The competition to attract foreign investment (FDI) is getting even more fierce in Latin America, with the rising unemployment rates putting pressure on the governments to create jobs and stimulate the economy.
Panama and Colombia are reportedly mulling providing financial aids to companies hit hard by the COVID-19 pandemic.
Panama’s parliament has already approved a legislative bill seeking to grant tax benefits to companies in the manufacturing sector. Reports say that Uruguay is also considering plans to reduce income tax on businesses in a bid to attract foreign investment.
“CINDE is insisting that the tax-breaks offered to multinational firms operating in free zones must be protected,” reports Spanish news outlet crhoy.com. The tax exemption has long been a major draw for foreign firms building up offices in the country’s free zones.
Globally, foreign direct investment (FDI) is on course to decrease between 30% and 40% this year, according to the United Nations. In Costa Rica, FDI fell by 22% in the first quarter of the current fiscal year, according to the country’s central bank.