Tax rates in Guatemala

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

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