will be applied.

6. Thin Capitalization Rules

It is established that the interests paid are not deductible for Income Tax purposes when the debt exceeds three times the equity of the domiciled companies.

The thin capitalization rule will be applied as

Tax RegimeApplicable to

2018 2018 2019 2021

Debts contracted and / renewed until 13.09.2018 only with

linked entities

Debts contracted and / renewed until

14.09.2018 with linked entities and not linked entities

Debts contracted and / renewed until

14.09.2018 with linked entities and not linked entities

Debts contracted and / renewed that they maintain with

linked and not linked entities

Applicable until 31.12.2020

Applicable from 14.09.2019 to

31.12.2018

Applicable from 01.01.2019 to

31.12.2020

Applicable from 01.01.2021

Limit 3 times equity Limit 3 times equity Limit 3 times equity Limit 30% of EBITDA

To do this, net interest should be understood as the amount of interest expense that exceeds the amount of interest income, computable to determine net income. Likewise, it is established that EBITDA is the net income after offsetting losses plus net interest, depreciation and amortization.


An individual can be considered as domiciled or not domiciled. It is considered domiciled if it remains in Peru for more than one hundred and eighty-three calendar days during any twelve-month period. Any change in your domicile status will be effective as of January 1 of the following year.


7. Income Tax for Individuals (cont.)

For tax purposes, a domiciled natural person is subject to Income Tax for their worldwide source income. In the case of a non-domiciled natural person, only income tax is affected on their Peruvian source income.


The income produced by the lease, sublease and transfer of goods (first category); as well as, the income obtained from interest, royalties and capital gains (second category) are subject to Income Tax with a rate of 6.25% applicable on their net capital income.

Dividends and any other form of profit distribution are subject to Income Tax at a rate of 5%.

Income derived from independent work (Fourth Category) and dependent work (Fifth Category) obtained by individuals domiciled in the country are subject to Income Tax according to a progressive scale between 8% and 30%.

In the case of individuals not domiciled in the country who receive income from independent and / or dependent work, a fixed rate of 30% will be applied.


Sale of goods and services in Peru are subject to VAT. The tax rate is 18%. This tax is called as IGV in Peru and IVA (VAT) in other countries.

Services rendered by non-domiciled entities used in Peru are subject to VAT.

10. Excise Tax (ISC)

The sale at the producer and importer level of certain goods, such as gasoline, motor vehicles, alcoholic beverages, mineral waters, beers, cigarettes, among others, is taxed with the ISC. The rates of said tax are set according to the type of product. Gambling and betting are also subject to this tax.

11. Financial Transaction Tax (ITF)

ITF is applied on the majority of transactions made in the accounts of the Peruvian banking system (credits or debits), regardless of the amount of the operation. The tax rate is 0.005%. ITF paid is deductible as an expense for Income Tax purposes for both, legal entities and individuals.

Banking Regime

Any payment that is made in favor of a company or individual and that is greater than US $ 1,000 or S / 3,500 Soles must be made through the National Financial System. For this, means of payment such as checks, bank deposits, transfers, credit or debit cards, among others, must be used. In case payments are made without using any of the means of payment indicated above, they will not give the right to deduct expenses, costs or credits in the determination of Income Tax. In the case of money loans, regardless of the amount, it must be made using one of the aforementioned means of payment.



The action of the Tax Administration to determine the tax obligation; as well as, the action to demand payment and apply sanctions prescribes:

• Four years as a general term; • Six years for those who have not submitted the sworn statements required

by law; and,• Ten years when the withholding or collection agent has not paid the taxes

withheld or received.• The action to request or effect compensation; as well as, to request the

refund, prescribes after four years.


Taxes filling deadlines is in function of the last digit of the tax payer number (Tax ID). Tax filings can be monthly, such as VAT, or annual, such as income tax.

Deadline in case of the annual income tax return is from March 25 to April 8 of each year.


