Facing the proposal of the authorities to abolish the banking secrecy in the country, businessmen of the industrial sector are opposed, because they argue that there are already legal procedures in the country to do it through a judge.
At a press conference on February 11, Finance Minister Rodrigo Chaves defended the proposal to access sensitive information from taxpayers and said that by lifting banking secrecy they were seeking to tackle tax evasion.
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.
Arguing that it does not comply with the standards on transparency and exchange of information for tax purposes, the OECD evaluated Guatemala negatively and recommended working on direct access to taxpayers' banking information.
As planned, following the temporary suspension by the Constitutional Court (CC) of the article of law facilitating access to taxpayers' bank information, the Organization for Economic Cooperation and Development (OECD) decided to include Guatemala in the list of countries that do not comply with their fiscal information commitments.
Since July 17, the agreement between the Dominican Republic and the United States for the exchange of information on reportable bank accounts entered into force.
Dominican financial institutions must identify the accounts of individuals, legal entities or other specialized entities such as U.S. trusts, to submit relevant information to the U.S. Internal Revenue Service (IRS), breaking down their movements, accounts, receipts and other operations, informed the government of the Dominican Republic.
In its next evaluation, the OECD could lower Guatemala's rating, because in August last year access to bank information with a court order was suspended, which could lead to an increase in the credit price.
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 bill that is being discussed in the Congress of Costa Rica would allow the tax authority to lift bank secrecy for companies without needing authorization from a judge.
The bill proposed by MPs of the Frente Amplio party includes a fine of between three and 100 base salaries, for any financial institution that refuses to provide information to the Tax Department or who delivers it outside of the required deadlines.
As part of an audit plan which will start this year and will include access to banking information, the tax authority will be verifying transactions of real estate sales.
With its 2017 audit plan the Superintendency of Tax Administration is preparing to use for the first time a law that authorizes it to access taxpayer's banking information when required.
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).