Guatemala City GMT -6
EY
5th Avenue 5-55, Zone 14 EuroPlaza World Business Center Tower I Penthouse I, 7th Floor Guatemala City Guatemala
Please direct all inquiries regarding Guatemala to the persons listed below in the Costa Rica office.
Indirect tax contacts
Manuel Ramírez +502 2386-2400 (resident in Guatemala) manuel.ramirez@cr.ey.com
Rafael Sayagués +506 2208-9880 (resident in San José, Costa Rica) New York: +1 (212) 773-4761 rafael.sayagues@cr.ey.com
Guillermo Leandro +506 2208 9887 (resident in San José, Costa Rica) guillermo.leandro@cr.ey.com
A. At a glance
Name of the tax Value-added tax (VAT)
Local name Impuesto al Valor Agregado (IVA)
Date introduced 1 July 1992
Trading bloc membership None
Administered by Tax Administration Superintendence (SAT) (http://www.sat.gob.gt)
VAT rates
Standard 12%
Reduced 5%
Other Zero-rated (0%) and exempt
VAT number format Tax identification number (NIT)
VAT return periods Quarterly, monthly, biannual
Thresholds
Registration None
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT applies to the following transactions:
• The sale or exchange of movable goods or rights derived from movable goods
• The rendering of services within Guatemala
• Imports
• Leasing of movable and immovable property
• The award (transfer) of movable and immovable goods as a payment
• Consumption by the taxable person and consumption by the employees, executives, directors and shareholders of a company or their family members
• Certain shortages of inventory such as those derived from missing goods (for example, shrink age) or damaged goods, as well as destruction of inventory, if complied with the legal requirements
• The first sale or exchange of immovable assets
• Certain donations
• Contributions of immovable property to legal entities if the assets have been previously con tributed to a real estate entity
C. Who is liable
Any business entity or self-employed individual that carries out taxable activities on a regular or periodic basis must register for VAT. Taxable persons whose annual turnover does not exceed GTQ150,000 (approx. USD19,380) may elect to be taxed under a simplified VAT regime.
Exemption from registration. The VAT law in Guatemala does not contain any provision for exemption from registration.
Voluntary registration and small businesses. The VAT law in Guatemala does not contain any provision for voluntary VAT registration, as there is no registration threshold (i.e., all entities that make taxable supplies are obliged to register for VAT).
Small taxable persons with annual turnover of up to GTQ150,000 (approx. USD19,380) may apply for a simplified regime. Under the simplified regime, taxable persons pay tax at a rate of 5% based on their gross taxable sales without a right to credit or deduct input tax (see Section F). Small taxable persons will be subject to VAT withholding when engaging in commercial activities with VAT withholding agents. In all cases where VAT is not withheld, small taxable persons must declare and pay the VAT within the next calendar month. In addition, taxable per sons operating under this regime are exempt and shall not declare or pay income tax.
Group registration. Group VAT registration is not allowed in Guatemala.
Non-established businesses. A “non-established business” is a business that has no fixed estab lishment in Guatemala. A non-established business must register for VAT if it supplies goods or services in Guatemala. To register for VAT, a non-established business must take the following actions:
• Appoint a tax representative
• Provide the tax authorities with a copy of its Articles of Incorporation, legalized by a Guatemalan consulate or duly apostilled, together with an official translation in Spanish to obtain registration before the Mercantile Registry
Tax representatives. To register for VAT, non-established businesses must appoint a tax represen tative.
Reverse charge. If a non-domiciled individual renders an occasional, temporary service in Guatemala (or performs another taxable activity) without being registered for VAT, the local beneficiary of the service may be able to issue a “special invoice” for VAT withholding.
