Corporate Tax 2010 - BMR Advisors

Arias & Muñoz
Guatemala
Guatemala
3.2 Would there be any withholding tax on royalties paid by a
local company to a non-resident
Yes, there is a withholding tax of 31% on the payments of royalties
to a non-resident.
3.3 Would there be any withholding tax on interest paid by a
local company to a non-resident
Yes, there is a withholding tax of 10% on payments of interest to a
non-resident. The exception is if such interest is paid or credited to
a foreign banking and financial institution with a first rate rating in
its country of origin, or to multilateral financial institutions,
provided that the principal has been used for revenue generating
operations and that the foreign currency is brought into Guatemala
via the local banking system.
4.2 When is that tax generally payable
The tax year is from 1 January to 31 December for both individuals
and legal entities.
Income tax is to be paid at the time the tax returned is filed.
However, quarterly payments are mandatory for taxpayers paying
income tax in the optional regime (31% on net income), and
monthly payments must be made by those in the default regime (5%
on gross income).
4.3 What is the tax base for that tax (profits pursuant to
commercial accounts subject to adjustments; other tax
base)
Please see the answer to question 4.1.
3.4 Would relief for interest so paid be restricted by reference
to “thin capitalisation” rules
No, there are no thin capitalisation rules in Guatemala.
3.5 If so, is there a “safe harbour” by reference to which tax
relief is assured
There is no safe harbour in Guatemala.
3.6 Would any such “thin capitalisation” rules extend to debt
advanced by a third party but guaranteed by a parent
company
Not applicable (see our answer to question 3.4).
3.7 Are there any restrictions on tax relief for interest
payments by a local company to a non-resident in addition
to any thin capitalisation rules mentioned in questions
3.4-3.6 above
Tax relief is conditioned to whom the interest is paid (a foreign
banking and financial institution with a first rate rating in its
country of origin, or to multilateral financial institutions), for what
the financing has been used (the principal has been used for revenue
generating operations) and how the foreign currency came into
Guatemala (via the local banking system).
3.8 Does Guatemala have transfer pricing rules
No, Guatemala has no transfer pricing rules. However, the local tax
authority has general powers to determine if such practice occurs.
To the best of our knowledge no such practice has been
commonplace.
4 Tax on Business Operations: General
4.1 What is the headline rate of tax on corporate profits
4.4 If it otherwise differs from the profit shown in commercial
accounts, what are the main other differences
There are no tax grouping rules in Guatemala.
4.5 Are there any tax grouping rules Do these allow for relief
in Guatemala for losses of overseas subsidiaries
There are no tax grouping rules in Guatemala.
4.6 Is tax imposed at a different rate upon distributed, as
opposed to retained, profits
A different tax rate is not imposed upon distributed as opposed to
retained profits.
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
Please see our answer to question 2.6.
4.8 Are there any local taxes not dealt with in answers to
other questions
There is a Solidarity Tax which levies a 1% tax on 25% of a
company’s assets or 25% of it gross income, whichever is greater.
Only those companies in the optional regime (31% on net income)
must report this tax, and any payments made on this tax are
creditable to the Income Tax that is paid for the same fiscal year.
5 Capital Gains
5.1 Is there a special set of rules for taxing capital gains and
losses
Yes. Capital gains are subject to a 10% Income Tax tariff. Capital
losses are deductible only from capital gains generated five years
after the year in which the loss took place.
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Corporate profits are subject to income tax, and there are two
regimes:
Default or ordinary regime: 5% calculated on gross income.
Optional regime: 31% calculated on net income (gross
income minus permitted deductions, plus capital gains).
5.2 If so, is the rate of tax imposed upon capital gains
different from the rate imposed upon business profits
Yes, see the answers to questions 4.1 and 5.1 respectively.
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