Your guide to doing business in Guatemala
The Guatemalan legal structure promotes investment and includes provisions that recognize and protect private property rights for both national and foreign investors. Additionally, Guatemalan law favours foreign investment under the grounds of the Foreign Investment Law.
Guatemala's economy is dominated by the private sector, which generates about 85% of GDP. Guatemala has the largest economic market in Central America, with a US$50.3 billion GDP for 2012, representing 27.8% of the region's total GDP. Such economic growth continues based on a State policy to promote development; an approach that has fostered the simultaneous endeavors of the public and private sectors, in this way facilitating the economic boom and access to key global markets. The latest studies on investment banking highlight Guatemala's great economic stability throughout its history.
Registering a Local Corporation in Guatemala includes the following requirements:
The Procedure of Registering a company is as follows:
It is not 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.
Some companies work from Monday to Friday and others to Saturday to complete 44 working hours. Government offices usually open 8am to 4pm, Monday to Friday.
Full Name: Republic of Guatemala
Capital: Guatemala City
Major Languages: Spanish
Monetary Unit: Quetzal
Main Exports: Coffee, sugar, petroleum, apparel, bananas, fruits and vegetables, cardamom
GDP Growth: 301% approx
Internet Domain: .gt
International Dialing Code: +502
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 are usually written in the day, month and year sequence. For example, 1 July 2015 or 1/7/15.
The tax year in Guatemala is January to December.
The Key (Legislative) Authorities in Guatemala are:
Income Tax In Guatemala
According to Guatemalan law, taxable income is all income generated by capital, property, services, and rights invested or used in the country as well as income derived from any type of activities taking place in Guatemala.
All individuals, corporations and businesses, domiciled or not in Guatemala, are subject to income tax. Income tax filing must be presented 90 days after the end of the accounting year. For companies the fiscal year ends in December or June. Individuals must file by June 30 of each year.
Income tax deduction applies whenever a person earns more than US$375.00 per month. Every individual is entitled to deduct for his income tax charge all the VAT paid for his personal purchases. However total purchases cannot exceed his total salary The income tax is 15% for earnings up to US$8,125 and goes up to 31% in a progressive scale.
The typical penalty for late payment of taxes is 50% fine and for social security there’s an annual interest charges of 18%. Monthly contributions are to be paid to the tax authority on the 10th of each month.
Social Security In Guatemala Social insurance system covers all employees, including agricultural workers. Public sector employees are covered by a separate program. The pensions for old age, survivorship, and disability are funded by a small contribution from employees and larger contribution from employers, while 25% is covered by the government. Retirement is set at age 60.
Cash and medical benefits are provided for sickness and maternity for employees of firms with more than five workers. Free medical care is provided for those receiving pensions.
Social Security Contributions:
Employers must contribute to the social security system (IGGS) with an overall percentage of:
Every month 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 employees.
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. 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$250 a month has to apply on its own for a Tax ID number The deadline for new starters to be registered with the authorities is 30 days after the company is duly registered in the Mercantile Register and after two months in the Social Security Institute.
The following Information is required to register the New Start:
The company only provides the person with a certification indicating the income tax amounts withheld during the year (only when applicable since not all employees are subject to income tax). The social security is informed of any leaver simply by stating in the monthly list sent to them that the person has left the company.