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Overview of the Tax Systems of Selected Countries in Latin America

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Overview of the Tax Systems of Selected Countries in Latin America USAID’S STRENGTHENING PUBLIC FINANCIAL MANAGEMENT IN LATIN AMERICA AND THE CARIBBEAN (PFM-LAC) Overview of the Tax Systems of Selected Countries in Latin America and the Caribbean: Colombia, Dominican Republic, Guatemala, Haiti, Honduras, Jamaica, Paraguay, and Peru Prepared by: Luis F. Paniagua and Anton Kamenov January 2014 Contract Number : AID-OAA-I-12-00036/AID-OAA-TO-13-00030 This publication was produced for review by the United States Agency for International Development. It was prepared by Deloitte Consulting LLP. 1 Strengthening Public Financial Management in Latin America and the Caribbean Overview of the Tax Systems of Selected Countries in Latin America and the Caribbean: Colombia, Dominican Republic, Guatemala, Haiti, Honduras, Jamaica, Paraguay, and Peru Program Name: USAID Strengthening Public Financial Management in Latin America and the Caribbean (PFM-LAC) Sponsoring USAID Office: USAID/LAC/RSD/BBEG Contract Number: AID-OAA-I-12-00036/AID-OAA-TO-13-00030 Contractor: Deloitte Consulting LLP Date of Publication: January 17, 2014 Authors Luis F. Paniagua Anton Kamenov Revenue Specialist Senior Advisor Deloitte Consulting, LLP Deloitte Consulting, LLP [email protected] [email protected] Disclaimer This report is made possible by the support of the American people through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of Deloitte Consulting LLP and its implementing partners and do not necessarily reflect the views of USAID or the United States Government. 2 Table of Contents Summary Report .................................................................................................................... 6 Purpose............................................................................................................................................. 6 Selected Countries .......................................................................................................................... 6 Summary .......................................................................................................................................... 6 Major Developments and Features of the Tax Systems .......................................................... 8 Evolution of Revenue ................................................................................................................................... 8 Tax Capacity and Tax Effort .......................................................................................................................10 Overview of Reforms ..................................................................................................................................10 Tax System Profile (2010-11) .................................................................................................... 12 Revenue Effort .............................................................................................................................................12 Tax Structure ...............................................................................................................................................13 Revenue Productivity .................................................................................................................................13 Tax Administration Structure ....................................................................................................................14 Taxpayer Burden and Corruption Evidence .............................................................................................14 ANNEX 1: Revenue Structure and Performance Measures ...................................................... 16 ANNEX 2: Collecting Taxes Indicators Glossary........................................................................ 17 Colombia ................................................................................................................................ 18 Summary ........................................................................................................................................ 18 Major Developments and Features of Current Tax System .................................................. 19 Evolution of Revenue ..................................................................................................................................19 Summary of Reforms ..................................................................................................................................19 Tax System Profile (2010-11) .................................................................................................... 20 Revenue Effort .............................................................................................................................................21 Tax Structure ...............................................................................................................................................21 Revenue Productivity .................................................................................................................................21 Tax Administration Structure ....................................................................................................................22 Taxpayer Burden and Corruption Evidence .............................................................................................22 ANNEX 1: Colombia’s Collecting Taxes Indicators ................................................................... 23 ANNEX 2: Collecting Taxes Indicators Glossary........................................................................ 26 ANNEX 3: Colombia Tax Highlights ........................................................................................... 27 Dominican Republic ............................................................................................................ 30 Summary ........................................................................................................................................ 30 Major Developments and Features of Current Tax System .................................................. 31 Evolution of Revenue ..................................................................................................................................31 Summary of Reforms ..................................................................................................................................31 Tax System Profile (2010-11) .................................................................................................... 32 Revenue Effort .............................................................................................................................................32 Tax Structure ...............................................................................................................................................33 Revenue Productivity .................................................................................................................................33 Tax Administration Structure ....................................................................................................................34 Taxpayer Burden and Corruption Evidence .............................................................................................34 3 ANNEX 1: Dominican Republic’s Collecting Taxes Indicators ................................................. 35 ANNEX 2: Collecting Taxes Indicators Glossary........................................................................ 38 ANNEX 3: Dominican Republic Tax Highlights ......................................................................... 39 Guatemala ............................................................................................................................. 42 Summary ........................................................................................................................................ 42 Major Developments and Features of Current Tax System .................................................. 43 Evolution of Revenue ..................................................................................................................................43 Summary of Reforms ..................................................................................................................................43 Tax System Profile (2010-11) .................................................................................................... 44 Revenue Effort .............................................................................................................................................45 Tax Structure ...............................................................................................................................................45 Revenue Productivity .................................................................................................................................45 Tax Administration Structure ....................................................................................................................46 Taxpayer Burden and Corruption Evidence .............................................................................................46 ANNEX 1: Guatemala’s Collecting Taxes Indicators ................................................................. 47 ANNEX 2: Collecting Taxes Indicators Glossary........................................................................ 50 ANNEX 3: Guatemala
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