Large taxable persons may be designated as VAT withholding agents for payments made relating to the acquisition of goods and services. This measure also applies to other special taxable persons expressly qualified as withholding agents (for example, exporters, government entities and credit card operators). VAT withholding generally applies to the following (exemptions regarding minimum amounts may apply):
• Regular exporters (minimum monthly average exports of GTQ100,000 [approx. USD12,920]):
65% of VAT generated from the purchase of agricultural and cattle products, and 15% of VAT generated for other acquisitions
• Drawback entities: 65% of the VAT generated
• Government entities (excluding municipalities): 25% of the VAT generated
• Credit and debit card operators: 15% of the VAT generated on transactions carried out by affiliated entities
• Gas stations: 1.5% withholding on the gross amount of acquisitions of gasoline
• Special taxable persons: 15% of the VAT generated
• Other withholding agents: 15% of the VAT generated
In principle, the VAT withholding mechanism does not apply to transactions between withhold ing agents, unless the acquisition is made by credit or debit card (in such case, the taxable person applies the VAT withholding as described above).
Domestic reverse charge. Taxable persons that acquire goods or services from local taxable per sons who do not issue an invoice for such transactions (i.e., if the supplier is not registered for VAT or by any other reason), are able to issue “special invoices” on behalf of said individuals to document the operations and should withhold the applicable VAT rate. The customer then selfaccounts for the VAT.
Special invoices should not be issued when the local individuals are duly registered as Guatemalan taxable persons, nor in transactions of habitual nature that are performed between individuals. Notwithstanding, an exception exists over the aforementioned prohibition when the issuer of the “special invoice” determines in such document that the seller of goods or services refused to issue the corresponding invoice.
Additionally, such domestic reverse-charge mechanism should also apply in cases where taxable persons have been designated as VAT withholding agents in the local acquisition of goods and services, except in transactions between withholding agents.
Digital economy. There are no specific rules regarding the taxation of digital economy for VAT purposes in Guatemala. The general taxable events indicated in Section B should be observed whether or not they are transacted by digital means.
For electronically supplied services, supplied by a non-established business, for both businessto-business (B2B) and business-to-consumer (B2C), place of supply would not be in Guatemala, and as such no obligation for the customer to account for VAT.
For the supply of a license, no VAT is expected to apply if it is not considered as granted within the Guatemalan territory. However, the tax authorities have issued official criteria for licenses over software, which provide that such licenses granted abroad to be used in Guatemala should be subject to VAT and customs duties.
Guatemalan legislation does not distinguish between B2B versus B2C transactions. In this regard, the same considerations are expected to apply, irrespective of whether the customer is an indi vidual or an entity. For both types of supply, there would be no VAT due on electronically sup plied services in Guatemala.
Online marketplaces and platforms. The Guatemalan tax legislation does not provide specific provisions or rules regarding the application of VAT over online marketplaces and platforms. In any case, to the extent goods are located or services are rendered within Guatemala, VAT should apply.
In June 2021, the tax authorities presented the new Digital Economy Tax Compliance Software, through which it is intended that taxable persons who engage in electronic commerce (streaming services, transport through digital applications, etc.) can have the mechanisms to fulfill their tax obligations in Guatemala, mainly from the perspective of consumption taxes (i.e., VAT). This is based on the Digital VAT Toolkit for Latin America and the Caribbean, which was developed by
the OECD, IDB, CIAT and the World Bank Group. However, at the time of preparing this chap ter, this platform is currently under development and in the implementation phase, therefore, tax able persons who perform e-commerce activities are not currently obliged to register.
Registration procedures. The VAT registration process varies for entities that are newly incorpo rated or are branches of entities incorporated abroad.
Newly incorporated legal entities. Registration with the tax authorities should be performed simul taneously to registration before the Mercantile Registry. The tax ID certificate should be issued along with the certificate of registration. This process should be carried out directly by the notary public engaged for the incorporation of the entity, either in person at the Mercantile Registry or electronically online (https://minegocio.gt/). A tax ID number should be assigned once the new entity has been registered, a process that takes approximately five business days once a complete application has been filed.
