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Please direct all inquiries regarding Guatemala to the persons listed below in the San José, Costa Rica, office of EY. All engagements are coordinated by the San José, Costa Rica, office.
Guatemala City GMT -6
EY
12 Street 2-25, Zone 10
AVIA Building, Tower II Office 1701
Guatemala City Guatemala
Executive and immigration contacts
Luis Ocando
+507 208-0100 (resident in Panama City, Panama)
Rafael Sayagués
Email: luis.ocando@pa.ey.com
+506 2208-9880 (resident in San José, Costa Rica)
Fax: +506 2208-9999
Email: rafael.sayagues@cr.ey.com
Immigration contacts
Fernando Vargas
+506 2505-0900 (resident in San José, Fax: +506 2208-9999 Costa Rica)
Mirla Tubac
A. Income tax
Email: fernando.vargas.winiker@cr.ey.com
+502 2461-3000
Email: mirla.tubac@gt.ey.com
Who is liable. Resident and nonresident individuals are taxed on Guatemalan-source income only. Individuals are considered residents for tax purposes if they meet any of the following conditions:
• They spend more than 183 days in a calendar year in Guatemala, even if not on a continuous basis.
• The center of their economic interests is located in Guatemala.
• They are Guatemalan diplomats with residence abroad.
• They are Guatemalan individuals with residence abroad for less than 183 days in a calendar year as a result of employment by a private entity.
• They are foreign diplomats on assignment to Guatemala, unless a reciprocity condition with their country of origin exists.
Income subject to tax. Under the Income Tax Law, income derived from activities rendered or services used within Guatemala qualifies as Guatemalan-source income and must be classified and taxed in one of the following categories:
• Employment income
• Income from a trade or business engaged in for profit (selfemployment income)
• Investment income
The taxation of the various types of income is described below.
Employment income. Taxable income includes wages and all types of remuneration or payments, regardless of the denomination, received in cash by employed resident individuals.
consanguinity, the applicable rates range from 3% to 12%. Rates from 9% to 25% apply to relatives and unrelated parties. A VAT rate of 12% applies to inter vivos gifts.
C. Social security
Social security contributions are levied on salaries, which includes wages and all types of remuneration or payments, regardless of the denomination. The contribution rates are 12.67% for employer contributions and 4.83% for employee contributions. No limits are imposed on the amount of earnings subject to social security contributions.
D. Tax filing and payment procedures
Employers are responsible for withholding income tax and social security contributions from the employee’s salary on a monthly basis. Consequently, an annual income tax return is not required for employed individuals if all compensation is subject to withholding at source through the local payroll. Self-employed individuals engaged in either commercial or noncommercial activities must issue invoices, and monthly or quarterly income tax reporting is required depending on the tax regime elected by the individual. In additional, self-employed individuals must pay VAT and file monthly VAT returns.
The ordinary tax year runs from 1 January to 31 December. Returns must be filed, and any tax liabilities due must be paid within three months after the end of the tax year (31 March). Interest and penalty charges are imposed on late payments.
Nonresident individuals with income subject to tax at a fixed withholding rate are not subject to further taxation and are not required to file an annual income tax return.
E. Double tax relief and tax treaties
Guatemala has signed a tax treaty with Mexico, but Congress has not yet approved the treaty. As a result, the treaty is not yet in effect.
F. Temporary visas
Depending on their country of citizenship, individuals may be required to apply for and obtain an entry visa before traveling to Guatemala. A Guatemalan consulate overseas grants the visa in the case of a consular visa. In the case of a consulted visa, the visa is submitted to and processed by the immigration authorities in Guatemala (Guatemalan Institute of Migration or Instituto Guatemalteco de Migración), and after its approval, a Guatemalan consulate overseas stamps the visa. Because the rules indicating the countries of citizenship of individuals who are required to obtain an entry visa before entering Guatemala and requirements for obtaining a visa often vary, it is necessary to check the entry visa requirements on a case-by-case basis.
G. Work visas (and/or permits)
Before obtaining a work permit in Guatemala, an applicant must request a temporary residence permit (see Section H). An application for a work permit is filed by the employer with the General
Direction of Employment of the Labor Ministry and must include the following documents:
• A copy of the employee’s passport or his or her Personal Identification Document granted by the National Register of Persons (Registro Nacional de Las Personas) located in Guatemala
• Proof that a temporary residence permit has been applied for or issued by the Guatemalan Institute of Migration
• A copy of the applicant’s appointment, registered with the corresponding authorities if applicable
• Accounting certification stating the number of Guatemalan and foreign employees employed by the entity
• A copy of the company’s tax identification
• A copy of the appointment of the legal representative of the company
• A copy of the Personal Identification Document granted by the National Register of Persons located in Guatemala to the legal representative of the company
• The form for the work permit filing application duly signed by the employer and employee that includes a sworn statement given by the employer that assumes full responsibility for the employee’s conduct and a sworn statement from the foreigner indicating that he or she is fluent in Spanish
For each work permit requested, the employer must pay a fee to the Guatemalan Learning and Training Department. This payment serves as evidence of the employer’s commitment to the training policies for Guatemalan employees.
The work permit is valid for renewable periods of one year. A request for an extension must be filed 15 days before the expiration of the period for which the work permit is issued.
H. Residence visas (and/or permits)
The government of Guatemala may grant residence permits to nationals of other countries who are interested in residing in Guatemala as foreign workers along with his or her dependents.
An application for a temporary residence permit for a foreign individual in Guatemala must be submitted to and processed by the immigration authorities in Guatemala. It must include the following items:
• A form filled out with the personal data of the applicant who wishes to reside and work in Guatemala
• Copy of the passport that is legalized by a Guatemalan notary public
• Certification stating the validity of the passport and term (in Spanish or in the original language translated into Spanish by a Guatemalan-authorized translator) issued by the embassy or consulate located in Guatemala or a birth certificate apostilled and translated into Spanish by a Guatemalan-authorized translator for foreigners from countries with which Guatemala does not have diplomatic relations
• Proof stating that the applicant does not have a police record or criminal record in the country or countries where he or she has lived during the last five years (or, for countries that do not issue these certificates, a certificate stating the country’s refusal), apostilled and translated into Spanish by a Guatemalanauthorized translator