Peru has signed treaties to avoid double taxation with some countries. The list of treaties signed to date is as follows:

15. Double Tax Agreements

Peru has signed some treats with countries to avoid double taxation. The list of treaties signed to date is as follows:

CountryIncome tax rate applied to

Dividends Interests Royalties

Chile (1) 10%/15% 15% 15%

Canada (1) 10%/15% 15% 15%

Brazil (1) 10%/15% 15% 15%

Mexico (1) 10%/15% 15% 15%

South Corea (1) 10% 15% 15%

Portugal (1) 10%/15% 10%/15% 15%

Switzerland (1) 10%/15% 10%/15% 15%

Japan (3) 10%/15% 10%/15% 15%

Bolivia (2) Agreement CAN

Colombia (2) Agreement CAN

Ecuador (2) Agreement CAN In the case of business benefits:(1) Income tax is paid in the country where the income is recognized(2) Income tax is paid in the country where the expense is recognized.(3) The treaty is pending for the approval of the Peruvian Congress

15. COVID-19

Taking into consideration the Coronavirus pandemic that affects the population, both people and companies, worldwide, the Peruvian Government has established various measures of a fiscal, labor, and health nature to be able to attack said pandemic. Among the main fiscal and labor measures we can mention the following:


15. COVID-19(cont.)

Taking into consideration the Coronavirus pandemic that affects the population, both people and companies, worldwide, the Peruvian Government has established various measures of a fiscal, labor, and health nature to be able to attack said pandemic. Among the main fiscal and labor measures we can mention the following:

SUNAT has the application of its discretionary power during the state of emergency and suspension of audits (Resolution of the Deputy National Superintendency of Internal Taxes No. 008-2020-SUNAT)

SUNAT will apply the discretionary power not to administratively sanction the tax offenses incurred by tax debtors during the State of National Emergency (initially between March 16, 2020 and March 30, 2020).

Given that the State of Emergency has been extended until April 26, 2020, SUNAT has indicated that the application of the discretionary power is also extended until the same date.

In this sense, the main declarations that the tax administration will not sanction will be the monthly and annual declarations and electronic books. Likewise, the aforementioned administration has communicated the suspension of the audits and summons scheduled until April 26, 2020.

Postponement of presentation for the 2019 Income Tax Return (Superintendency Resolution No. 061-2020 / SUNAT)

SUNAT postponed the schedule for filing the Annual Income Tax Return 2019, as long as the annual net income of taxpayers during 2019 has not exceeded 5,000 UIT (S / 21,000,000) (value of UIT 2019 is S / 4,200). The new schedule runs between June 25, 2020 and July 9, 2020.

Modify the Default Interest Rate (TIM) applicable to taxes administrated by SUNAT (Superintendency Resolution No. 066-2020/SUNAT)

SUNAT has modified the interest rates applicable to taxes administered or collected by this entity. Thus, the following default interest rates have been set, which will be in force as of 1.4.2020, as follows:

VALIDITYMORATORY INTEREST RATES (TIM) RETURN OF UNDUE OF EXCESS

PAYMENTS

MN ME MN ME

01.04.2020 1% 0.50% 0.42% 0.50%

Financing of Business Support for Micro and Small Enterprises (FAE-MYPE) (Urgent Decree No. 029-2020)

FAE-MYPE (by its acronym in Spanish) is created with the objective of guaranteeing the credits for working capital granted to the MYPE; as well as, restructure and refinance your debts.

They are eligible as beneficiaries of the FAE-MYPE, the MYPE that develops activities of production, tourism, commerce and related services, that:


15. COVID-19(cont.)

a. Obtain credits for working capital as of the entry into force of this Emergency Decree, according to the parameters established by the Superintendency of Banking, Insurance and AFP (SBS) for credits to micro and small companies; or,

b. They have a current credit and are classified in the SBS credit registry in the “Normal” or “With Potential Problems” (CPP) category as of February 2020; and, require a reprogramming or refinancing as of the entry into force of this Emergency Decree.

Extension of the expiration date of the submission of monthly sworn statements and electronic books (Superintendency Resolution No. 055-2020 / SUNAT and Superintendency Resolution No. 065-2020 / SUNAT)

Considering the net income obtained in 2019, the filing dates of the sworn statements and electronic books for the months of February, March and April 2020 have been extended based on the last digit of the RUC, as follows:

a) For the tax obligations of February 2020:• Monthly declarations between June 4 and June 11, 2020• Labor taxes between May 5 and May 12, 2020• E-books until June 4, 2020

b) For the tax obligations of March and April 2020:• Monthly declarations between June 3 and June 22, 2020• Labor taxes (only March) between May 15 and May 25, 2020• E-books until June 4, 2020

Extension of the expiration of the tax fractionation fee (Superintendency Resolution No. 065-2020 / SUNAT)

Another of the tax measures adopted is the one referring to the maturity terms of the March and April 2020 installments, establishing that if the taxpayers make the corresponding payments until May 29, 2020, they will not lose the installment granted.