Also, newly incorporated legal entities are able to register personally or electronically before the tax authorities and, to that effect, the following documents are required:
• Personal identification document (DPI for its Spanish acronym) of the legal representative or passport in case that they are non-established
• Notarized copy of the public deed that contains the articles of incorporation
• Appointment of the legal representative
Branches of entities incorporated abroad. Registration should be carried out directly at one of the agencies authorized by the tax authorities. The following documents are required:
• Documnet that proves a minimum assigned capital of USD50,000
• Certified copy of the last balance sheet and profit and loss statement of the company
• ID of a legal representative of the company
• Letter signed by the accountant accepting their registration with the tax authorities as the tax able person’s accountant
• Document that proves the individual’s authority to represent the company
• Notarized copy of the articles of incorporation of the company
• Information regarding the income tax regime election, inventory method, Solidarity Tax elec tion and quarterly payments election, if applicable
Whenever the information in these documents or any information that is part of the VAT registra tion changes, the taxable person must amend its registration within 30 days.
Deregistration. Taxable persons that will no longer develop commercial activities in Guatemala should, after the legal procedure to liquidate the entity has been completed, deregister for VAT purposes by filing form SAT-2175 and any other required documentation with the tax authorities.
Changes to VAT registration details. Per the Guatemalan Tax Code, Decree 6-91 of the Guatemalan Congress, any modification to the general tax registration details should be notified to the tax authorities in person or electronically, depending on the type of change, within the 30 days following the corresponding modification.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 12%
• Reduced rate: 5%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for a reduced rate, the zero rate or an exemption.
A 5% rate on gross sales applies to small taxable persons, which are those with annual turnover of less than GTQ150,000 (approx. USD19,380). Under this scheme, no input tax recovery is permitted. Also, taxable persons duly registered under the Regime for Agricultural Contributions should be subject to a 5% VAT rate when their annual sales of products in the agricultural sector do not exceed the amount of GTQ3 million (approx. USD380,000) within the applicable fiscal year.
The 12% VAT rate applies to sales of vehicles and motorcycles when the transaction and the model of the vehicle or motorcycle corresponds to one of the following:
• The current year
• The year prior to the current year
• The year following the current year
For used vehicles, including motorcycles, a fixed amount of VAT applies ranging from GTQ200 to GTQ1,000 (approx. USD26 to USD129), 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.
Exports of goods and services are zero-rated.
In addition to supplies that are subject to tax, some supplies are exempt, which means input tax is not recoverable.
Examples of exempt supplies of goods and services
• 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 contrib uted 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 GTQ100 (approx. USD13)
• Certain financial services
• Education
• Certain insurance and reinsurance transactions
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Guatemala.
E. Time of supply
The time when the taxable event is considered to be completed and VAT becomes due is called the “tax point.” For a supply or exchange of goods, the tax point is the earlier of the issuance of the invoice or the delivery of goods. For a supply of services, the tax point is when the invoice, receipt or other document related to the transaction is issued. If no invoice is issued, the tax point is at the time of payment.
The tax point for insurance and bonds is when the premiums or quotas are received, and for short ages of inventory, it is when the shortage is discovered.
Deposits and prepayments. There are no special time of supply rules for deposits and prepay ments. As such, the general time of supply rules apply, and the time of supply is when any payment is made from the purchaser to the supplier.
Continuous supplies of services. For leasing and a continuous supply of services for which the customer pays periodically, the tax point is the due date for each periodic payment.
Goods sent on approval for sale or return. For goods sent on approval, the tax point is when the goods are effectively delivered. If goods are returned to the seller after being sold, the seller is required to issue a credit note to reverse the sale operation, provided that the credit note is issued within the time frame permitted by the VAT law (i.e., two months).
Reverse-charge services. The time of supply rules for supplies of reverse-charge services, i.e., the case of special invoices (see the reverse-charge section above under Section C. Who is liable) is when the invoice is issued by the local acquirer of goods or beneficiary of the services.
Leasing assets. For leased assets, the tax point is the due date for each periodic payment.
Imported goods. The time of supply for imported goods is when the goods clear all customs formalities for importation.
F. Recovery of VAT by taxable persons
Input tax is the VAT paid on the purchase of goods and services used to generate other goods and services subject to tax. A taxable person can generally recover input tax, subject to certain rules. Input tax is generally offset against output tax, which is VAT charged or collected on the sale of goods and the rendering of services. To deduct or credit input tax, certain conditions must be met.
