Foreign tax credit
Guatemala has no provisions or agreements signed to avoid international double taxation, and no foreign tax credit is allowed.
Drawback industries (maquila)
The Law of Promotion and Development of Exports Activities and Drawback Industries is known in Guatemala as maquila. This law seeks to promote, encourage, and develop the manufacture of products within areas controlled by the Customs Authority for export to countries outside the Central American region, as well as to regulate exporting and drawback activities.
The exporter may apply for authorisation to operate under any of the following three systems provided by the law:
- Export under a temporary admission system.
- Export under the reimbursement of duties system.
- Export under the total added national component system.
Tax incentives and benefits of the law include the following:
- Exemption of taxes, import duties, and other charges on imports of machinery and equipment, including VAT.
- Discontinuance of VAT payments on temporary raw material imports.
- Exemption of income tax for ten years on profits obtained under this law.