One of the most consistently challenging aspects of contracting in Central America is complying with the country’s tax system. Whether you’re a contractor or a permanent employee, you have to pay tax on all of your earnings whilst you’re in the country. As well as paying tax in Central America, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge. Do you get double taxation in Central America? It will depend on your nationality and the nature of your assignment in Central America. Getting to grips with the basics of income tax in Central America and understanding your options helps you work out the best way to organise your affairs.

Paying Income Tax in Central America through Your Employer

If you’re working in Central America under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Central America for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Central America, but contractors may not be offered this service because of their short stay with each employer.

Working Out Income Tax in Central America Yourself

Anybody who can’t pay their tax in Central America through PAYE is left with the prospect of filing a tax return and doing everything themselves. Do you know much about Central American Tax Law? Does Central America have a tax treaty with your home country? You will need to find out or find someone who can help! Not only does this eat into your free time, it’s also exceptionally difficult to get the most out of the system. The rules change frequently, so if you’re new to it you may be working on out-dated research and end up paying too much. Income tax in Central America can range from attractive to amongst the highest in the world so you need to be sure you are placed in the correct tax brackets.

Using an Umbrella Company for Income Tax in Central America

Contractors in Central America are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Central American umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records). The companies are experts in Central America taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Central American tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax in Central America

We work with numerous umbrella companies in Central America, many of whom are experts in tax and immigration laws. If you have any questions about tax in Central America, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We also have a comprehensive knowledge of the different services they provide, and we can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Central America work permit. Our advice is 100 percent free, and it comes with no obligations. You will be paying taxes in Central America but without the overhead of directly dealing with the Central American tax authorities. Get in touch with us today for some reliable advice on tax in Central America!