Guatemala: Business Environment

Accounting Rules

Tax Year: The fiscal year coincides with the calendar year.
Accounting Standards: From January 1st, 2008, Guatemala adopted the IAS - International Accounting Standards and IFRS - International Financial Reporting Standards. To view these standards, see the IASB website: International Accounting Standards Board - IASB.
Accounting Regulation Bodies: Congress of the Republic of Guatemala
Accounting Reports: All companies have to provide an annual report in Spanish and publish their balance sheet and profit and loss statements in the Official Gazette. For more information consult the document on accounting in Guatemala: Hispanic-American Commission (Spanish only).
Publication Requirements: The company's balance sheets have to be published each year. It is advisable to have an accounting system that is clear and wholly translated into Spanish. It has to be noted that it is difficult to get information on Guatemalan companies as there are very few published balance sheets.
Professional Accountancy Bodies: Institute of Public Accountants and Auditors of Guatemala , (Spanish only)
Guatemalan Association of Public Accountants and Auditors , (Spanish only)
List of audit firms , (Spanish only)
Certification and Auditing: Audited financial statements must be filed annually. You can contact an external auditor: Deloitte, KPMG, Ernst & Young, PricewaterhouseCoopers. See also list of audit firms in the Yellow Pages (Spanish only).
Accounting News

Tax Rates

Consumption Taxes

Nature of the Tax: Value added tax (VAT) - Impuesto al valor agregado (IVA)
Tax Rate: 12%
Reduced Tax Rate: A reduced rate of 5% applies on gross sales of small taxpayers (annual turnover of less than GTQ 150,000). Under this scheme, no input tax recovery is permitted. Such rate applies also to taxpayers duly registered under the Regime for Agricultural Contributions when their annual sales of agricultural products do not exceed GTQ 3 million during the fiscal year.
Exports of goods and services are zero-rated.
Certain items are exempt from VAT, including: transfer of assets in a merger; in-kind contributions of movable property to a legal entity; in-kind contributions of immovable property if the property had not been previously contributed to a real estate entity; supplies by cooperatives to their members; low-value retail sales of meat, fish, seafood or shellfish, fresh fruits and vegetables, cereals and basic grains in cantonal and municipal markets with a maximum sale value of GTQ 100; certain financial services; education; certain insurance and reinsurance transactions.
Other Consumption Taxes: Excise taxes are payable in the form of fuel distribution tax (from 0.5% to 4.7%), alcohol and beverages distribution tax (from 6% to 8.5%) and tobacco distribution tax (100% of the factory selling price).
For used vehicles, including motorcycles, a fixed amount of VAT applies, ranging from GTQ 200 to 1,000, depending on the year of manufacture.
The first registered sale of a real estate property is subject to 12% VAT, but not to a stamp tax; the second and subsequent sales are exempt from VAT but subject to a 3% stamp tax.

Corporate Taxes

Company Tax: The rate under the general regime is 25% on net income
Tax Rate For Foreign Companies: Both resident and non-resident companies are taxed on their Guatemala-source income at the same rate. However, a 5% withholding tax applies on remittances by a branch to its foreign head office.
Capital Gains Taxation: Capital gains are taxed at a rate of 10%. Capital losses can be offset only against capital gains, up to a maximum of two years.
Main Allowable Deductions and Tax Credits: Depreciation of fixed assets can be deducted at rates varying from 5% (building and improvements) to 33.33% (computer equipment). Intangible assets can also be depreciated, under the straight-line method over a period that cannot be less than five years.
Start-up expenses, interest costs (up to certain limits) and bad debt (up to 3% of the debit balances of accounts and notes receivable) are deductible.
Charitable contributions are deductible up to 5% of the taxpayer's net annual income or up to GTQ 500,000 per year.
Contributions for employee retirement/pension funds and severance compensation payments are generally deductible. Allocations to a reserve for severance compensation are also deductible (up to 8.33% of total annual salaries and wages).
Fines and penalties are not deductible. All taxes except income tax and value-added tax are deductible.
Net operating losses cannot be carried forward or back.
Other Corporate Taxes: Real estate tax is assessed at GTQ 2 per thousand on declared property values from GTQ 2,000 to GTQ 20,000, at GTQ 6 per thousand on values from GTQ 20,000 to GTQ 70,000, and at GTQ 9 per thousand on values in excess of GTQ 70,000. First sale and resale of property are subject to VAT under the stamp tax regime. The stamp tax rate is 3% on the face value of documents or the gross value of the transaction.
A solidarity tax (ISO - Impuesto de Solidaridad) of 1% applies on the net assets of a corporation, or on its gross income, whichever is higher.
Mining companies are subject to a license tax, surface tax, and royalties.
Social security contributions payable by the employer amount to 12.67% of the gross salary (4.83% for the employee).
Other Domestic Resources: Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

	Guatemala	Latin America & Caribbean	United States	Germany
Number of Payments of Taxes per Year	8.0	28.2	10.6	9.0
Time Taken For Administrative Formalities (Hours)	248.0	327.5	175.0	218.0
Total Share of Taxes (% of Profit)	35.2	46.8	36.6	48.8

Source: Doing Business - Latest available data.