The time limit for a taxable person to reclaim input tax in Guatemala is the month when the invoice is received or in the following two months. This is when the input tax should be recog nized and reported to the tax authorities for the VAT credits to be recoverable. In this sense, duly recognized VAT credits should be recoverable until their exhaustion.
In general, input tax paid on imports or purchases of goods and services is creditable when directly related to the taxable person’s business activity.
A valid tax invoice or customs document must generally accompany a claim for input tax credit. Purchases supported by invoices issued by small taxable persons do not generate input tax credits.
Payments greater than GTQ30,000 (approx. USD3,875) must be made through the banking system or using a deed from a notary public in which the payer and the beneficiary are clearly iden tified.
Nondeductible input tax. Input tax may not be recovered on imports or purchases of fixed assets not directly related to the taxable person’s business activity.
Examples of items for which input tax is nondeductible
• Items (expenses or purchases) without proper supporting documentation
• Items (expenses or purchases) not registered in the VAT purchases book
Examples of items for which input tax is deductible (if related to a taxable business use)
• Any item that is related to the taxable person’s taxable business activities, which is duly docu mented with the proper legal documents that comply with local requirements, provided the purchase has been included in the VAT purchases book, the balance of the tax credit has been registered in the accounting books as an account receivable, and the payment in excess of GTQ30,000 (approx. USD3,875) for the purchase has been made through a financial/banking institution.
Partial exemption. Special regulations regarding the treatment of overhead expenses are not pro vided by the VAT law. However, in cases where a business performs both taxable and exempt
activities, input tax may be fully credited against output tax generated by taxable activities. Any remaining credit may be refundable if the legal conditions are met.
Approval from the tax authorities is not required to use the partial exemption standard method in Guatemala. However, the taxable persons should keep an organized record of taxable and exempt activities performed to avoid risk of questioning or inconveniences with such authorities over the compensation of input tax with output tax.
Special methods are not allowed in Guatemala.
Capital goods. In Guatemala, there are no specific provisions regarding the definition of capital goods for indirect tax purposes. However, the VAT law determines that VAT credits generated by the acquisition, import or construction of fixed assets should be recognized and subject to compensation with VAT debits, to the extent that such assets (i.e., capital goods) are duly linked to the process of production or marketing of goods or services of the taxable person.
In this sense, if capital goods will be used for both taxable and exempt activities, VAT credits should be recognized for both activities, and the taxable person should submit VAT refund requests with the tax authorities over any excess VAT credits.
Refunds. If the amount of input tax recoverable in a month exceeds the amount of output tax payable, the taxable person obtains an input tax credit. The credit may be carried forward to offset output tax in subsequent VAT periods.
Qualified exporters may claim a refund of VAT paid on inputs. The Bank of Guatemala (central bank) maintains a registry of qualified exporters.
• To qualify for the registry of exporters, the taxable person must provide the Bank of Guatemala with documents that prove it satisfies one of the following conditions:
• It exports 50% or more of its gross sales.
• It exports less than 50% of its gross sales, but it is not able to fully offset its input tax credit related to its exports against its output tax generated from domestic supplies.
Taxable persons registered as exporters may file a refund request with the Bank of Guatemala within 30 business days following the end of the period for which the refund is claimed. No refunds are granted for amounts of up to GTQ10,000 (approx. USD1,292). For refund requests greater than GTQ10,000, the Bank of Guatemala partially refunds the VAT paid by exporters in the following percentages:
• 75% of refund amounts of up to GTQ500,000 (approx. USD64,600)
• 60% of refund amounts greater than GTQ500,000
The remaining 25% or 40% is carried forward to the future periods, or the exporter may request a refund directly from the tax authorities.
Qualified taxable persons may also request VAT refunds based on an opinion issued by a regis tered certified public accountant.
A nonqualified exporter may request a 100% VAT refund from the tax authorities directly if the exporter is not able to credit VAT on inputs against VAT on outputs. This method is applied to VAT refunds requested by service exporters.
