Firstly, a significant factor is the high dynamism of tax reforms and measures aimed at modernizing the management of tax agencies in the region, which resulted in 243 significant tax measures, of which 116 are related to tax policy and 127 to strengthening tax administrations.¹.

Another analysis will be to consider their effectiveness over time, which implies considering the results obtained in each socioeconomic context according to the operational strategy conducted by the tax agency.

The reforms of the system

As for the tax reforms, they can be distinguished mainly between those that are sought to: 1) increase tax revenues, 2) consolidate the current tax system and/or 3) reduce the tax and administrative burden to boost the economic activity.

For those aimed at increasing tax revenues, a distinction can be made between progressive reforms, i.e., those that seek greater tax equity based on taxpayers’ ability to pay, and regressive reforms, which are based on increasing indirect taxes.².

In our region, the projects of reforms of a substantial progressive nature promoted by some governments did not succeed, due to lack of parliamentary support, as was the case of Colombia, Costa Rica, Chile, and Honduras. The taxation therefore remains regressive in Latin America, as in Africa and Asia-Pacific, regions that make up the less economically developed areas in the world.³.

Regarding the objective of reducing the tax burden and simplifying tax legislation to favor the investment climate, the modifications applied by Argentina are highlighted⁴. In terms of creating fiscal stimulus regimes to favor investment, El Salvador excelled, through the implementation of a highly active policy in the field⁵.

In light of the change of government in Bolivia, tax changes were made in line with the new economic policy, with the future repeal of certain taxes having been announced.⁶.

Brazil stands out because its legislation had as its main objective implementing the reform of consumption taxation at the federal, state, and municipal levels (dual VAT and specific consumption), which gradually began to be applied from this year, in a process that aims to culminate in 2030.

Another country that stands out for the reform was Uruguay, as soon as it approved the so-called OECD Pillar II regarding the imposition of the Global Minimum Tax.l⁷, they adapted the so-called “Tax Holidays” regime and applied a VAT rate to purchases on Digital Platforms from abroad.

As for the taxation of small taxpayers, Brazil approved a new regime called Nano-entrepreneur, which is a special regime for low-income individuals. Bolivia reinstated the so-called Simplified Tax System for entrepreneurs, which consolidates VAT, IT and EUI into a single tax, as a mandatory transition to the General Regime.

Guatemala, for its part, created two regimes for taxpayers with lower tax capacity⁸, while Paraguay, attentive to the high level of informality of small businesses, sanctioned the MSMES Law in order to formalize the economy of this taxpayer sector⁹.

Strengthening the management

In this fiscal period, we observed that the countries of the region, in general, applied measures to strengthen their tax administrations, to achieve greater efficiency and effectiveness in their mission of controlling tax obligations.

With regard to the organization and functions of the tax administration, Costa Rica approved the new regulations on organization and functions. In Cuba, the ONAT was established as a national entity subordinate to the Council of Ministers in order to develop its functions with greater autonomy.

In Paraguay, following the creation of the DNIT in 2023, this fiscal year saw the formalization of the organizational structure of the General Customs Directorate and its merger with CONAJZAR (National Gaming Commission), which is responsible for collecting gaming taxes.

In Brazil, to improve the management of the tax agency, the programs that promote voluntary tax and customs compliance (CONFIA, SINTONIA and OAS) were approved, the institute of the contumacious debtor was created, the cooperative dispute resolution regime and the declaration of the rights and duties of taxpayers was formulated.

The case of Mexico is also noteworthy for the intensity of the measures adopted, given the changes reflected in the Federal Revenue Law of 2025 and 2026, which prioritized strengthening tax administration management.

At the regional level, notable actions included the phased extension of electronic invoicing to all taxpayers and, in terms of control, the extension of the application of taxpayer risk profiling tactics to enable more effective control measures.

As for the tax standardization plans, eight (8) countries applied it, in order to regularize the tax debt portfolio.

Summary:

The importance that the countries of the region attach to both tax policy and the strengthening of tax agencies for its effective implementation is highlighted as significant data in taxation for the fiscal year 2025.

Deepening the strategy regarding taxpayer segmentation is important, in order to create specific regimes that consider the unique characteristics and effects of each universe, according to their tax capacity and economic specificity.

At the same time, the electronic invoicing is being consolidated and generalized, although the control of widespread electronic payments still needs to improve, in order to detect existing deviations.

Finally, unfortunately, the region’s outstanding issue continues to be the existing high levels of informality, for which we must avoiding the strong temptation to continue exclusively “fishing inside the fish tank.”

For more details on the tax measures adopted by Latin American countries in fiscal year 2025, please visit on the CIAT website in Spanish and English the following documents:

• • Observatory of fiscal reforms and the strengthening of the tax administrations of Latin America (2025) / 2026
• • Observatory of Fiscal Reforms and the Strengthening of Tax Administration in Latin America (2025). English summary / 2026

References:

1 With the same methodology, 211 tax measures (CIAT) had been implemented in 2024.

2 For general and specific consumption.

3 In Zone 1 (Africa, Asia Pacific and Latin America) which is the one with the lowest degree of economic development, predominantly regressive tax systems are applied, there is a gap between indirect taxation with respect to direct taxation on average of 3% of GDP (in Africa 2%, in Asia Pacific 2.6% and in AL 4.2%) (CIAT Blog: Progressive, regressive or neutral tax systems: their current international situation).

4 Which started in 2024 and continue in the current financial year 2026.

5 This strategy continued this year with the creation of the Investment Expansion Promotion Law (2026).

6 To the Great Fortunes, Gaming, Financial Transaction Tax and Business Promotions

7 Following the strategy of Brazil, which incorporated it in 2024.

8 The special regime for the production and marketing of agricultural products and handicrafts for farmers and artisans, excluding final sellers. The special regime for the production and marketing of the livestock, hydrobiological and beekeeping sector was also created.

9 This universe, according to the economic portfolio, has 1.4 million small taxpayers, but it has an approximate informality level of 1 million small businesses.

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