Corporate - Group taxation

Last reviewed - 04 December 2023

There is no consolidation for tax purposes, as each group entity is treated as an independent taxpayer that shall file its own tax returns.

Transfer pricing

All companies that have any transaction with a related party abroad should have a transfer pricing study.

From a Guatemalan transfer pricing perspective, the scope of application of the rules of valuation of transactions between related parties reaches any operation that has been carried out between a person living in Guatemala with a resident abroad.

Local legislation allows the selection of traditional methods and profit-based methods consistent with the Organisation for Economic Co-operation and Development (OECD) guidelines as well as a sixth method applicable to imports and exports.

Advance pricing agreements (APAs) are permitted, and it is also stated that the tax authority can reclassify activities according to its true nature in accordance with Tax Code statements.

Thin capitalisation

Thin capitalisation applies regarding deductible expenses for interest paid. The deductible amount for such costs may not exceed the value of multiplying the annual maximum simple interest rate determined by the Guatemalan Monetary Board for tax purposes by three times the amount of average total net assets submitted by the taxpayer in the annual income tax return.

Average total net assets is defined as the sum of total net assets of the previous year and total net assets at the end of the year in force (both values must correspond to the amounts filed in the annual income tax return of each period of final settlement) divided by two. Total net assets are defined by law to correspond to the book value of all goods that are actually the property of the taxpayer.

Controlled foreign companies (CFCs)

Guatemala does not have any provisions regulating CFCs.