An “electronic refund regime” entails the presentation of monthly VAT refunds requests for 100% of the accrued VAT credit. The business should comply with the following requirements:
(i) Carries out export activities
(ii) Adheres to the electronic invoice regime (FEL)
(iii) Transfer accounting information to the tax authorities regarding the 100% of its activities
(iv) Obtains qualification to apply for this regime
Pre-registration costs. Input tax incurred in relation to pre-registration costs is not recoverable in Guatemala.
Bad debts. Output tax accounted for on supplies that do not get paid by the recipient (i.e., bad debts) cannot be recovered in Guatemala. However, 100% of the amount of bad debts may be deductible for income tax purposes, provided certain requirements are met.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Guatemala.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses in Guatemala is not recoverable.
H. Invoicing
VAT invoices. A taxable person must generally provide a VAT invoice for all taxable supplies made. VAT invoices, credit notes and debit notes must be authorized by the tax authorities. An invoice is generally necessary to support a claim for an input tax credit. If the nature of the busi ness makes it impractical for a taxable person to issue tax invoices, the tax authorities may authorize the use of cash registers and other computerized systems to issue invoices in which the goods or services acquirer may insert its name and tax ID for tax purposes.
Credit notes. A VAT debit note must be used to increase the VAT chargeable if the value of a supply increases for any reason. A VAT credit note must be used to reduce the VAT charged and claimed on a supply if the value is reduced for any reason (for example, the granting of a dis count, a change in the price or a return of the goods). A debit note or credit note must include the same information as a tax invoice. Credit notes and debit notes only modify VAT charged when issued within the two months following the issuance of the invoice it modifies.
Electronic invoicing. Electronic invoicing is mandatory in Guatemala for all taxable persons. The tax authorities have enabled an online electronic invoicing regimen (FEL) that allows the tax authorities to obtain invoicing and VAT information in real time. Taxable persons may be required to adhere to said regime; however, they may also voluntarily apply and implement as desired.
Specifically, the agreement provides the following procedures for taxable persons to use the FEL regime:
• Taxable persons required by the tax authority: Progressively, the tax authority will define the taxable person segments and the deadline for their mandatory incorporation into FEL through the issuance of administrative dispositions, which will be duly notified to the taxable persons. Upon expiration of the deadline established in the administrative provision for such taxable persons, the current authorizations of other resources or forms other than issuance of tax docu ments will no longer be valid.
• Voluntary incorporation: Taxable persons may voluntarily apply to join the FEL regime using the Virtual Agency (Agencia Virtual), in which case they have six months to comply with the FEL requirements provided in the agreement. Once this period has expired, the authorizations of other resources or forms of issuing tax documents will no longer be valid.
Additionally, the regulations of the VAT law determine that as of 1 July 2021, the FEL regime will be the only authorized mechanism for the issuance of tax documents to legal entities or individuals who register for the first time as a taxable person, which means that taxable persons duly registered before 1 July 2021 should be already incorporated to the FEL regime on such date.
Also, resolutions issued by the tax authorities indicate that taxable persons operating under the previ ous electronic invoice regime, FACE, should migrate to the FEL regime before 31 December 2020.
Simplified VAT invoices. Simplified VAT invoicing is not allowed in Guatemala. As such, full VAT invoices are required.
Self-billing. Taxable persons that acquire goods or services from local individuals who do not issue an invoice for such transactions are able to issue “special invoices” on behalf of said indi viduals to document the operations and should withhold the applicable VAT rate.
Special invoices should not be issued when the local individuals are duly registered as Guatemalan taxable persons, nor in transactions of a habitual nature that are performed between individuals. Notwithstanding, an exception exists over the aforementioned prohibition when the issuer of the “special invoice” determines in such document that the seller of goods or services refused to issue the corresponding invoice.
Due to the nature of the operations subject to the issuance of “special invoices,” it is not required to perform a written agreement between the seller and the buyer.
