For a long time, economic policies have had to find a balance between the immediate needs of the State and the long-term development of the nation. In that regard, free trade zones (FTZs) have emerged as a strategic solution in many countries. For decades, these zones have been the basis of multiple economic and legal debates, but their value in attracting investment and fostering development has been indisputable.
Free trade zones, conceived as geographical areas in which special tax and customs regimes apply, have become magnets for domestic and often foreign companies. The benefits are not only limited to tax exemptions; they also provide smoother operations, fewer bureaucratic obstacles, and a more direct connection to international markets. Therefore, beyond being just free trade areas, they represent ecosystems of opportunities where companies can grow and strengthen the local economy through job creation, technical training, and the strengthening of production chains.
Guatemala recognized the potential of these zones and incorporated them into its economic structure in the hope they would become an attractive investment destination. However, in a turn of events motivated by the intention to increase tax collection, the country made the decision to eliminate such zones. The logic behind this decision was that eliminating these benefits would fully integrate the exempt businesses into the ordinary tax regime, thus increasing state revenue.
But the economy, with its inherent complexity, rarely moves in straight lines. Read more