Extension of maximum delay periods for the Sales and Income Registry and the Electronic Purchase Registry (Superintendency Resolution No. 055-2020/SUNAT and Superintendency Resolution No. 065-2020 / SUNAT)

Considering the net income obtained in 2019, the maximum delay dates of the Sales and Income Registry and the Electronic Purchase Registry have been extended based on the last digit of the RUC, as follows:

a. For the month of February 2020, between June 4 and June 10, 2020b. For the month of March and April 2020, between June 2 and June 19, 2020

Exceptional procedure to request the free disposal of amounts deposited for withdrawals (Superintendency Resolution No. 067-2020 / SUNAT)

If a taxpayer should submit his request for the release of funds from his VAT deduction account, within the first three (03) business days of April, this time he may do so between April 8 and 14, 2020; and if it was your responsibility to present it within the first five (05) business days of said month, you may do so between April 8 and 16, 2020.


15. COVID-19(cont.)

Postponement of the obligation to present information of the executing units and entities of the National Public Sector

The executing units and entities of the National Public Sector, obliged to provide information on their acquisitions, must submit to SUNAT the information corresponding to the acquisitions of goods and / or services for the month of January 2020, until April 30, 2020.

A special procedure is established for Registration in the RUC and obtaining the Sun Code for people who are hired to face the COVID-19 outbreak

Public entities that hire natural and independent persons, to attend the declared health emergency, may process their registration in the RUC as long as they identify themselves with a DNI. For this, these natural persons must present to the entity that hires them the information of their ID, date of birth, tax address, email and mobile phone. Once they have obtained their RUC number, they can become users of SUNAT Online Operations by generating their SOL Code.

Subsidy for the payment of payroll of the private sector oriented to the preservation of employment (Emergency Decree No. 033-2020)

The State will grant private sector employers a subsidy not exceeding 35% of the sum of gross monthly wages for each Fifth Category worker who earns up to S / 1,500.

In order for an employer to access this benefit, it must meet the following requirements:• Have your workers registered in the PLAME of January 2020 and submitted

by February 29, 2020.• The work period of your workers must not indicate an end date or be prior to

March 15, 2020 (T-Registration).• As of December 31, 2019, not to maintain tax debts managed by SUNAT

enforceable higher than 5 UIT of 2020; or be in bankruptcy proceedings.• Not being within the scope of Law No. 30737, a law that ensures immediate

payment of civil damages in favor of the Peruvian state in cases of corruption and related crimes.

• Have declared the concept of Social Health Insurance - EsSalud, through the PLAME for the period January 2020.

• Not find yourself with a withdrawal from the RUC.• Have the quality of located/based.• Report your CCI to SUNAT until April 13, 2020 (the procedure is carried

out online, from the SUNAT portal, through SUNAT Online Operations. It requires having your SOL password.

New treatment applicable to the deduction of Inventories losses (mermas/desmedros) from 2020 (Supreme Decree No. 086-2020-EF)

A new treatment is established for the deduction of inventories losses in the determination of income tax from the year 2020. The new treatment is as follows:


15. COVID-19(cont.)

PERIOD SUPPORT FOR DEDUCTION COMMUNICATIONS DEADLINE

DEADLINE FOR PRESENTING THE

REPORT

Until 21.04.2020

1. Written communication to Sunat

2. Destruction is before Notary Public Justice of the

Peace Lawyer

1. 6 business days before the date for

Destruction

1. N/a2. A Notarial

Certificate is required that sustente destrucción

From 22.04.2020

to 31.07.2020

1. Communicacion via e-mail to SUNAT

2. Independant Report of Goods value only required3. The presence of Notary

Public is not required.

1. 2 business days before the date for

destruction.2. Communication

to email comunicaciones_

[email protected]

1. Dit must be presented to SUNAT

at the end if the 5 business days

counted from August 1, or the deadline that SUNAT establishes.

From 01.08.2020 onwards

1. Sólo se requiere informe cuando el valor de los

bienes a destruir en el año o superan las 10 UIT (S/

43,000 POR EL AÑO 2020)2. En el caso que el valor de los bienes supere las 10 UIT, se mantiene que la destrucción sea ante

Notario Público o Juez de Paz Letrado.

1. 2 business days before the daye for destruction, but in

person.

1. Dit must be presented to SUNAT

at the end of the 5 business days

counted after the destruction of the

goods.

