Our guide to Payroll in Guatemala

Doing Business in Guatemala

Investing in Guatemala

The Guatemalan legal structure promotes investment and includes provisions that recognize and protect private property rights, both for domestic and foreign investors. In addition, there are Guatemalan laws that favor foreign investment by virtue of providing attractive incentives for investment, such as the “Ley de Inversión Extranjera” (Decreto 9-98), “Ley de Libre Negociación de Divisas” (Decreto 94-2000), “Ley de Zonas Francas” (Decreto 65-89), “Ley de Alianzas para el Desarrollo de Infraestructura Económica” (Decreto 16-2010).

Guatemala’s economy is dominated by the private sector, which generates around 90% of GDP. Guatemala has the largest economic market in Central America, occupies the tenth position in Latin America and its GDP represents a third of the region. This economic growth continues based on a state policy to promote development; an approach that has encouraged the simultaneous efforts of the public and private sectors, in this way facilitating the economic boom and access to key global markets.

Basic Facts about Guatemala

General Information:

Full Name: Republic of Guatemala

Population: 16.6 million (World Bank, 2019)

Capital: Guatemala City

Major Languages: Spanish

Monetary Unit: Quetzal

Main Exports: Coffee, sugar, petroleum, apparel, bananas, fruits and vegetables, cardamom

GNI per Capita: USD 8,870 (World Bank, 2019)

Internet Domain: .gt

International Dialing Code: +502

How to say

Hello: Hola

Good Morning: Buenos Días

Good Evening: Buenas Noches

Do You Speak English? Habla Inglés

Good Bye: Despedida

Thank You: Gracias

See You Later: Hasta Luego

Dates & Numbers

Dates are usually written in the day, month and year sequence. For example, 1 July 2019 or 1/7/19.

Registrations and Establishing an Entity

Registering a local corporation in Guatemala includes the following requirements:

• A minimum of two persons, individual or corporate, is necessary to form a corporation
• There are no restrictions on the origin of the parties
• The charter of the corporation must be executed in a public deed
• The deed must be submitted for registration in the Commercial Registry for legal authorization within 20 days after the registration of the corporation

The procedure of registering a company is as follows:

• Check the proposed company name online and obtain a letter from a Guatemalan notary public. It takes one day to open a bank account.
• With the name already investigated, request a letter from a Guatemalan attorney to open a bank account in the name of the company
• Select a person who will be the legal representative of the company
• Deposit the subscribed capital in a bank and get a receipt, this will take one day and will not be charged, this management must be done personally by the legal representative
• An attorney will issue the public deed of the constitution of the company and must be signed by each partner in Guatemala
• Complete the forms required by the Commercial Registry and the tax authority then pay the registration fees online. This is an online procedure of less than one day.
• Obtain the provisional registration of the new company before the Mercantile Register; the Tax Identification Number; the Edict; the registration of the legal representative appointment
• Publication of the edit in the “Diario Oficial de Centro América”, and opposition to the provisional registration of the company by affected third parties
• Obtain the definitive registration, the commercial license
• Register with the “Superintendencia de Administración Tributaria” to obtain the Company Tax Identification Number (NIT); authorization for accounting books and authorization to print invoices

Banking

It is mandatory in Guatemala to have an in-country bank account to process payroll.

Banks typically open 9am to 5pm Monday to Friday and 9am to 1pm on Saturdays.

Working Week

Some companies work from Monday to Friday and others to Saturday noon to complete 44 working hours.

There are 3 types of working schedules in Guatemala:

Daytime Schedule

Daytime work is the one that runs between six and eighteen hours of the same day. It cannot be more than eight hours a day, nor exceed a total of forty-eight hours a week

Night Schedule

Night work is the one that runs between eighteen hours of one day and six hours of the next day. The night time cannot be longer than six hours a day, nor exceed a total of thirty-six hours a week.

Mixed Schedule

This is the one that runs during a time that covers part of the day period and part of the night period. The effective work hours cannot be more than seven hours a day or exceed a total of forty-two hours a week. However, if the person works more than 4 hours in the night; it will be considered as a night schedule.

