The year 2024 was notably dynamic in tax matters across Latin America, characterized by significant reforms in both fiscal legislation and the modernization of tax administrations, according to the latest report from the Observatory of Tax Reforms by the Inter-American Center of Tax Administrations (CIAT).
Overview of Tax Reforms
Throughout this period, there were 199 significant tax modifications across 19 Latin American countries, implemented through 87 legislative acts, including laws, resolutions, and decrees. These reforms pursued two clearly differentiated strategies: one aimed at increasing revenue through new taxes or higher rates, and another focused on simplifying tax systems by reducing or eliminating taxes.
New Taxes and Fiscal Simplification
Brazil and Ecuador stood out prominently by introducing new taxes aimed at specific fiscal goals. In contrast, Argentina and Costa Rica focused on simplifying their tax systems by reducing or eliminating existing taxes. Additionally, Chile and Mexico emphasized strengthening their tax administrations, launching 28 and 6 new programs respectively, aimed at enhancing internal controls and reducing tax evasion.
Implementation of the Global Minimum Tax and Adjustments in Transfer Pricing
Among the most notable changes was Brazil’s implementation of the “Global Minimum Tax” in line with OECD Pillar II, setting a minimum 15% tax for large multinational groups. Brazil also abandoned its traditional “Brazil Model” for transfer pricing, fully adopting the OECD standard to reduce tax asymmetries and improve international economic integration.
Argentina, meanwhile, made significant adjustments to wealth taxation, reducing rates on Personal Assets Tax and abolishing the Real Estate Transfer Tax (ITI). It also introduced appealing fiscal incentives for major investments exceeding 200 million dollars, promoting economically impactful projects.
Strengthening International Fiscal Transparency
Chile made considerable progress in regulations related to transfer pricing and international fiscal transparency, aligning with OECD standards and facilitating the implementation of Advanced Pricing Agreements (APAs), providing greater legal certainty and improved fiscal management for multinational companies.
Tax Amnesties and Special Regimes
The region also extensively implemented tax amnesties and special regimes aimed at formalizing informal economies and regularizing undeclared assets. Argentina, Chile, Ecuador, and Peru stood out with regimes that facilitated voluntary declarations of national and international assets, offering varying levels of economic incentives to taxpayers opting to regularize their tax situations.
Innovations in Tax Administration
In terms of tax administration, notable developments include the creation of specialized new institutions such as Argentina’s Agency for Revenue Collection and Customs Control (ARCA) and Paraguay’s National Directorate of Tax Revenue (DNIT). Both autonomous institutions aim to enhance tax collection efficiency and effectively combat tax evasion.
Conclusions and CIAT Outlook
Finally, the CIAT report highlights that although the debate continues between stability and change in tax policies, fiscal reforms are crucial for Latin America to efficiently adapt to dynamic economic and social contexts. Facing challenges like tax evasion and avoidance, as well as the pressing need to attract strategic investments, recent tax reforms serve as essential tools to ensure sustainable economic growth in the region.
Read the CIAT report here