Income tax in Guatemala
Taxation Researcher | June 18, 2020
INDIVIDUAL TAXATION
Residents are subject to income tax on all their Guatemalan-sourced income. Married couples are taxed separately.
INCOME TAX
There is no classification of income into different categories. All income, other than employment income, may be taxed in two separate ways: under the general regime and under the optional regime.
Under the general regime, income tax is imposed at a flat rate of 5% on the gross income.
Under the optional regime, income tax is imposed at a flat rate of 25% on the net taxable income. Income-generating expenses are deductible when computing for the taxable income and the deductions must be supported by corresponding legal documentation.
Residents earning income from employment are taxed at progressive rates.
EMPLOYMENT INCOME TAX |
|
| TAXABLE INCOME, GQT (US$) | TAX RATE |
| Up to 300,000 (US$39,216) | 5% |
| Over 300,000 (US$39,216) | 7% on band over US$39,216 |
| Source: Global Property Guide | |
RENTAL INCOME
Rental income may be taxed under the general regime (5% on gross income) or under the optional regime (25% on net income). Taxable income is computed by deducting income-generating expenses from the gross rent. The deductions must be supported by corresponding legal documentation.
CAPITAL GAINS
Capital gains realized from selling real estate property are subject to capital gains tax at a flat rate of 10%. The taxable gain is computed by deducting the acquisition costs and improvement costs from the selling price.
VALUE ADDED TAX (impuesto al valor agregado)
VAT is levied at a uniform rate of 12% and applies (among others) to the sale of new properties and rental of real estate.
VAT imposed on leasing properties is based on the gross rent plus any financing charge.
VAT is imposed on sale of newly built immovable properties in Guatemala and the taxable amount is the selling price.
PROPERTY TAXATION
Real TaxorPropertyTax (impuesto unico sobre inmuebles)
Property taxes are annual taxes levied on all Guatemalan property, collected by the local municipalities. The tax base is the cadastral value of the property, as determined by the tax authorities. Property owners are liable to pay for this tax.
PROPERTY TAX |
|
| TAX BASE, GTQ (US$) | TAX RATE |
| Up to 2,000,000 (US$261,438) | 0% |
| 2,000,000 - 20,000,000 (US$2,614,379) | 0.20% |
| 20,000,000 - 70,000,000 (US$9,150,327) | 0.60% |
| Over 70,000,000 (US$9,150,327) | 0.90% |
| Source: Global Property Guide | |
CORPORATE TAXATION
INCOME TAX
Income and capital gains earned by companies may be taxed in two separate ways: under the general regime and under the optional regime.
Under the general regime, income tax is imposed at a flat rate of 25% on the net taxable income. Income-generating expenses are deductible when computing for the taxable income and the deductions must be supported by corresponding legal documentation.
Under the optional regime, income tax is imposed at a flat rate of 5% to 7% on the gross income.