Proof of exports. Exports of goods and services are exempt. However, to qualify as exempt, exports must be supported by customs documents that give evidence of the outbound process. Suitable evidence also includes export invoices and bills of lading.
Foreign currency invoices. VAT invoices must be issued either in the domestic currency, which is the Guatemalan quetzal (GTQ) or in US dollars (USD). However, invoices issued in USD must show the exchange rate used on the date of the transaction. The exchange rate to be used is the one that is issued on a daily basis by the Guatemalan Central Bank.
Supplies to nontaxable persons. There are no special invoicing rules for supplies to nontaxable persons in Guatemala. As such, full VAT invoices are required.
Records. Taxable persons should keep a record of their transactions in the book of sales, book of purchases and other applicable accounting books. Also, taxable persons must file invoices and other tax documents through physical and electronic means (when applicable) to support their operations in case of audits by the tax authorities.
The accounting records can be held in or outside of Guatemala. The records must be kept within the country of the tax domicile that is duly registered before the tax authorities or in the offices of the taxable person’s accountant that should also be registered before such authorities.
Record retention period. The Guatemalan Tax Code indicates that the tax authorities have a fouryear period to make audits, adjustments and verifications over the operations of all taxable per sons, which means they should keep records over such a period of time to be prepared for possible audits by the tax authorities. Furthermore, records should be kept for as long as they are having tax effects even when the four-year period has elapsed.
The Guatemalan Commerce Code also provides that traders/merchants should retain legal cor respondence and records for a period of five years.
Electronic archiving. For VAT purposes, the book of purchases and book of sales may be kept and archived physically or electronically through the electronic system of the tax authorities (AsisteLibros). Also, tax documents (i.e., invoices) could be archived physically or by electronic means when applicable.
Under the Online Electronic Invoice regime (FEL for its Spanish acronym), registered taxable persons will be obliged to use the electronic system for the registration of their accounting books, purchasing and sales books, and other auxiliary records determined by the tax administration for 100% of their operations. However, the authorities are currently working on the mechanisms and regulations to determine the requirements and procedures to keep the electronic accounting, and they will be progressively incorporating taxable persons to such e-accounting scheme.
I. Returns and payment
Periodic returns. VAT returns should be submitted on a monthly basis through Form SAT-2237, using the electronic system of the tax authorities (Declaraguate) within the month that follows the expiration of each monthly tax period.
VAT generated through special invoices should be reported through Form SAT-2085 within the month that follows the expiration of each tax period.
Periodic payments. VAT due must be paid in full by the end of the month following each tax period. Exceptions to this rule apply for real estate and vehicle supplies, in which case the supply should be documented through a public deed and VAT should be paid in cash or through the means made available to the taxable person by the tax authority within the next 15 days following the date of the transaction.
Electronic filing. Electronic filing is mandatory in Guatemala. Tax forms must be prepared and filed through the electronic system of the tax authorities (Declaraguate) (https://declaraguate.sat. gob.gt/declaraguate-web/). Once tax returns are filed, the payment can be made either through an online banking system tool (BancaSAT) or physically through authorized banks.
Payments on account. Payments on account are not required in Guatemala.
Special schemes. Small taxable persons. The Guatemalan legislation provides a special regime for “small taxable persons.” In this sense, taxable persons with an annual turnover of up to GTQ150,000 (approx. USD19,380) may apply for a simplified “small taxable person regime,” in which they pay tax at a rate of 5% based on their gross taxable sales without a right to credit or deduct input tax. Small taxable persons will be subject to VAT withholding when engaging in commercial activities with VAT withholding agents. In all cases where VAT is not withheld, small taxable persons must declare and pay the VAT within the next calendar month. In addition, taxable persons operating under this regime are exempt and shall not declare or pay income tax.
Agricultural taxable persons. The Guatemalan Congress recently enacted several amendments to the VAT law, through the new Decree 7-2019. The new special regime for agricultural taxable persons and its specific regulations were created. This new regime applies to all taxable persons that develop production and commercialization activities in the agricultural sector and whose annual income does not exceed GTQ3 million within a fiscal year. For cattle breeders the tax rate of 5% is on gross sales; and for traders of cattle a 5% on profits, being in turn relieved from the payment of income tax.
