Tax Credit Refund

Under the terms of the initiative, part-time workers are entitled to receive a wage on an hourly basis, which cannot be less than the minimum hourly wage fixed for each year. All the labor benefits that apply for the regular workers are to be determined proportionally.

Lastly, it establishes that the transfer of a full-time worker to part-time or vice versa is allowed, as long as it is voluntary, so the worker's consent must be stated expressly and in writing.

Conclusion

The approval of the initiative will be positive as it would facilitate the hiring of personnel by increasing the flexibility of the country's labor regulatory framework in an unprecedented way. This, therefore, without further regulation, provides that the payment of the minimum wage may be proportional to the number of hours worked, and the rest of the benefits must be calculated in the same way. In addition, it solves aspects that were not regulated in the Agreement 89-2019 of the Ministry of Labor and Social Security that is currently suspended.

Background

In Guatemala, the Superintendence of Tax Administration (SAT) is the State body responsible for planning, programming, organizing, directing, executing, and controlling all activities that are linked to the tax relationships that arise as a result of the application, collection and control of taxes.

Considering the need of the State of Guatemala to meet its economic and social development objectives, the Congress of the Republic decreed the Value Added Tax (IVA) Law that creates a tax with a rate of twelve percent (12%) that taxes various acts and contracts. IVA is a consumption tax that moves in a chain until it reaches the final consumer. The latter is the one responsible for paying the tax in question.

The tax credit comes from the affected operations that the taxpayer generates during a period of time for the acquisition of goods and the use of services. The acquisition of such goods and use of services is supposed to be necessary to produce, transform, market, transport or distribute the goods or services that are put on sale.

Procedure

Taxpayers who are dedicated to export and those who sell or provide services to exempt people in the domestic market, will have by law the right to the refund of the tax credit when the tax has been generated by the importation, acquisition of goods or the use of services, which apply to acts affected by IVA, as long as they are linked to the taxpayer's production or marketing process. Due to the above, the return of tax credit to exporters and/or exempt companies is justified as a result of the compensation between the credit and the taxpayer's debit.

The SAT estimates that for the year 2019 the return of the tax credit should amount to GTQ 3,092 million with a growth rate of 8.5 percent compared to 2018. The estimates of the collecting entity show that the return of the tax credit will continue to increase until reaching the almost GTQ 4 billion by the year 2023.