During the First Summit of Latin America and the Caribbean for inclusive, sustainable and equitable global taxation, held in Cartagena, participating countries prioritized the main issues that would form part of the work plan for the first year of operation of the Platform for Taxation in Latin America and the Caribbean (PTLAC), as part of the pro-tempore presidency of Colombia. These issues are: the progressiveness of the tax system, tax incentives, environmental taxation, and the taxation of the digital economy and new forms of work.
This report presents the main results of the working sessions of the subgroup on tax benefits, addressing the experience in their design and measurement both in the member countries of the PTLAC and at the global level. The process of preparation of technical reports by the different Ministries of Finance and Public Finance, as well as Tax Administrations, is analysed according to the information gathered in the ‘Diagnostic Survey on the management of tax benefits: legal framework, measurement, scope and monitoring’, designed to obtain a comprehensive understanding of the situation and assess aspects ranging from the legal framework and legislative processes to the evaluation and monitoring of these benefits in the six PTLAC member countries that provided their inputs: Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador and Peru.
Initially, a descriptive analysis of practices and regulations in these countries is presented. In addition, a diagnosis of revenue forgone is provided, covering legal aspects, measurement processes, scope and monitoring. In addition, international experiences such as those of Canada, the Netherlands and South Korea highlight the importance of periodic evaluations, the rigidity of budgetary rules regarding the management of tax benefits and the involvement of experts to improve both their fairness and efficiency. These practices can serve as a reference to enhance the management of tax benefits in the region.
Finally, recommendations were presented based on international best practices and the analysis of the particularities of the surveyed countries, highlighting the need to institutionalise the measurement and publication of tax benefits, improve the quality and availability of information, strengthen transparency and promote regional cooperation. It was also emphasised that capacity building and technical trainings are key to promote effective tax expenditure management and reforms. These recommendations were classified according to their difficulty, timeframe for implementation and level of priority in order to facilitate decision-making by countries, without representing binding guidelines with respect to the current state of their tax systems.
Read the report.