Since November 26, the Guatemalan authorities have the power to access taxpayers' bank information for tax purposes, so they can now corroborate that the bank income of companies coincide with the payment of their taxes.
After the resolution of the Constitutional Court was published in the Diario de Centroamérica on November 25, in which the appeal of unconstitutionality filed by Escalas Mercantiles S.A., which was intended to prevent the authorities from having access to the banking information of companies and individuals, the law that empowers the Superintendence of Tax Administration (SAT) to investigate taxpayers has come into effect.
As a result of the elimination of banking secrecy in Guatemala, the business sector announces that it will be alert to "respect due process and the confidentiality of taxpayers.
One year after having suspended access to taxpayers' bank information for fiscal purposes, at the beginning of August the Constitutional Court ruled definitively and revoked the suspension, so that in the coming weeks the changes will begin to apply.
Experts and authorities believe that the ruling by the Guatemalan Constitutional Court revoking the suspension preventing access to taxpayers' bank information for fiscal purposes could be reversed with another legal action.
In recent days, the issue has become more relevant in the country, because after a year of being suspended access to banking information for tax purposes, on August 6 the Constitutional Court finally ruled, authorizing the Superintendence of Tax Administration (SAT) to review the accounts of taxpayers.
One year after the suspension of taxpayers' access to bank information for tax purposes, the Guatemalan Constitutional Court ruled definitively and revoked the suspension.
During its last visit to Guatemala, the IMF warned that if banking secrecy is not lifted in the country, compliance with "international transparency treaties" could be undermined.
After the last visit of the International Monetary Fund (IMF) to Guatemala, the international organization warned that reversing the decrease in tax collection involves strengthening the control of large taxpayers, improving the use of tax information to reduce non-compliance, reallocating resources to risk-based audits, and reconsidering the lifting of bank secrecy for tax auditing purposes.
The article of the law in Guatemala, which facilitated access to companies bank information via a court order requested by the tax authorities, has been temporarily suspended.
The decision was taken by the Constitutional Court after a company filed an appeal of unconstitutionality.Based on the arguments put forward, the CC decided to order the provisional suspension of Article 52, which empowered the Superintendency of Tax Administration (SAT) to request that a judge order the lifting of banking secrecy of individuals or companies when there was "...reasonable doubt about the results of the processes or execution of the selective and mass inspection plans'." See "Guatemala: Bank Secrecy Now Lifted"
A law has entered into force which facilitates access to individuals and companies' bank information with a court order at the request of tax authorities.
Francisco Solorzano, chief of the Superintendency of Tax Administration (SAT), noted that"... 'this tool will only be used when there is reasonable doubt about the results of the processes or execution of plans and mass selective control'."
The Tax Authority is considering using this new tool in its audit plan for 2017.
From a statement issued by Tezó & Associates:
THE LIFTING OF BANK SECRECY IS A FISCAL TOOL THAT THE SAT WILL MAKE USE OF IN 2017
As mentioned in our Tax Memo Number 11-16, the lifting of "Bank Secrecy" will start from February 27, 2017, consisting of the SAT being able to require from the following entities: Banks, Finance Companies, Credit and Savings Cooperatives, and Microfinance and Nonprofit Institutions: information on bank transactions, transfers, investments, available assets or other transactions and services performed by any individual or legal person, entity or assets.The SAT will request such information in cases where there is reasonable doubt about activities or operations that warrant an investigation process.The aim of lifting Bank Secrecy is for the SAT to make use of a fiscal took to check whether all of an individual or legal entity's income, be they registered or not as a taxpayer, has paid the taxes on it.
In February a law comes into force authorizing the lifting of bank secrecy of companies and individuals with a court order at the request of tax authorities.
Banks are preparing for the entry into force of legislation in February, modifying their processes in order to respond more quickly to requests from the Superintendency of Tax Administration (SAT).
In January 2017 a rule will come into effect which allows the lifting of bank secrecy by court order at the request of the Tax Administration.
Decree 37-2016 Law to strengthen fiscal transparency and governance for the SAT was published today in Diario de Centroamerica, along with the dates for when each of the amendments adopted in the reform becomes effective.
The tax authority is insisting on the impossibility of complying with information exchange agreements with other countries if banking secrecy is not eliminated for tax purposes.
Amid the discussion in Congress of the draft Law for Strengthening Fiscal Transparency and Governance of the Tax Administration, the superintendent Solórzano Foppa reemphasized the need to allow access to taxpayers' tax information for tax purposes by means of authorization given by a judge. He also announced that preparations are being made for "... a new control plan with which an attempt will be made to recover the power to collect taxes on income earned outside of Guatemala that are transferred to offshore accounts."
Reviewing the regulation on banking secrecy and replacing the board of the SAT with a new Administrative Tax and Customs Tribunal are part of the proposals to improve tax administration in the country.
From a statement issued by the Central Institute for Fiscal Studies (Icefi):
Guatemala.- During the session of the Committee on Public Finance and Currency of the Congress, on February 19, the Icefi participated in a specific working session to discuss amendments to the Organic Law of the Superintendency of Tax Administration (SAT ), during which the final version of the Diagnostic was released and a roadmap proposed for effective tax administration.
The tax authority insists that Congress approve the changes to the Tax Code and the Banking Law so that regulated entities provide information to the SAT for tax purposes.
The request by the department of the Superintendency of Tax Administration to Congress aims not only to improve monitoring tools and tax revenues, but also meet one of the conditions required by the OECD for removal from the organization's.gray list.
The new head of the Superintendency of Banks intends to resume the discussion in Congress of a bill which would regulate banking secrecy in the country by way of tax audits.
With the aim of improving tax controls, the Superintendency of Banks (SIB) seeks to reform national legislation for the regulation of banking secrecy in order to access "... Banking information of taxpayers, under guarantees of confidentiality."