The authorities maintain the expectation that the tax on family remittances sent from the United States is not approved, although various sectors consider it difficult to revert the decision, which has already begun to be approved in that country.
Last week, the United States Lower House approved a law in fiscal matters that, among other provisions, establishes a 3.5% tax on family remittances sent by migrants from that country.
The President of the Republic, Bernardo Arévalo, reported on Monday, May 26 that he sent a letter to the United States authorities with the intention of reducing or eliminating the possible tax on family remittances.
The president said that efforts are made before the US authorities to reduce or eliminate the possible impact of these measures. At a conference he told migrants that they are not alone.
He indicated that in that letter addressed to the House of Representatives, the Government of Guatemala said that the creation of the tax would aggravate the social ramifications that are currently trying to combat, including poverty, organized crime, drug trafficking and irregular migration. He added that they understand the efforts of the current administration of the United States government and the Congress of that country for promoting economic development, promoting local employment and increasing tax collection.
He said that they understand the “enormous sacrifice” of those who live away from their land, and that remittances are not only a figure, but the fruit of the work of millions of Guatemalans that contribute to the economy of their communities, which affects the development and future of the country.
The measure would be counterproductive to the joint efforts that the governments of Guatemala and the United States promote to regulate migration, guarantee a sustainable return and combat the networks of human trafficking and organized crime, said the president, stating that they observe “with deep concern” the announcement of the possible tax.
Opinions
Jorge Benavides, an analyst at the Foundation for the Development of Guatemala (Fundesa), explained that the decision to apply a 3.5% tax on remittances sent by non -citizen people in the United States is backed by the approval in the Congress of the proposal of President Donald Trump, an aspect that he considers determining for his probable entry into force.
Benavides said that the implementation of this provision seeks not only to discourage irregular migration and reduce the number of irregular migrants in the United States, but also to increase tax revenues to compensate for the unbalances caused by other measures, such as tax exemptions and the implementation of scholarships for young people.
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Taking these factors into account, Benavides considered very likely that a letter from Guatemala influences the Senate vote, where the Republican party also has a majority.
He added that the tax will have repercussions in Guatemala and that it will be necessary to take internal measures, such as increasing investment and improving budget execution.
According to the report “Challenges in the face of talent migration in the United States, Mexico and Guatemala”, prepared by Benavides as ILO consultant, five key points are identified about the use of remittances:
- Consumption represents the main destination of remittances, with 42.8%, especially in food and rentals.
- Savings channels 29.3% of the use of remittances.
- 14.6% are allocated to businesses and ventures, including personnel and acquisition of raw materials.
- 12.6% is used in health and education. This would have represented around US $ 2,700 million in 2024.
- On average, a Guatemalan in the USA. Uu. Sends between US $ 750 and US $ 780 per month in remittances. Your remaining income serves to cover your cost of living, estimated at US $ 1,465 per month, and to pay debt to the coyote.
The analyst concluded that a tax such as the proposal would affect the entire savings and investment item, since consumption is the priority category in homes.
Distribution of remittance use:
- Savings and investment (29.3%): Includes housing, purchase of assets and investments.
- Home consumption (43.8%): food, rentals, transport, among others.
Amador Carballido, general director of AGEXPORT, explained that with respect to 10% tariffs on imports and remittance tax, the first offers greater possibilities of negotiation because it is an external tax, and there is a free trade agreement with zero tariff reciprocity. In the case of remittances, he considered that the scenario is more complex because it is an internal tax. He also said that the reaction to the tax was late.
Republicans in the United States sought to create a 5% tax for sending remittances, as part of a broader project to lower certain taxes and modify other programs, including a new Remittance Tax. The lower house approved the project but with a rate of 3.5%.
According to Adolfo LACS, union leader, he explained that this sector will send a letter to the UST, requesting that 10% tariffs be eliminated to imports from Guatemala, to protect jobs, but indicated that in the case of remittance tax it is different since the project is in Congress and we should talk to each deputy. According to LACS, the initial project was a 10%rate, then they dropped to 5%, and now the lower house left it at 3.5%, which indicates the leader will be an impact on migrants but lower compared to the initial rates. The project is pending to continue its approval process
With information from Lesly Sánchez and Óscar García.