A controversial Law Initiative to modify Mining Law is being discussed at Guatemala’s Congress since last January. If the proposal is approved, mining companies may be exempt from paying taxes and indigenous community consultations will be ignored.
Minerals are considered state goods; therefore, tax exonerations are generally not applicable. However, On January 22nd, the Energy and Mines Commission of the Congress released one last favourable resolution towards the reform of the Mining Law, which grants taxation benefits to mineral exports.
Given the important implications of the law, the reform proposal has generated some controversy between the private and public sectors in Guatemala. Some legislators and financial experts consider that these measures will injure the country. Others, including Alejandro Sinibaldi, ex-president of the Energy and Mines Commission, argue that the tax exemption is completely legal and appropriate.
References have been made to the “Ley de Maquila” (“Maquila Law”). This decree, which establishes a list of certain fiscal exceptions, especially for manufacturing industries, already provokes millions in losses to the National Treasury. Initially, it was meant to attract international investment and promote the exports of textiles; but it has simply turned into a way for foreign companies to avoid taxation. It has been argued that (by now) some mining companies, such as Montana Exploradora de Guatemala, S.A., subsidiary of Canadian Goldcorp, have used Maquila Law regulations to avoid income taxes when initiating their operations.
Additionally, the partition of profits will also be modified, leaving the local communities where the mining activity takes place with less financial revenues.
For further reading see the original article (in Spanish).