Tax
Territorial income tax with two regimes for business profit
The Ley de Actualización Tributaria (Decreto 10-2012) governs income tax on a territorial basis: only Guatemalan-source income is taxed. Businesses elect between a simplified turnover regime and a profit-based regime, and the choice is difficult to reverse.
Key rules
- The régimen sobre utilidades taxes net profit at 25%; the régimen simplificado taxes gross income at 5% up to GTQ 30,000 monthly and 7% above.
- VAT (IVA) is 12% and applies to most goods and services.
- Employment income is taxed at 5% up to GTQ 300,000 and 7% above, with limited deductions.
- Dividends bear a 5% withholding; interest and royalties to non-residents are withheld at 10% and 15%.
- Transfer pricing rules follow the arm's-length principle for related-party transactions.
Governing law
- Ley de Actualización Tributaria (Decreto 10-2012)Income tax and transfer pricing.
- Ley del Impuesto al Valor Agregado (Decreto 27-92)VAT.
- Código Tributario (Decreto 6-91)Assessment, penalties and appeals.
In practice
Electronic invoicing through FEL is now mandatory for essentially all taxpayers, and a missing FEL document blocks deduction. The régimen election is made on registration and changing it requires waiting for the next fiscal year, so model both before choosing.