Guatemala income tax rates are progressive up to 31% as follows:
Taxable income (GTQ) Tax due on limit Marginal tax rate on excess
Up to 65,000 0 15%
65,001 to 180,000 9,750 20%
180,001 to 295,000 32,750 25%
Over 295,000 61,500 31%
Tax deductions are available for social security payable and personal allowances. The general personal allowance is GTQ 36,000.
Both residents and non-residents are only subject to income tax on Guatemala source income. Employment income is treated separately but all other types of income are aggregated and subject to tax at 5% (on gross income) under the general tax regime and 31% (on taxable income) under the optional tax regime.
Dividends received which are paid out of profits which have already been subject to corporate income tax are not subject to tax in the hands of the recipient.
Capital gains are included in the individual's total income and subject to income tax under the general or optional regime. Under the general regime, capital gains are subject to tax at the rate of 10% on the gross amount. No tax is payable on the sale of movable goods used for the personal use of the taxpayer or his family.
The tax year is the calendar year. Returns must be filed within three months of the end of the tax year. However, individuals receiving only employment income which is subject to the monthly withholding tax system, and those with income of no more than GTQ 36,000, are not required to file a return.
Taxpayers using the optional tax regime must make advance tax payments on a quarterly basis. Taxpayers using the general tax regime must pay any tax outstanding within three months of the end of the tax year.
Companies may choose to be taxed either under the general tax regime or the optional tax regime.
Under the general tax regime, companies are subject to tax on their gross income at a rate of 5%. Tax is paid through a withholding system and/or by direct monthly payments.
Under the optional tax regime, tax is charged at 31% on gross income less deductible expenses.
Companies are subject to income tax only on their Guatemala source income.
The tax year is the calendar year. The tax return must be submitted within the first three months following the end of the tax year. Final payment of tax must be made by the filing date for the return. If the taxpayer chose to pay the tax by the withholding tax method under the general tax regime, this is withheld by those persons paying income to the company concerned. Where the taxpayer has opted to be taxed under the optional tax regime, advance payments of tax are required on a quarterly basis.
CAPITAL GAINS TAX
Companies taxed under the general tax regime pay tax at 10% on the gross proceeds derived from the sale of capital assets, whereas those opting to apply the optional tax regime pay tax on net gains at 31%.
BRANCH PROFITS TAX
There is no separate branch profits tax. Overseas companies with a permanent establishment in Guatemala pay tax on the profits of the permanent establishment under the same rules applied to Guatemala resident companies.
FRINGE BENEFITS TAX
All benefits in kind are taxable on individuals receiving those benefits from their employers.
NET ASSETS TAX
With some exceptions, a quarterly tax is levied on persons or entities which perform commercial or agricultural activities in Guatemala and derive a gross margin of more than 4% from those activities. Tax is payable on the greater of 25% of the value of net assets and 25% of gross income. If the value of net assets exceeds four times gross income, the tax base is 25% of gross income. Currently, the tax is levied at a rate of 1%.
REAL ESTATE TAX
An annual tax is payable on the owners of real estate and levied at the following rates:
Taxable amount (GTQ'000) Rate
up to 2,000 0%
2,001 to 20,000 0.2%
20,001 to 70,000 0.6%
Over 70,000 0.9%
Tax is also charged on rural land declared to be idle (ie not used for agricultural purposes).
SOCIAL SECURITY CONTRIBUTIONS
Employer's social security is payable at a rate of 12.67% on the total salary of employees.
DETERMINATION OF TAXABLE INCOME
The information provided in this section applies only in respect of taxpayers opting to be taxed under the optional tax regime. Generally, costs and expenses may be deducted from gross income provided they do not exceed 97% of the total taxable income in the tax year. Any excess may be carried forward to the following tax year only.
Tax deductions are available in respect of the depreciation of fixed assets used in the business. Generally speaking, only the straight-line method is allowed, although other methods may be used if agreed by the tax authorities. Maximum depreciation rates are set and include the following:
Buildings and construction 5%
Furniture and equipment 20%
Computers (including software) 33.33%
The following methods of stock valuation are allowed for tax purposes:
- production or acquisition cost
- balanced average of the opening inventory plus purchases in the period
- market value
See discussion above
The payment of dividends and profit distributions is not tax deductible. Similarly, dividends received which are paid out of profits already subject to corporate income tax are not taxable in the hands of the recipient.
Interest payable is generally deductible provided it is paid on loans granted by banks or financial institutions. There are no specific thin capitalisation rules in Guatemala.
Losses, other than capital losses, may not be carried back or carried forward. Capital losses may be carried forward for 5 years under the optional tax regime and off-set against capital gains.
FOREIGN SOURCE INCOME
Tax is only chargeable on Guatemala source income.
FOREIGN TAX RELIEF
As only Guatemala source income is subject to tax, this section is not relevant.
There are no special tax provisions relating to groups of companies.
RELATED PARTY TRANSACTIONS
There are no specific transfer pricing rules. Restrictions apply to the prices which may be charged or paid in respect of exported and imported goods. Generally, the price of imports may not exceed the international price plus transportation and other costs, whereas the price of exports may not be less than the international price less transportation and other costs.
Guatemala source income derived by non-residents without a permanent establishment in Guatemala is generally subject to a final withholding tax at the rate of 31% on the gross amount. An exception is Interest income which is subject to a final withholding tax at the rate of 10% on the gross amount. Dividends paid to non-residents are exempt from tax provided that they are paid out profits which have already been subject to income tax at the corporate level. Otherwise, they are subject to final withholding income tax at the rate of 10% on the gross amount.
There are no exchange controls in Guatemala.
The standard rate of VAT in Guatemala is 12%.
VAT is levied on the domestic supply of goods and services and on imports of goods. The export of goods is zero rated. There is a single rate of 12% although certain supplies are exempt.
VAT returns must be submitted monthly, within the month following that to which the return relates. Any VAT due must be paid by the same due date.
5 or 31%
Income Tax Rate
Corporate Tax Rate
Sales Tax / VAT Rate
Last Update: Nov 2010
ANTIGUA & BARBUDA
BOSNIA & HERZEGOVINA
BRITISH VIRGIN ISLANDS
CENTRAL AFRICAN REP.
CONGO, DEM. REPUBLIC
CONGO, REPUBLIC OF
ISLE OF MAN
PAPUA NEW GUINEA
TURKS AND CAICOS
UNITED ARAB EMIRATES
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