Guatemala: Notional VAT Calculation Annulled

Citing unconstitutionality power has been taken away from the tax authorities to determine the basis for calculating tax owed in respect of Value Added Tax.

Friday, March 14, 2014

A paragraph in Article 7 of the Law on Value Added Tax (VAT) which was declared unconstitutional provided: "In the case that a taxpayer, within three months, reports in their declaration of turnover sales rates that are lower than at cost or production of goods, the tax authorities may determine the basis for calculating the tax owed, taking into consideration the sale price of the same product in other transactions of the same taxpayer within the same time ... unless the taxpayer can justify and demonstrate the reasons why this situation occurred and present banking and financial information proving their real income. "

"... The Chambers of Agriculture and Commerce presented a partial unconstitutionality case for Articles 7 and 38 of Decree 4-2012. However, the CC only declared the second paragraph of Article 7 to be unconstitutional."

More on this topic

Guatemala: Articles Suspended in Anti Evasion Act II

July 2013

The Constitutional Court has declared unconstitutional three articles of the Tax Code, which empowered the Tax Authority to make adjustments if it detected tax simulation. reports: "In Article 31 of Decree 4-2012 the concept of fiscal simulation was added, the aim was that the Superintendency of Tax Administration (SAT) made adjustments when delegates established that taxpayers had concealed the legal status of the business by giving a appearance different to that under which it was registered. "

Business Tax Reclassification Suspended

January 2013

In Guatemala, the Constitutional Court has accepted an appeal filed by businessmen and suspended the application of Article 61 of the tax reform.

Unanimously and provisionally, the Constitutional Court of Guatemala ordered the suspension of Article 61 of the Tax Reform related to reclassification of operations after considering it "patently unconstitutional."

Article in Anti-Evasion Act II Suspended

May 2012

In Guatemala, the justice department has provisionally suspended Article 31 of the Act authorizing the SAT to penalize taxpayers who commit violations of their tax obligations.

The partial unconstitutionality (only against Articles 31 and 50) was requested by the Chamber of Agriculture through its chairman, Otto Kuhsiek, on 9th March. The Bar Association also filed an action before the Constitutional Court in the same vein.

Guatemala: Court Ruling Against Tobacco Tax

October 2010

The Constitutional Court ruled in favor of an appeal by British American Tobacco, alleging double taxation.

The decision, by the highest court in Guatemala, repeals the second paragraph of Article 27 of the Tobacco Law which sets the basis for calculating the tax at no less than 46% of retail price.

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