Individual Taxes

Tax Rate

Income tax	The rate is progressive and varies from 5 to 7%
up to GTQ 300,000	5%
Over GTQ 300,000	GTQ 15,000 + 7%

Allowable Deductions and Tax Credits: Individuals can deduct social security contributions (4.83% of salary); life insurance premiums; and donations.
A standard deduction of GTQ 48,000 also applies.
Special Expatriate Tax Regime: Both residents and non-residents are only taxed on their Guatemala-source income. No special expatriate tax regime applies in Guatemala.
Resident aliens cannot take income taxes paid to foreign countries or governmental units as a credit against their tax liability in Guatemala.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: To date, Guatemala has not entered into a tax treaty with another country.
Withholding Taxes: Dividends: 5%, Interest: 0% (banking and financial sector)/10%, Royalties: 0% (residents)/15% (non-residents)

Sources of Fiscal Information

Tax Authorities: Overview of Guatemala's tax measures in response to Covid-19
Guatemala Tax Administration
Other Domestic Resources: Ministry of Finance
Business Chamber of Guatemala

Intellectual Property

National Organisations: The "Intellectual Property Decree" no 57-2000 was ratified by the whole of Central America. This decree established a uniform legal environment for the whole region as well as a database on brands and logos. One has to register with the Registro de la Propriedad Industrial, an organization responsible for the protection of intellectual property in Guatemala.
Guatemala is a signatory of the Berne convention and of the Treaty of Rome. By virtue of the Central American agreement for the protection of industrial property, preferential registration is guaranteed for a Guatemalan brand in whichever Central American country during the first 6 months following its registration in Guatemala.
Regional Organisations: Guatemala is a member of WIPO (World Intellectual Property Organization) and has ratified the WIPO Copyright Treaty (WCT), as well as the WPPT, Performances and Phonograms Treaty. It is also a member of the WTO. It has signed the Paris convention, the Berne Convention, the Rome Convention and the Nairobi Treaty.

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent Intellectual property law.	15 years maximum
Trademark Brand names and Intellectual property legislation	10 years renewable	Trademark Law Treaty
Design Law on Design	3 years
Copyright Copyright law	75 years	WIPO Copyright Treaty
Industrial Models 1997 law on utility models	10 years

Legal Framework

Independence of Justice: The judiciary is not independent in Guatemala and corruption is still corroding the system which lacks transparency and pub
lic accountability. Nevertheless, with regard to doing business, there are agencies that deal with dispute resolution and they work well: The FTAA group has a dispute resolution system and companies often call on the WTO for the resolution of conflicts. The DSB: Dispute Settlement Body is the most frequently used dispute resolution system. See DSB website.
Equal Treatment of Nationals and Foreigners: In the business world, investment laws treat Guatemalan and foreign companies equally. With regard to all other judicial matters that one could be engaged in, it all depends on the circumstances (location, presiding judge). The Guatemalan justice system and police practices are very criticized by the Human Rights League. See link: Freedom House.
The Language of Justice: The judicial language used in the country is Spanish, though there are 23 other officially recognized Amerindian languages.
Recourse to an Interpreter: The Guatemalan State makes provisions for an interpreter to be available for people who do not speak Spanish.
Sources of the Law and Legal Similarities: The main source of the law is the 1985 Constitution as amended in 1993.The legal system is based on a system of civil law and of judicial reviews of various legislative acts. Guatemala has not accepted compulsory ICJ jurisdiction. The Guatemalan legal system has similarities with that of the United States.
Checking National Laws Online: Laws of Guatemala (in Spanish).

Standards

National Standards Organisations: COGUANOR, Guatemalan Standards Commission (in Spanish), (Spanish only)
OGA, Accreditation Bureau, (Spanish only)
Ministry of Economy website on standards, (Spanish only)
Integration in the International Standards Network: The relevant organization that legally lays down the standards in force is the Guatemalan Standards Commission (COGUANOR - Spanish only). Guatemala is a member country of the International Organization of Legal Metrology (OIML), of the International Organization of Standardization (ISO), of the International Eletrotechnical Commission (IEC) and of the Pan American Standards Commission (COPANT).
Classification of Standards: For the classification of the different standards, see the COGUANOR website.
Online Consultation of Standards: Refer to the standards website: COGUANOR
Certification Organisations: National Standards Commission (COGUANOR) (Spanish only).
General management of Regulation, Vigilance and Health Control (Spanish only).

Business Practices

General Information: Ehow, Business Etiquette practice website
Opening Hours and Days: Banks are open Monday to Friday from 9 AM to 3 PM and sometimes until 7 PM. They are open Saturday from 9 AM to 12 PM.
Administrative offices are open Monday to Friday from 8 AM to 12 PM and from 1 PM to 4.30 PM however, Friday afternoon is considered by many as a "pre-weekend", it is therefore advisable not to wait till Friday afternoon to get in touch with them.
Businesses work Monday to Friday from 9 AM to 1 PM and from 3 PM to 7 PM. Saturdays they are open until 1 PM or 7 PM.
Supermarkets and hypermarkets are open every day from 9 AM to 8 PM.

Public Holidays

New Year	January 1st
Holy (Maundy) Thursday	3rd Thursday in March
Labor Day	May 1st
Army Day	June 30th
Bank Holiday	July 1st
Our Lady of the Ascension (for the capital city only)	August 15th
Independence Day	September 15th
Race Day	October 12th
Revolution Day (of 1944)	October 20th
All Saints' Day	November 1st
Christmas	December 24th and 25th
New Year	December 31st

Periods When Companies Usually Close

End of March, the date varies every year

Holy week

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