Guatemala: New Taxes Coming Soon?

The authorities that will assume the government in 2020 in Guatemala could evaluate options to tax temporarily some sectors, however, there would be a risk that these taxes become permanent.

Monday, August 26, 2019

Alejandro Giammattei, who weeks ago was elected president of the country, announced that his finance minister will be Alvaro Gonzalez Ricci, an official who will find several constraints on public spending for the 2020-2024 administration.

In this regard, the Ministry of Finance suggests examining the possibility of temporarily taxing telephone lines, fuels or remittances. In addition, the rates of some of the specific taxes that are fixed and outdated are expected to be reviewed.

Maynor Cabrera, consultant for the Fundación Economía para el Desarrollo (Fedes), explained to that "... these are approaches that arise from time to time, but that it is appropriate to analyze and discuss the options and their effects on tax collection and economic activity. In the case of suggesting temporary taxes, the experience is that these taxes become permanent, an example is the Solidarity Tax (ISO).

Cabrera added that "... Regarding the temporary taxation of telephones, an attempt has already been made and it would be more feasible to reach an agreement with the two operators. To increase the tax that is paid on the Distribution of Oil and its derivatives, besides the direct effect that it has for who acquires the fuels an impact is given in the costs of production of the rest of goods and services."

For new temporary taxes to be established, studies must be carried out so that the Congress of the Republic can then authorize their entry into force.

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In Congress doubts are being voiced over the effectiveness of the application of a tax of $0.65 per phone line and $13 for call centers.

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