Taxation

All business enterprises are subject to a 15 per cent First Category tax on accrued taxable income. A 35 per cent additional tax is imposed on the repatriation or distribution of profits, but a credit is given for the First Category tax. Therefore, once remitted, foreign investors normally pay a total tax on profits of 20 per cent.

Partnerships are taxed as separate taxpayers.

All imported goods are subject to an 18 per cent Value Added Tax (VAT) calculated on the cost, insurance and freight (CIF) value, plus an eight per cent uniform tariff (ad valorem). Importers generally recover taxes paid on imports and in some cases importers can defer payment of duties and VAT for up to five years.

Exemptions include capital goods authorised by the government, goods imported by the Ministry of the National Defence, goods imported by international organisations and diplomatic missions and goods imported under the temporary admission system.

An import registration tax of three per cent on the CIF value (Incoterms 1990) is levied on all imports and is paid at the issue of the Informe de Importacion. The tax value is deducted from the import duty payment on import.

A surcharge is levied on entry on some luxury goods such as motor vehicles, fine jewellery, alcoholic beverages, tobacco, fur, and some textile goods.