Having witnessed the benefits of double taxation across countries and continents, the winds of change may be appearing in the LAC.
There are over 3,500 tax treaties worldwide. These treaties are known to strengthen the business climate and regional integration. However, their adoption in the Latin American and Caribbean (LAC) region is far lower than in OECD countries, which have between 75 and 95 treaties on average in force. Most LatAm countries have not yet recognised the importance of tax treaties to achieve economic cooperation.
There is an overwhelming feeling of scepticism in the region that such treaties could cede taxing rights and shrink revenue margins. This ‘revenue loss’ is a myth based on the inaccurate assumption that double taxation results in the source countries, which are the countries receiving the foreign investment, losing tax revenue. On the contrary, the reality is that the allocation of taxing rights is not the equivalent of a transfer of tax revenues.
Having witnessed the benefits of double taxation across countries and continents, the winds of change may be appearing in the LAC. The Economy Ministry of Argentina recently announced that it would lower its export taxes for certain industrial sectors to zero from July. Taxes on automotive, petrochemical, chemical, rubber and machinery exports are currently 4.5%, and will be reduced by 0.375 percentage points on a monthly basis. Gradual tax reductions will also be applied to major agricultural exports.
In 2025, Argentina’s automobiles comprised over 10% of all exports at $8.78 billion, a 2.5% shrink from the previous year’s figures. The petrochemical exports, including oil, reported a 12.8% surge from 2024, generating $11.77 billion, representing 13.5% of 2025 exports.
Argentina is one of many LatAm countries slowly accepting tax reforms as vehicles to boost economic growth. The LAC Revenue Statistics report compiled by a UN body revealed that tax revenues rose as a share of GDP in 15 of the 28 countries in the LAC and declined in 13. Some of the highest gainers were Cuba with 5 percentage points (p.p), Barbados (2.1p.p), Brazil (2.0 p.p) and Antigua and Barbuda (1.9 p.p).
This increase is a result of the major taxation reforms implemented in Brazil, Cuba, and Antigua and Barbuda, which increased revenues from taxes on goods and services, and also from the corporate income tax, which was introduced in Brazil and Barbados. Two of the largest declines in the tax-to-GDP ratio were noted in Trinidad and Tobago and Guyana. This was due to economic factors. Trinidad and Tobago reported a 3.0 p.p drop because of lower energy prices and declining natural gas production. Guyana posted a 2.4 p.p fall, as strong economic growth outpaced increases in tax revenues.
In the LAC, taxes on goods and services comprise the largest part of the tax mix, as income taxes and social security contributions are lower in the region, compared to other OECD countries. In 2024, the LAC’s taxes on goods and services accounted for 49.2% of total tax revenues on average. This was driven primarily by VAT, which is 28.9% of revenues. Income and revenue taxes were 29.1% of total revenues, of which 17.4% came from corporate income tax and 9.6% from personal income taxes. Social security contributions accounted for 15.9%.
The increases in the region’s average tax-to-GDP ratio have always been due to increases in revenues from VAT and taxes on income and profits. Between 2014 and 2024, the LAC reported a 1.5 p.p. rise in the aforementioned ratio, with tax revenue rising as a share of GDP in 21 countries and declining in 7. Tax revenues per capita increased in all LatAm countries, with the Dominican Republic, Nicaragua and Guyana standing out in PPP terms as it more than doubled.
These positive changes are also reflected in 2025’s additional tax revenue. The Global Forum on Transparency and Exchange of Information for Tax Purposes published a report highlighting that LatAm countries had identified over 576 million euros in additional tax revenue last year through exchange of information (EOI) and related voluntary disclosure programmes.
According to the Tax Transparency in Latin America 2026: Latin America Initiative Progress Report, these countries are systematically incorporating EOI into compliance activities. Since 2009, LatAm has amassed over 29 billion euros in additional revenue, which constitutes 21% of global additional revenue generated through EOI programmes.
With over 2000 exchange relationships, 79% of which were created under the Convention on Mutual Administrative Assistance in Tax Matters, Latin America has one of the largest networks for international tax cooperation in the world. The majority of countries in the region currently have fully functional EOI frameworks with strong internal protocols, assigned units, and empowered responsible authorities. The Common Reporting Standard’s (CRS) automatic EOI on bank accounts greatly helps Latin American tax administrations. More than 5 million foreign financial accounts with 463 billion euros in assets were reported to the region’s tax authorities in 2025.
A significant fiscal shift is occurring throughout Latin America, ultimately dispelling long-standing doubts about international tax cooperation. Adoption of international tax treaties has generally been hampered by worries about revenue loss, but recent strategic reforms like the broad VAT and corporate tax restructuring and Argentina’s dramatic export tax cuts are proof of a renewed focus on economic growth. LAC countries are successfully enhancing their business environments, ensuring financial stability, and opening the door for greater global integration by embracing transparency and international alignment.
