Managing Corporate Taxation in Latin American Countries - Guatemala

Overview

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...