DDP 745. Sonia Cavallo. "Tax Structure in Guatemala." February 2000. 29 pp. Central America Project Series

This paper explores Guatemala's attempts to confront the problems of tax evasion and poor tax administration. Resolution of these problems has become more important as a result of the 1996 Peace Accords, which require larger social spending and thus, an increase in tax revenues. The paper looks at the current tax structure, as well as Guatemala's fiscal challenges, and seeks to suggest priority areas for tax reform in the near future. Among the issues analyzed is Guatemala's low tax burden, high rates of tax evasion, unstable tax structure, and poor tax administration.

Keywords: Guatemala, tax exemptions, tax evasion, tax reform, tax structure, tax administration, Value Added Tax

JEL Codes: H200, H220, H240, H250, H260

Sonia Cavallo has an economics degree from Universidad de San Andres, Buenos Aires, Argentina (1996) and a Masters in Public Policy degree from the Kennedy School of Government, Harvard University (1999). This paper was prepared in the summer of 1998 at INCAE where the author was working as Macroeconomics Researcher for the Central American Project, a project of the Harvard Institute for International Development, INCAE and The Central American Bank for Economic Integration.