In 2019, Part-Time Work Convention (No. 175) (ILO) was issued, which establishes that full or part-time staff can be hired, respecting and complying with the provisions of the law.

Government offices generally open from 8am to 4pm, Monday through Friday.

Employment Law

Holiday Accrual/Calculations

Full-time permanent employees in Guatemala are entitled to 15 working days of paid annual leave after completing one year of continuous service. Vacation pay is provided at the employee’s regular daily salary rate.

Maternity Leave

The Guatemalan Labor Code grants working women 84 calendar days of maternity leave, consisting of 30 days before childbirth and 54 days after childbirth. If the full pre‑birth leave is not used, the remaining days are added to the post‑birth period. To qualify, the employee must have worked at least 120 days during the six months prior to the leave and must present a medical certificate. During maternity leave, the employment relationship is protected. The maternity subsidy is paid by the Guatemalan Social Security Institute (IGSS), and the employer must maintain the employment position.

Paternity Leave

Fathers are entitled to three days of paid paternity leave upon the birth of a child.

Sickness

In cases of illness, if the employee is covered by the Guatemalan Social Security Institute, sickness benefits are paid by IGSS. If the employee is not covered, the employer must grant paid leave according to statutory rules, generally providing 50% of salary for a period that depends on the employee’s length of continuous service.

National Service

There is no compulsory national service in Guatemala.

Tax & Social Security

The tax year in Guatemala is January to December.

The key legislative authorities in Guatemala are:

• Tax Office (Superintendencia de Administracion Tributaria)
• Ministry of Labor
• IGSS – Social Security Institute

Income Tax

Employment income in Guatemala is subject to Income Taxly portion). ISO paid may be credited against ISR.Employment income in Guatemala is subject to Income Tax (ISR) at progressive rates of 5% and 7%, as established by Decree 10‑2012. After applying a standard annual personal deduction of Q48,000 and other allowable deductions, taxable income up to Q300,000 per year is taxed at 5%, and income above Q300,000 is taxed at Q15,000 plus 7% on the excess.

Individuals may deduct a standard annual amount of Q48,000 from taxable income and may additionally credit VAT paid on personal expenses, up to a maximum of Q12,000 per year, subject to documentation.

Guatemalan labor law requires the payment of 14 salaries per year: twelve monthly salaries plus two mandatory bonuses (Bono 14 in July and Aguinaldo in December). Employers must also comply with statutory benefits such as paid vacations, severance, and legally mandated bonuses.

Value Added Tax (IVA) is levied at a standard rate of 12% and must be declared monthly for the preceding month, with payment due by the last business day of the following month. Late payment may result in significant penalties and interest.

Employment income tax is withheld monthly by the employer, with a final annual reconciliation. Taxpayers under the Optional Simplified ISR Regime for economic activities pay income tax quarterly, within 10 business days after the end of each quarter.

Social Security

In Guatemala, the social security system is funded through mandatory employer and employee contributions based on each registered worker’s salary. These contributions provide access to healthcare, maternity, sickness, disability, old-age pensions, work accident coverage, and survivor benefits administered by the Guatemalan Social Security Institute (IGSS).

Employees contribute 4.83% of their salary (labor quota), while employers contribute a total of 12.67% of salary, composed of the following:

• IGSS: 10.67%

• INTECAP: 1.00% (technical training and workforce development)

• IRTRA: 1.00% (recreational and welfare services for workers and families)

The employer is responsible for deducting the employee contribution from salary and remitting both employer and employee contributions together to IGSS.

Social security contributions must be declared and paid monthly, no later than the last business day of the month following the payroll period

Reporting

Yearly

In March of each year, the Ministry of Labor must submit an annual statistical report of the employed workers that contains a list of all employees. This should be presented to the Ministry of Labor with total salary and positions.

In March of each year, a liquidation of income tax for employees has to be presented before the tax office.

Monthly

Every month, the IGSS worksheet must be submitted, a list of all salaries paid subject to social security has to be presented. This list determines the amount to be paid to social security from employer and retained and employees.

Payroll

It is legally acceptable in Guatemala to provide employees with online payslips.

