Adoption of an appropriate international tax policy in Latin America can promote greater foreign direct investment. Latin American countries should work together on a tax integration process to give foreign direct investment a more regional approach rather than each country competing to attract its own foreign direct investment. Such intraregional competition results in lost tax revenues with no proven effect on foreign direct investment. A tax integration process would reduce the use of advanced tax planning techniques by multinational companies to take advantage of loopholes created by disparities between tax systems; however, it would also provide the foreign investor with a homogeneous set of rules throughout the region, which would result in decreased administrative and compliance expenses. Nevertheless, prior to enacting a determined regional tax policy, an analysis of tax expenditures and legal consequences must be examined by a multidisciplinary body with presence in the whole region. Successful implementation should be lead by larger regional players such as Argentina, Brazil, Chile and Mexico with other countries gradually following suit and would require the creation of a supranational tax court whose decisions would be directly applied in the respective countries.
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