Investor’s Guide
Strategic Tax and Legal Elections for Investing in Guatemala
Byron Martínez CEO and Lead Tax and Legal Partner, Deloitte Guatemala
As in any jurisdiction, strategic tax and legal elections in Guatemala should be made at the planning phase of the project in order to procure optimal results in the operational stage.
use the limited liability company (Sociedad de Responsabilidad Limitada –SRL-) or the Limited Partnership by Shares (Sociedad en Comandita por Acciones –SCA-).
HoldCo Jurisdiction and Type of Local Entity
Evaluation and election for the more convenient between the net income based 25% Corporate Income Tax vs. the gross revenues based 7% simplified Income Tax is the backbone of the local tax profile of the Guatemala branch or subsidiary. Solidarity tax –ISO- of 1% annual on the higher of total assets or total revenues works as alternative minimum tax for taxpayers electing from the net basis that are allowed to credit ISO to Income Tax or vice-versa.
Guatemala taxation is based on territorial principle and the country has no tax treaty network at all. Furthermore, the jurisdiction(s) for shareholding the investment in Guatemala could be elected based solely on investor home jurisdiction considerations, since Guatemala treat all jurisdictions the same. The significant local tax attributes and elections are the same for branches and subsidiaries as well as for the different types of domestic legal entities and then the vehicle used locally is normally elected based on investor home jurisdiction considerations. Foreign investors looking for local per se corporations use the stock corporation (Sociedad Anónima –SA-), and those intending to have a local entity eligible to be treated as transparent in their home jurisdiction
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Significant Income Tax Election
Value Added Tax –VATGuatemala imposes VAT at a universal rate of 12% on imports, domestic transfers of goods, leases and services. Exports of goods and services are exempt. VAT credit refund is available for exporters only. As a result, exporters of goods and services end up accumulating VAT credits because
DOING BUSINESS & INVESTING IN GUATEMALA
