Guatemala

Taxable period

System on earnings from lucrative activities

Under the system on earnings from lucrative activities, the annual final tax liquidation period begins on 1 January and ends on 31 December of each year.

Simplified optional system on income from lucrative activities

Under the simplified optional system on income from lucrative activities, taxes are paid on a monthly basis.

Tax returns

System on earnings from lucrative activities

Under the system on earnings from lucrative activities, returns are due after the end of the fiscal period (31 December) but no later than 31 March of each year.

The income tax return shall be accompanied by the documents required by the regulations, which might include a:

• balance sheet
• statement of results of operations
• statement of cash flows, and
• statement of cost of production.

Documents must be duly certified by a professional or an independent accounting firm. The financial statements that accompany the return shall agree with both those recorded in the financial statements ledger and those destined for publication.

Both the income tax return and exhibits thereto shall be signed by the taxpayers, their agent, or their legal representative or by any other responsible persons so determined by this law and the Tax Code.

Simplified optional system on income from lucrative activities

Under the simplified optional system on income from lucrative activities, there is an obligation to file an annual informative tax return, which is due on 31 March of each year.

Payment of tax

System on earnings from lucrative activities

Under the system on earnings from lucrative activities, taxpayers are required to prepay their estimated annual income tax liability in quarterly instalments. The balance is due upon filing the return.

Taxpayers may choose one of the following procedures for computing estimated quarterly tax liability:

• Tax on income shown by partial closure of accounts or computation of presumed liquidation of operations at the end of each quarter.
• Tax on 5% of overall gross income earned during the corresponding quarter of the preceding year (5% of the 30% income tax rate equals 1.5%).
• Tax equivalent to one-fourth of the tax paid for the immediately preceding tax year.

Simplified optional system on income from lucrative activities

Under the simplified optional system on income from lucrative activities, tax is payable via flat tax withholdings (the tax is to be retained by either the customer or the recipient of services) or by direct remittances to the tax office made monthly within the first ten working days of the month following the invoice date.

Taxes on income are governed by the income tax law, Ley de Actualización Tributaria, and its related regulations. Administration of the law is vested with the SAT.

Taxpayers registered before the tax administration under this system will settle and pay the tax through the withholding system. Persons or entities obligated to withhold are those taxpayers who pay or credit into account for the acquisition of goods and services to the taxpayers registered under this system.

Tax audit process

The tax authorities can request specific information at any moment. If necessary, a tax audit can be carried out. The tax authorities must formally notify the taxpayer of any specific adjustments, and the taxpayer has 30 working days to file a response. After filing the response, the taxpayer will again be notified by the tax authorities if the adjustments are confirmed or overturned.

Statute of limitations

The right of the tax administration to checks, adjustments, corrections, or determinations of tax liabilities; settle and enforce interest and penalties; and enforce payment of taxpayers must be brought within four years. In the same period, taxpayers must exercise their right of recourse for overpaid or unduly charged taxes, interest, penalties, and fines.

Topics of focus for tax authorities

The tax authorities normally focus on the following:

• Deductible expenses.
• VAT credits.
• WHT.
• Capital gains.