Guatemala: Managing Corporate Taxation in Latin American Countries - Guatemala

Last Updated: 12 October 2010
Article by Eduardo Mayora Alvarado


1. Income Tax

1.1. General Aspects

1.1.1. Income Tax Rate.

The general statutory corporate income tax rate is a flat rate of 5% on gross income minus exempt income; alternatively, there is the 31% corporate income tax rate on net income. This is equally applicable to local branches of foreign corporations.

1.1.2. Taxable Base

Refer to 1.1.1 above.

1.1.3. Deductions

There are no deductions applicable to the 5% Regime; for the 31% Regime, as a general rule, all costs and expenses related and necessary to the income producing activity, are considered deductible expenses. Excluded and/or exempted items of income are not deductible, and the lack of appropriate apportionment could lead to a proportional rejection on overall deductible costs and expenses. Some costs and expenses are limited to quantitative ceilings; e.g., royalties, unrecoverable debts, interest payments.

1.1.4. Depreciations

For the 31% Regime, tangible and intangible fixed assets´ depreciation is deductible. Depreciation term varies depending on the nature of the assets.

1.1.5. Transfer Pricing

Guatemalan legislation does not contemplate specific Transfer Pricing rules; however, this is not equivalent to say that the taxpayer is basically free to assign any value to transactions entered into with related entities. At the limit, the deliberate simulation of transactions with the purpose to evade taxes partially or totally is specifically sanctioned by criminal law.

1.1.6. Inflation Adjustments

Guatemala does not have inflation adjustments mechanisms; however, the revaluation of tangible or intangible assets is permitted.

1.2. Payment and Filing For tax payers under the 31% Regime, ordinary tax year covers the period from January 1st . to December 31st, with an annual filing deadline three months after the closing of the corresponding Tax Year. Tax payers under the 5% regime must file their returns on a monthly basis.

1.3. Interest and Penalties on Unpaid Tax or Tax Paid Belatedly

Unpaid taxes are subject to an interest charge that shall be assessed at the legal rate, roughly the average of the lending interests charged by banks, plus a fine that, subject to some qualifications, may be up to 100% of the unpaid taxes. Late payments (where no inspection has taken place yet) are subject to a fine calculated by multiplying the unpaid tax times the number of days of delay by a factor of 0.0005.

1.4. Dividend Tax /Branch Profits Tax

Although characterized as a Stamp Tax, for every practical purpose and except under certain circumstances (still debated at the Tax Court level) a 3% charge is levied on the dividends paid to both residents and non resident shareholders, as well as on the remittances made to Parent Corporation of local branches.

1.5. Cross-Border Payments

1.5.1. Withholding Taxes

When Guatemalan sourced income is remitted abroad to a beneficiary that is a nondomiciled alien individual or entity, the payment is subject to a withholding tax. Royalties

Royalty payments are subject to a 31% withholding tax. Dividends

Guatemalan law does not tax dividends or profits remitted abroad to foreign companies or foreign shareholders, provided that income tax has been paid in Guatemala by the local company at corporate level. Technical, Administrative, Scientific, Financial or Economical Services.

Payments made to non-resident alien entities for technical, administrative, scientific, financial or economical Services are subject to a 31% withholding tax. Other

Cross-border payments.

Other payments not specifically characterized, to non-resident alien entities or individuals are subject to a 31% withholding tax. Interest payments.

Interest payments are subject to a 10% withholding tax rate; when interests are paid to a non-domiciled first order bank or financial institution, the proceeds of the loan are sold to the Guatemalan banking system and used to generate taxable income, there is no withholding obligation. Equity Reimbursements

Although tax liabilities may arise within this context, they would not be subject to withholding obligations. Tax Havens

Guatemalan tax regulations do not have Tax Havens provisions.

2. Value Added Tax (VAT)

2.1. General Aspects

2.1.1. VAT´s general rate is 12%. There is as reduced rate for minor tax payers (roughly under US$9,000.00 yearly income) of 5%. There are also some VAT exemptions for specific entities.

2.1.2. Taxable Transactions

The taxable transactions are the sale of movable assets and real estate property; imports; leasing of movable assets or real estate property; donations; inventory's consumption, losses or destruction, and services rendered in Guatemala.

2.1.3. Taxable Base

As a general rule, the taxable base is the price or value of the consideration paid for the goods or services. There are cases where certain items must be either included or excluded.

2.1.4. Creditable VAT

As a general rule the VAT taxpayer is entitled to credit to the VAT payable all such VAT paid to its suppliers for tangible movable assets brought or imported and for services hired, provided that they constitute a cost or expense of the taxpayer's income producing activity. The VAT paid in the acquisition of goods that will become fixed assets for the buyer is creditable to VAT account.

2.2. Payment and Filing

VAT has a one-month taxable period. Therefore, the tax must be assessed and a VAT return filed monthly. The VAT return must be filed and paid in full on the filing date, 30 days after the closing of the monthly period.

3. Other Taxes

3.1. Property Taxes

There is a Real Estate Tax paid on a quarterly basis. The tax rate ranges from 2 to 9 per thousand a year, calculated on a fiscal basis which can be appraised according to different procedures contained in the law.

3.2. Stamp Tax

This is a documentary tax applicable to all written agreements, with the exception of dividends or profits, which are levied with the 3% rate, regardless of the existence of a physical document; the Stamp Tax has fixed rates for some specific documents and agreements; for documents which are not subject to a fixed rate, there is a general tax rate of 3%. The taxable base is the full amount of the consideration agreed in the document. The general exemption for this tax is that all transactions subject to VAT, are not levied with the Stamp Tax.

3.3. Excise Taxes

In Guatemala, there are several excise taxes that apply to the consumption of national or imported goods such as cigarettes, alcoholic beverages and soft drinks. Tax rates range from 8% to 100%.

3.4. Custom Duties

In addition to import VAT, imports are also subject to custom duties that range between 0% and 30%; for most goods, the average rate is 15%. There is also the application of zero rating to certain goods in the context of Free Trade Treaties. Custom duties are computed on the CIF value of the goods, while import VAT is computed on the CIF value plus the corresponding custom duties.

3.4.1. Filling and Payment

An import tax return must be filed upon nationalization of the goods, and all import procedures must be preformed through an authorized customs agent.

4. Payroll Taxes /Welfare Contributions

4.1. Social Security System

The Guatemalan Social Security Institute manages and operates the Social Security System and the National Health System. These systems provide services and benefits related to illness treatment, disability and pensions system, old age, and maternity, death insurance. Social Security contributions are applicable to employer and employees. The contributions are based on the monthly salaries with a 12.67% for the employer and a 4.83% for the employee.

4.2. Labor Risks Insurance

This mandatory insurance is covered under the state owned monopoly of the Guatemalan Social Security Institute, and covers all the labor force.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions