Reform is in the air for Central America’s tax systems. Alfredo Rodríguez, Diego Martín ­Menjívar, Armando Manzanares,Carlos Taboada and Diego Salto Van der Laatof Consortium Legal take a look.

Central America’s tax systems have certainly evolved over the past few years. Looking ahead, the need to increase fiscal revenues and the lack of modernised systems will trigger further reforms in most of the countries.

According to the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) into Central America exceeded $43 billion in 2018. For this reason, the region’s tax systems are adapting to international tax trends – led by the BEPS initiative – and intensive tax reforms are likely to materialise in both Costa Rica and Nicaragua.

Recent elections in El Salvador and Guatemala will also open windows of opportunity to push tax reform in those countries.At the same time, Central America’s tax authorities are working hard to strengthen their technology platforms to conduct more efficient audits and collection processes.

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