Guatemala: What Will Be Taxed and By How Much

The proposal raises income tax from 25% to 29% for profits of over $38 billion a year, royalties for extracting gold and silver from 1% to 10%, taxes on fuels and a tax of $0.65 tax per bag of cement.

Thursday, August 11, 2016

See document by the Ministry of Finance of Guatemala with details on each tax increase.

From a statement issued by the Ministry of Finance: 

Content of the Reform

The First Book contains amendments to Decree 10-2012 in which measures are proposed to broaden the tax base in general, one by restructuring the system of adjustment of certain activities, now partially outside of the tax system (expansion of the base), giving legal certainty to taxpayers who already use special invoices and are dedicated to the export of agricultural, handmade and recycled products, so that when issuing special invoices in accordance with Article 52 "A" of the Law on Value Added Tax, independent of the amount of turnover, a definitive payment is retained for income tax, of five percent (5%), and the second measure to broaden the tax base, the scheme for tax on labor income is resumed, which is contained in Decree 26-92, repealed by Decree 10-2012, taking up once again the same sections of taxable income and tax rates and deductions established in said Decree (26-92) with the incentive of taxpayers now being able to deduct expenses generated by tuition fees in pre-primary, primary and secondary levels, including bilingual or special education, which corresponds to the taxpayer, spouse and children. The measure includes resumption of use of the tax credit for VAT on account of income tax determined by taxpayers in the scheme for labor income (wage earners) as an incentive to generalize the use of invoices, and minimize the impact that the tax may have on those with the lowest levels of income.  Notwithstanding the aforementioned, since in the past there has been abuse in the use of this credit by allowing the deduction of unpaid VAT derived from exempt or unverifiable income, it is proposed that it be now calculated on taxable income, which in the last instance is what the taxpayer intends to use for the purchase of taxed goods and services.

Read full proposal.

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