Tax policy makers in the countries of the region began to understand that the success of a tax system was not only achieved by promoting modern tax reforms, but also by strengthening the management of tax agencies.

Tax policy and administration strategies in Latin America and the Caribbean (2024)

Knowing the tax reforms applied by nineteen (19) countries in 2024, with such information we fortunately have the “Monday paper” to analyze what happened and determine the existing trends, stripped of theoretical positions.

The first question is to know: What was the priority objective of the countries in the region in their tax reforms in 2024? Increase, decrease or neutrality of tax revenues. The second question is: has the lesson of strengthening tax administrations been learned?

Increased tax burden

There are two strategies to achieve this: a) create new taxes or broaden the tax rates, or the tax bases of existing taxes, or b) improve the efficiency of the tax agency. The optimal strategy to achieve this objective would be to apply the two actions jointly.

The tax increase proposal via tax policy, in the fiscal period under analysis, was applied by Ecuador, for example, in view of the difficult and exceptional economic circumstances the country was going through, for which it increased the VAT rate and applied three new taxes (one permanent and two transitory). [1]

Cuba also undertook a comprehensive tax reform last year in order to adapt the tax system to the new economic realities of taxpayers.

Progressivity or regressivity

It is well known that the countries of the region have regressive tax systems, i.e., higher incidence of indirect taxation (general and specific consumption taxes) than direct taxation (income and wealth taxes).
The lower weight of direct taxation was due to a definition of economic policy, where a significant tax expenditure (tax benefits) prevailed, the lack of taxation of the profitability of certain sources of wealth, and the lack of full powers of the tax agency to control avoidance/evasion or to exercise full actions for effective collection.

Some countries have proposed substantial tax reforms aimed at improving the progressiveness of the tax system, but these have not been approved by the legislature, as in the cases of Colombia, Costa Rica, Honduras and the Dominican Republic.

Strengthening tax administration

The strategy of increasing revenues, but without increasing taxes, by strengthening the tax administration, i.e., “giving teeth to the tax agency”, was the strategy followed by the reforms carried out in Chile, for example, with the program called “Tax Compliance”, and in Mexico through the Federal Revenue Law 2025.

There were also multiple partial reforms in almost all countries to improve tax administration, regardless of the tax policy strategy of the respective countries[2].

Integral Strategy

Brazil had a more comprehensive strategy, as it designed to increase taxation on individuals with high taxable capacity. [3] and multinationals [4], concomitantly with the implementation of three tax and customs compliance programs [5] to improve the management of Federal Revenue (tax administration). Congress approved the tax measures, but the measures related to the strengthening of the management of the Federal Revenue are still under consideration.[6]

Also in this country, a Constitutional Amendment and the corresponding law were approved to simplify Brazil’s complex consumption taxation, improving the conditions of the tax burden at the national, subnational and municipal levels through the dual VAT. Its implementation will be gradual in the future.

Revenue neutrality

Another strategy adopted was to implement a tax reform aimed at adapting the tax system to favor investment.

Argentina has adopted this position in accordance with the economic policy implemented and in its tax reform, [7] derogated ITI[8], replaced the Cedular Tax on Higher Incomes [9] and approved the reduction of the tax burden on personal property tax, and opted for the loss of validity of the PAIS Tax. [10] Argentina also replaced the AFIP as the tax agency and created in its place the ARCA (Customs Collection and Control Agency).

Paraguay was the only country that did not apply any tax reform, consolidating its strategy of system stability under the so-called 10-10-10 regime (10% Corporate Income Tax (IRE), 10% Personal Income Tax (IRP) and 10% Value Added Tax) in order to strengthen the country’s business environment to attract international investment.

At the same time, it created the National Tax Revenue Directorate (DNIT), an autarkic entity that merged tax management, previously under the jurisdiction of the Secretariat of State and Taxation (SET), with Customs, to improve tax management.

Tax Amnesties

The level of tax evasion in the countries of the region has led to the temporary application of regimes for the regularization of tax obligations, which depending on the modality can be distinguished between a) Full Tax Amnesties (remission of capital, interest and fines), and b) Partial TA (remission of interest and/or fines).

Full tax amnesties, which in turn can be onerous [11], or free[12] were applied by four (4) countries and the partial ones by seven (7) countries, This demonstrates the relevance of these measures in the tax policy strategy of the countries in the region.

Conclusion

In Latin America, the intensity of tax reforms and measures to strengthen tax administrations during the tax year 2024 (of the 19 countries studied, all have formulated proposals in this regard), together with the diversity of the strategies applied, according to the different objectives of the countries, stand out.

Therefore, to answer our initial questions, it can be stated that there is no general trend, and that each country applies the strategy that is closest to its priorities according to its political and economic context. It can also be observed that governments have shown a high degree of interest in the effectiveness of tax agencies, implementing continuous programs for their modernization.

For a detailed development of the main tax reforms and measures for strengthening tax administrations, please refer to the CIAT book (2025) “Observatory of Tax Reforms and Strengthening of Tax Administrations in Latin America (2024 Edition)”, which is available on the web in its digital library:

Download it here in Spanish: https://marketing.ciat.org/RS-ES-ORFF

See: English Summary https://marketing.ciat.org/RS-EN-OFRT

[1] Temporary Security Contribution (CTS), the Temporary Contribution on the Profits of Banks and Credit and Savings Cooperatives (CTB) and the Single Tax on Sports Betting Operators.

[2] The implementation of 66 (sixty-six) programs for the modernization of the tax administrations of 19 countries was verified, and 12 (twelve) others in the legislative process were proposed..

[3] Taxation of income earned abroad by individuals and investment funds in the country (Law No. 14,754).

[4] Corporate Minimum Corporate Taxation (Interim Measure) No. 1262/24).

[5] TRUST, SYNTHONY AND OEA programs. The institute of the contumacious tax debtor was also promoted..

[6] Tax compliance program.

[7] Law No. 27.743 (2024).

[8] Real Estate Transfer Tax.

[9] Replacing it with the fourth income tax category.

[10] Taxation of certain foreign currency transactions.

[11] Generalmente a través del pago de un impuesto especial como fue en Argentina, Chile y Perú.

[12] Argentina y Ecuador.