Annual returns. Annual returns are not required in Guatemala.
Supplementary filings. No supplementary filings are required in Guatemala.
Correcting errors in previous returns. Errors contained in previous VAT returns must be rectified or amended electronically through the online system of the tax authorities (Declaraguate) and a fine of GTQ100 (approx. USD13) should apply. Also, any subsequent rectification to the same VAT return should be subject to a fine of GTQ100 (approx. USD13).
Digital tax administration. In Guatemala, the tax authorities recently enacted an online electronic invoicing regime (FEL for its Spanish acronym) through Directorate Agreement 13-2018. The Agreement establishes the terms under which electronic invoices may be issued and received and provides that the taxable persons subject to VAT are required to issue the electronic tax documents according to the current legislation. It should be noticed that the application of the FEL regime has not been mandatory for all taxable persons; however, the tax authorities maintain the intention to progressively incorporate the remaining taxable persons into such regime.
Also, the new FEL regime establishes the obligation for registered taxable persons to use the electronic system for the registration of their accounting books, purchasing and sales books, and
other auxiliary records determined by the tax administration for 100% of their operations. At the time of preparing this chapter, the tax authorities are currently working on the mechanisms and regulations to determine the requirements and procedures for electronic accounting.
J. Penalties
Penalties for late registration. A taxable person that fails to register for VAT on a timely basis can not offset VAT credits generated from purchases that are included in inventory at the time of registration. The tax authorities may impose penalties and interest for late VAT registration.
Penalties for late payment and filings. Nonpayment of VAT results in a penalty equal to 100% of the unpaid amount. If the penalty is paid voluntarily by the date required by the VAT authorities, the penalty is reduced to 50%.
The late filing of VAT returns is subject to a penalty ranging from GTQ50 (approx. USD6.50) per day, up to a maximum of GTQ1,000 (approx. USD129). If the return is filed voluntarily, the late-filing penalty may be reduced to 85% of the original amount.
Penalties for errors. If the tax authorities detect that the taxable person made an error in the determination of its tax liability, they could summon such taxable person to remedy the corre sponding mistake by paying the omitted tax plus interest at the maximum rate determined by the Monetary Board. The penalties for late payment should be calculated by applying the amount of tax to be paid, per the 0.0005 factor, per the days of delay. This is the formula used by the tax authorities to determine the factor of tax due. Such penalties are for late payments of VAT and any other errors at the time of reporting.
If the taxable person accepts the calculation error, a 40% discount will apply over interest pay ments and an 80% discount will apply over the late payment penalty.
Failure to notify or late notification to the tax authorities of changes to a taxable person’s VAT registration details will be subject to a fine equivalent to GTQ50 (approx. US$6) for each day of delay, with a maximum penalty of GTQ1,500 (approx. US$190). For further details, please see the subsection above Changes to VAT registration details.
Penalties for fraud. Tax fraud occurs when information has been altered in a manner that causes the tax authorities to incorrectly compute the amount of tax due. The penalty consists of 100% of the amount of the tax plus imprisonment from one to six years.
The tax fraud penalty may not be imposed together with penalties for late payment.
Personal liability for company officers. For tax purposes, company officers or directors cannot be liable for errors and omissions in VAT declarations and reporting. However, the legal representa tive, partners and other officers of a company could be subject to criminal implications and penalties for tax fraud if they are duly convicted by judicial authorities.
Statute of limitations. The statute of limitations in Guatemala is a four-year period during which the tax authorities may be able to review and audit the tax information and documentation of a taxable person (tax returns, invoices, etc.) and identify errors or payment omissions.
Additionally, there is no time limit regarding voluntary error correction in tax returns. However, fines and penalties may be reduced if the errors are corrected before an inspection or audit pro cess is carried out by the tax authorities. On the contrary, if the tax authorities determine such errors during an inspection or audit process, fines and penalties should be higher as previously provided.