International Taxes in Guatemala: What You Need to Know

Over time, Guatemala has transformed itself into an attractive destination for foreign investment in Latin America. It is the largest economy in Central America and thanks to its low public debt, and stable currency its GDP projects to grow by over three percent in 2023.

These helpful conditions make it an ideal time to consider doing business in Guatemala. However, like most new international markets, there are specific local rules and regulations that you need to understand and follow to be successful. 

One of these factors is international taxes in Guatemala and how they may affect your plans for entering this emerging Latin American market. Meeting your local and international tax obligations is essential when doing business in Guatemala. 

Read on to learn more about international taxes in Guatemala, and how partnering with a professional employer organization in Guatemala can benefit your business. 

"top services exported by guatemala" infographic by Biz Latin Hub for an article on "international taxes in guatemala".
Guatemala exports an array of services, with personal travel taking the number one spot. When considering doing business in the country, it is important to remain compliant and abide by the international taxes in Guatemala.

How do international taxes work in Guatemala?

Companies are subject to International tax regulations on the income they generate from their foreign operations and sales. Tax treaties between nations determine which country has the right to collect tax revenue. 

To prevent companies from exploiting loopholes to reduce their overall tax obligations, anti-avoidance measures are implemented.

In Guatemala, corporate and personal income taxes are enforced through a territorial system. This means that only income derived from Guatemala is subject to taxation. 

As a result, individuals and corporations that are residents of Guatemala are liable for income tax solely on their Guatemalan earnings. On the other hand, non-residents are taxed via withholding on their Guatemalan-sourced income.

To be considered a resident of Guatemala, a corporation must either be incorporated under Guatemalan law with its fiscal domicile or corporate headquarters located in Guatemala or be a branch of a foreign entity conducting business in Guatemala.

Do you have to pay international taxes in Guatemala? 

As mentioned above, companies are subject to income tax only on their Guatemala-source income. Dividends and other income payable abroad are taxed separately through withholding taxes (WHTs).

Non-residents can operate in Guatemala with or without permanent establishment (PE) accordingly, income tax treatment varies depending on the circumstance outlined below:

  • Non-residents with PE will be subject to income tax, choosing one of the two methods of payment established for residents.
  • Non-residents without PE will be subject to WHT, applying specific rates according to the nature of the services rendered.

The Guatemala corporate income tax rates are:

  • System on earnings: 25 percent on net income.
  • Simplified optional system: 7 percent on gross income. 
  • Headline corporate capital gains tax: 10 percent

Does Guatemala have any tax treaties?

No, Guatemala has no tax treaties in force as of January 2023. This includes no double taxation treaties, as found in other Latin American countries. 

Engaging the services of a local consultant can assist your company in complying with Guatemala’s tax, legal, and employment regulations, thereby preventing any potential issues. 

6 benefits of working with a PEO in Guatemala

If you’re looking to set up a business in Guatemala, partnering with a professional employer organization (PEO) can be a great way to overcome your initial challenges. 

PEOs can help businesses to enhance productivity, profitability, and expansion by providing payroll, benefits, and HR services and helping with compliance matters under both international and local laws.

For example, a PEO can help you manage your compliance with international taxes in Guatemala. 

Here are six benefits of working with a PEO in Guatemala:

  1. Legal Risk Protection: By using the services of a PEO, you can rely on their legal experts to minimize any legal disputes and assume responsibility for your employees
  2. Talent acquisition: With a team of HR specialists, a PEO in Guatemala can quickly source the most qualified staff for your business needs. 
  3. Rapid setup: Since a PEO is already a legally recognized entity, working with one can allow for quicker access to the market. 
  4. Cost savings: Using a PEO can eliminate the costs and time involved in setting up and maintaining a legal entity within Guatemala.
  5. Immigration assistance: A PEO can provide guidance and support for foreign employees seeking work visas.
  6. Time management: Outsourcing payroll to a PEO frees up valuable time and resources, enabling you to focus on other critical aspects of your business.

According to the National Association of Professional Employer Organizations (NAPEO), companies that collaborate with PEOs experience a growth rate that is almost 10% faster than their competitors.  

Not all PEOs are the same, so make sure you do your research and partner with a reputable provider with a proven track record of success. 

"corporate tax planning reviews" infographic by Biz Latin Hub for an article on "international taxes in guatemala".
International taxes in Guatemala can be simplified when hiring a Professional Employer Organization in Guatemala. PEO services assure legal compliance, while finding optimization opportunities.

Biz Latin Hub can support your business in Guatemala 

At Biz Latin Hub, we have a team of specialists who can provide you with customized services to meet your Guatemala business needs.

Our comprehensive range of legal, accounting, and back-office solutions enable us to serve as your primary contact point, helping simplify and speed up your entry into the Guatemalan market.

Talk to our team of local experts today about international taxes in Guatemala, company formation, and how to find the top talent in the region. 
If you found this article about international taxes in Guatemala interesting, be sure to explore the rest of our coverage of the region. Additionally, you can learn more about our team and expert authors here.

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Key services offered by Biz Latin Hub

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