Complementary measures are established to mitigate the economic effects caused to workers and employers in the face of Covid-19 and other measures (Urgency Decree No. 038-2020)These measures include the following:• It is applicable to any private sector employer, without any distinction.• Faced with the impossibility of remote work, the agreement between the

parties is privileged.• The possibility of a license is established without having:

i. Exceptionally;ii. Automatic application subject to subsequent state control. The Ministry

of Labor may issue additional regulations, but they do not prevent the execution of the measure.

iii. It has a duration of up to 30 calendar days after the health emergency has ended (90 days from March 13). This period can be extended by supreme decree.

iv. It must be justified and communicated to the Labor Administrative Authority (as a sworn statement) in a format that will be provided by the aforementioned authority.

v. The communication is subject to verification (within a period of no more than 30 business days). The Administrative Labor Authority must issue the resolution within 7 business days, if not, positive administrative silence will be applied.

vi. If a lack of support is found, the suspension is null and void and the remuneration must be paid.

vii. EsSalud benefits are maintained during the period of perfect suspension.viii. The Inspecting Authority will carry out control actions remotely or in

person.ix. The suspension of terms and procedures provided for in article 28 of

DU No. 029- 2020, regarding the perfect suspension of work and of the actions of the labor inspection, does not operate.


15. COVID-19(cont.)

• Regarding the cases in which the compensable leave had been determined for workers in a risk group who could establish compulsory remote work (for companies exempted from the prohibition), it is now established that employers can adopt the measures that are necessary in order to maintain the validity of the employment relationship and the receipt of remuneration, favoring the agreement with the workers.

• Compensatory measures are established in favor of workers who are in perfect suspension from work, such as: i. Withdrawal of Compensation for Time of Service, in the amount of a

gross remuneration for each calendar month of suspension (in addition to the withdrawal of s /. 2,400 provided above). It is made prior to the request of the worker (remote or in person) and verification of the depositary, who will make a payment on the account that the worker indicates. The worker who does not have a favorable balance can ask the employer to pay him CTS for May 2020 and a bonus for July 2020, calculated to date. The employer must make the payment within 5 calendar days

ii. For workers in micro-enterprises: an Economic Social Protection Emergency benefit from COVID-19. It only applies to those who earn up to s /. 2,400.00. The amount is S /. 760 for each month that the perfect suspension lasts, up to a maximum of 3 months. The entity in charge of carrying out the deposit is Essalud, who deposits it in a bank account upon request of the worker and indicating an Interbank Account Code (CCI).

iii. Extraordinary Withdrawal from the Pension Fund - only SPP (excluding beneficiaries of DU No. 034-2020: no contributions between the months of September 2019 and February 2020): for those affected by the perfect suspension of work: withdrawal of up to s /. 2,000 as of April 30. All affiliates: can withdraw S /. 2,000 if they do not have contributions for the months of February or March 2020. For all affiliates, whose declared remuneration is not greater than s /. 2,400: they can withdraw s /. 2,000 if they have contributions for the months of February or March 2020.

iv. Facilities for the employer as payment of the CTS: The payment of the CTS of May 2020, can be postponed until November 2020, except when the worker’s remuneration is not greater than s /. 2,400. When workers meet perfect suspension. The deferral of said payment will generate the respective interest.

v. During the Health Emergency and the State of National Emergency, notifications of administrative acts and other actions issued by the AAT are made via email or other digital means.

vi. Managers must provide an electronic address in their first communication to the AAT to be notified through that medium.

vii. The notification is understood to be validly made when the entity sends to the electronic mailbox, taking effect on the day it appears to have been received.

Firm: Monzón, Falconí y AsociadosContact: Jorge Rivera | [email protected]

UpdatedApril 2020


mailto:jrivera%40monzonfalconi.com.pe?subject=


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For further information, or become involved, please contact:

AGN InternationalEmail: [email protected] | Office: +44 (0)20 7971 7373 | Web: www.agn.org

AGN International Ltd is a company limited by guarantee registered in England & Wales, number 3132548, registered office 3 More London Riverside, London, SE1 2RE, United Kingdom. AGN International Ltd (and its regional affiliates; together “AGN”) is a not-for-profit worldwide membership association of separate and independent accounting and advisory businesses. AGN does not provide services to the clients of its members, which are provided by Members alone. AGN and its Members are not in partnership together, they are neither agents of nor obligate one another, and they are not responsible or liable for each other’s services, actions or inactions.

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