MAJOR DEVELOPMENTS
Changes were made to the income tax rates. Dividends paid to
nonresidents are no longer subject to withholding tax.
INCOME TAXES ON CORPORATIONS
1. Rates
Corporate and other business entity (see item 6) income is subject to a 30% (decreasing to 27.5% in 1999 and to 25% in 2000) tax rate on any amount of profit. Advance payment of income tax is due quarterly. Several options are provided to calculate the estimated tax.
Local services and leasing may opt to pay tax at 4% on revenues as definitive income tax.
2. Local Income Taxes
None.
3. Capital Gains Taxes
The profit on sale of fixed assets, securities or any other asset for more than its net book value is treated as part of taxable income of the year. Income from capital gains is taxed at the rate of 10%, as definitive income tax.
4. Branch Profits Taxes
Branches of foreign companies are subject to the same income tax rates as corporations on their local net profits. No additional tax is withheld on transfers of profits to the parent company.
5. Foreign Tax Reliefs
Foreign-source income is not taxable.
6. Classification of Corporations
Guatemalan business law recognizes the following entities:
q Corporations;
q Limited liability partnerships;
q General partnerships.
7. Payment of Taxes
Income tax is payable annually within 90 days after the close of the tax period.
INCOME TAXES ON INDIVIDUALS
9. Rates
An employee income is subject to tax as follows (only selected taxable incomes are shown):
Taxable Income
Tax on Percentage
Over Not Over Lower Amount on Excess
Q 0 Q 65,000 Q 0 15%
65,000 180,000 9,750 20
180,000 32,750 30*
Note:
Reduced to 27.5% in 1999 and to 25% in 2000.
10. Local Income Taxes
None.
11. Capital Gains Taxes
See item 3.
12. Foreign Tax Reliefs
Individuals are not taxed on foreign-source income.
13. Tax Period
Generally, the tax period ends on June 30 of each year.
INCOME TAXES ON NONRESIDENTS
15. Liability to Tax
Tax is required to be withheld by the payor on payments or credits to individuals or companies domiciled abroad for certain services rendered from abroad to individuals or companies domiciled in Guatemala. Withholding taxes vary with the nature of the payment or credit. The most important withholding taxes are those imposed on the following
payments or credits:
Freight 4%
Interest, fees, commissions, salaries 10%
Tourist services 4%
Patents, privileges, royalties, franchises, technical or financial
advisory services, and any other Guatemalan-source income 30%
Note:
Reduced to 27.5% in 1999 and to 25% in 2000.
19. Tax Treaties
Guatemala has not entered into tax treaties with other countries for
the avoidance of double taxation.
OTHER SIGNIFICANT TAXES
21. Sales (Value-Added) Taxes
A 10% value-added tax is levied on imports, sales, and services. The tax is borne by the buyer, but it is not an expense, except when it cannot be applied to future payments. The seller can credit the amount of tax that he has paid on his own purchases of goods. If the credit in a given month is greater than the tax due, it can be carried forward and credited against future payments. Exports and services provided by banks and other financial institutions are exempt from VAT.
22. Inheritance and Gift Taxes
Gifts made during the donor lifetime and property transferred on his death are subject to a progressive tax. The rate varies with the amount involved and the degree of relationship.
23. Taxes on Payrolls (Social Security)
Social security is financed by employers?and employees?contributions of 12% and 4.5%, respectively, of total compensation with no maximum limits.
24. Taxes on Natural Resources
All surface and subsurface mineral resources belong to the
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