Reforms in Latin America and Caribbean, 2006-07
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Argentina
Argentina stripped bankruptcy judges of jurisdiction over labor lawsuits and exempted such claims from the automatic stay applicable to claims, which are to be continued and concluded at the labor courts before presentation to the bankruptcy court for verification. Also, a company must now set aside 1% of their gross revenues to satisfy labor claims - even if the company did not turn a profit.
Brazil
Brazil made several amendments to its Code of Civil Procedure to reform the rules on enforcing judgments and to make debt collection easier for creditors. Debtors are now forced to cooperate in the disclosure of their assets for attachment and can be fined if they do not cooperate. Last year, Brazil also restricted the number of cases that can go to the Supreme Court and introduced electronic filing of documents in court. In ‘trading across borders', Brazil has also upgraded their EDI system and reduced importing delays by 2 days. Colombia
Colombia, the top reformer in the region, has made great strides in easing trade. By extending port operating hours, adopting more selective customs inspections, time for ports and terminal handling activities has been reduced by 3 days. Investor protection was strengthened by a decree requiring increasing disclosure requirements for related-party transactions, and paying taxes is now quicker and the corporate tax rate of 35% is progressively being reduced to 34% in 2007 and 33% in 2008. With the simplification of accounting rules, 188 hours were cut, a reduction of 41%.
Costa Rica
Costa Rica allowed traders to directly transmit customs declarations electronically and improved the capacity of the customs services resulting in reduced cross border trade by 6 days for import and 7 days for export. Dominican Republic
Dominican Republic has been successful in streamlining procedures; by simplifying the name registration process and introducing online tax registration the time to start a business has been reduced from 72 to 22 days. The Dominican Republic abolished the requirement for consular notarization of import documents. A new property law and the reform of the registry cut property registration from 107 to 60 days. El Salvador
El Salvador established a one-stop shop for importers thereby facilitating the documentation and approval process. Guatemala
Guatemala, expedited a number of formalities by making them electronic. By allowing registrars to submit electronic signatures, the time to register property has been reduced from 37 to 30 days. The implementation of a new Electronic Data Interchange (EDI) system for electronic submission of customs declarations and the introduction of risk-based inspection regime decreased the time for exporting procedures one day. With the full implementation of the one stop shop, time for new company registration was cut from 30 to 26 days, and 13 procedures were reduced to 11. Guatemala focused on increasing efficiency across the board, expediting the decision processes for construction, reducing the time from 286 to 235 days, as well as reforming the courts: increasing the number of cases to be decided by justices of peace hereby expanding their small claims courts. Haiti
Haiti decreased the time to register property from over two years to 405 days by decreasing time to register at the tax authorities. Time to register the sale contract has been reduced from 1-2 years to 6 months to one year (a total decrease of 278 days). A reform program began to reduce the time to register the sale-contract through reorganization, training and employment of interns. Beginning in the summer of 2006, a program was begun to reorganize the department and retrain employees, many of whom were not competent. In addition, about 60 interns were hired from the university and trained, with the promise that if they performed well, they would be contracted as employees. After the initial two month training period, a six-month program commenced to reduce the time to register sale contracts. The transformation was closely supervised and at the end of the period–in which improvements were definitely achieved, thanks to the additional staff and training–the interns that had performed well were hired. Honduras
Honduras simplified the municipal licensing procedures reducing the time to build a warehouse by 32%, and starting a business from 44 to 21 days. Registering property has also become easier; the creation of time limits on certain procedures has sped up the process from 36 to 24 days. Honduras has began facilitating access to credit by allowing borrowers to access their data and obtain a free credit report once a year. In addition, parties to a security agreement can agree to enforce a security out of court by using a notary to take care of the out-of-court enforcement of collateral agreements. Mexico
Mexico reduced if corporate tax rate from 33% in 2004 to 30% in 2005, to 29% in 2006 and to 28% for 2007 and subsequent years. Mexico also issued a new notary fee schedule which reduced the costs of registering property, from 5.24% to 4.73% of property value
Paraguay
Paraguay launched a one-stop-shop linking multiple agencies. The number of procedures to start a business was more than halved, time was reduced from 74 days to 35. Trinidad & Tobago
Trinidad & Tobago now includes utility companies as providers of information to credit bureaus increasing the credit information index. In addition, t he corporate income tax rate decreased from 30% to 25%. Uruguay
Uruguay reduced corporate income tax and simplified the various contributions made by employers to a single rate. Venezuela
Venezuela, however, has made doing business more complicated than it already was and has dropped 10 positions in the Doing Business rankings, now at 172. Venezuela added further hurdles to cross border trading procedures by requiring traders to obtain permits for each shipment leading to an increase time from 18 to 30 days. Venezuela also increased the number of payments and the total tax rate. Already one of the countries with the most rigid employment regulations, Venezuela extended its prohibition on dismissals of workers earning up to 3 times the minimum wage. The result is a loss of job opportunities: the Venezuelan economy has lost about 850,000 jobs in small businesses since 2002.