Reports

For social security purposes, the reports are required to be held indefinitely.

New Employees

Every worker to be hired must sign an individual work contract, which defines the conditions of hiring and their salary, this must be submitted to the Ministry of Labor to be valid and is endorsed by the entity, the contracting of the employee.

For social security purposes, employees are simply added to the monthly report sent to the social security. New employees that have never been reported to social security have to apply for identification and a social security ID number and it will be the same as your Personal Identity Identification number DPI.

For income tax withholdings, the employee is subject to taxes whenever the person starts to earn above US$250 a month, in which case if applicable a withholding is made and sent to the tax office. Every employee earning above US$500 a month has to apply on its own for a tax ID number.

The following Information is required to register a new employee:

• Company name
• Employee name
• Social security number of Personal Identity Identification DPI of every employee
• Salary amount
• Start date
• Payments during the month (every 15 days, weekly or monthly)

Leavers

The social security is informed of any leaver by simply stating in the monthly list sent to them that the person has left the company.

Employee Benefits

Deductible Expenses

Benefits for Employees in a Dependent Relationship

Employees may deduct personal expenses supported by SAT-authorized invoices. An income tax credit is granted for Value Added Tax (VAT) paid on goods and services acquired for exclusive personal use, up to a maximum of 12% of the employee’s net taxable income, not exceeding GTQ 12,000 per year. To claim this credit, the employee must submit a detailed VAT listing with supporting invoices to the Superintendence of Tax Administration (SAT) within the first ten working days of January following the tax year.

Benefits for Companies

All costs and expenses incurred during the fiscal year that are necessary for the generation of taxable income or the sale of goods and services are deductible from gross income, provided they are properly documented with SAT-authorized invoices.

Banking Requirement (Bancarización)

In accordance with Decree 20‑2006, all payments that generate deductible costs or VAT credits and exceed GTQ 30,000—either per transaction or aggregated per supplier in a calendar month—must be made through the banking system (e.g., checks, bank transfers, credit or debit cards). Cash payments above this threshold are not deductible. All deductible transactions must be traceable through banking records.

Travel Expenses

Domestic and foreign travel expenses are deductible when directly related to the production of taxable income and properly supported by invoices or equivalent documentation. If travel expenses are paid as part of salary or allowances, they are subject to income tax. Reimbursements supported by documentation and linked to business activities are generally deductible and not treated as taxable income.

Visas & Work Permits

All individual who are not Guatemalan nationals and wish to work in Guatemala must obtain a Residence Visa and Work Permit. Both documents are valid for one year and are renewed in Guatemala. The Temporary Residence in the country must be managed first.

In Guatemala, a work permit for a foreign employee in a dependent employment relationship must be sponsored by the Guatemalan employer. The employer is responsible for initiating the application before the Ministry of Labor and Social Welfare (MINTRAB), justifying the need to hire a foreign worker, and complying with statutory obligations, including a mandatory training contribution of Q3,000 per application. The work permit process is employer-driven, while immigration status (residency or visa) is handled separately by the Guatemalan Migration Institute.

The documents required from the employer to support the employee’s work permit are as follows:

• Sworn Declaration of Responsibility
• Sworn Guarantee
• Job offer letter
• Act from Board of Directors
• Accounting certification/tax return forms

An employee and their family must provide the following documents to make the Work Permit application:

• Complete copies of the passport and the passports of each dependent
• An up to date CV in Spanish
• Two passport style photographs
• Job title and description of duties in Guatemala
• Criminal and police records, extended from your country of origin
• Police record of cood Conduct for the employee with legalization at the Consulate of Guatemala in the countries where he/she has resided for the last five year.
• Certificado de Validez y Vigencia. This is a letter or certificate from the passport issuing authority, which verifies the passport's validity and certifies that it is a true document. The certificate must then be legalized at the Consulate of Guatemala.

2026 Updates

In 2026, Guatemala introduced revised minimum wage rates across agricultural, non-agricultural and export sectors, alongside continued efforts to strengthen electronic tax reporting and payroll compliance requirements. Employers should monitor ongoing regulatory developments to ensure payroll accuracy and compliance with local employment legislation.