Limited Incentives for Business Start-Ups

Two years after the Law to Strengthen Entrepreneurship came into force in Guatemala, only 40 companies have been registered under the figure of Entrepreneurship Companies, a situation that is partly explained by the lack of incentives provided by the legal framework.

Monday, February 8, 2021

On January 29, 2019, the Law to Strengthen Entrepreneurship came into force, which provides for the creation of training centers in the country and facilitates access to credit for small entrepreneurs.

According to Guatemalan authorities, with the entry into force of the Law, entrepreneurship will be incorporated in primary and secondary education, and a new figure called Entrepreneurship Society (SE) will be created, among other actions.

The legal framework has been in force for two years, however, the results have been very poor. Data from the Commercial Registry specify that during 2019 17 SEs were registered and in 2020 the figure rose to 23 SEs.

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David Casasola, economic analyst and member of the Global Entrepreneurship Monitor (GEM) team for Guatemala, told that "... the low figure is a reflection of the lack of incentives for more entrepreneurs to opt for this figure, added to the lack of information and advice from the Ministry of Economy. The fact that there is now an additional figure that is the SE is not a significant enough incentive for many of the entrepreneurs who have been operating for years without registering to do so now."

Johann Hartleben, partner of the firm Legalsa, explained that due to in the country newest companies belong to the consumer sector, "... it has prevented more entrepreneurs from registering under that figure (SE), because it encloses the object, that is, the business model must be framed in a theme of innovation that is far from the reality of most businesses in the country."

There are other aspects that discourage entrepreneurs from registering, such as the publication of annual income statements, since this is a sensitive issue due to security issues, according to Hartleben.

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