Indirect tax - Guatemala

Value Added Tax (VAT) is the main type of indirect taxation in GT.

It is a tax on consumption which is applied during the production and distribution process to most goods and services. It is also applied to goods entering the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the tax authority at each stage of the process rests with the business making the supply in the sale.

A business registered for the tax will charge VAT (output tax) on its sales, and incur VAT (input tax) on its purchases (including any VAT paid at importation). The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax, a refund can be claimed only for the case of exporters of goods or services.

A transaction is within the scope of GT VAT if the following conditions are met:

• it is a supply of goods or services. 
• it takes place in GT.
• it is made by a taxable person. For these purposes, a taxable person is a person or entity who is making this type of activities in the country. 
• it is made in the course or furtherance of any business carried on by that person or entity.

There are three rates of VAT that are applied to goods and services in GT; the standard rate, the reduced rate (for Small-Tax Payers and Agriculture Activities), and the zero rate. In addition, some goods and services are exempted from the tax.

Businesses that make exempt supplies are unable to claim all of the input tax that they incur, so the VAT paid to suppliers would be a 'real' cost.

Most goods imported into the GT from outside are subject to VAT. The tax will have to be paid by the importer at the time of importation. Where the importation is for business purposes and the importer is registered for VAT, it may be possible to reclaim the tax (subject to certain rules).

It is also important to note the interaction between VAT and Customs duty. Customs duty is levied in order to bring the cost of goods produced outside the country to the same level as those produced within it. Once duty (and VAT) has been paid by the importer, the goods are in 'free circulation' and they can then be released for use in the market. Unlike other indirect taxes, such as VAT, once duty has been paid it is not usually recoverable by the importer. It therefore represents a bottom line cost to the importing business if it cannot be passed on in higher prices. It is therefore very important to ensure that the correct rate of duty is applied. VAT is charged on the value of the importation, including any custom duty.

A 'person' who either makes or intends to make taxable supplies of goods or services in the course or furtherance of a business must register for VAT. A business should be registered. 

For these purposes, a 'person' includes any legal entity. Therefore, once a person is registered for VAT, all of his business activities will be covered by the registration - even if the nature of some of those activities are very different.

A penalty may be imposed by the tax authority if a business fails to register at the correct time.

The normal VAT registration limit does not apply to businesses who are not established in GT, but for the purposes of the tax are making taxable supplies there. Those businesses will need to register for VAT as soon as they commence trading in GT, irrespective of the level of turnover. 

The registration is connected with have or not PE in GT.

No, at this moment GT does not have rules on digital businesses.

No, if the business does not have a PE in the country. Otherwise, the PE has to appoint a legal representative person.

VAT returns normally cover an accounting period of one month, ending on the last day of a calendar month, the tax return should be submitted on a monthly basis.

All VAT returns have to be submitted within 30 days of the end of the relevant vat period. As all returns and payments have to be submitted electronically.

A default surcharge penalty may be imposed by the tax authority if VAT returns are not submitted on time, or the related tax is not paid by the due date.

The penalty is on the 50% of the late payment tax plus interests (13% annual).

If the taxpayer is appointed as VAT withholding agent, it has to withhold a 15% or 85% of the rate (12%) on the payment of domestic services or goods acquired. This withholding tax does not apply between agents. The withholding taxes should be submitted to the tax office in the next month during the next 15 business days.

In the other hand, if the company acquires services or good with domestic providers who are not registered taxpayers, an special invoice should be issued. In this case, the company has to withhold 5% of income tax on each purchase and the 12% of VAT. Both withholding should be submitted to the tax office in the following month, the income tax withholding during the first 10 business days, and the VAT withheld in during the next month.

If a company appropriates of the VAT a penal matter could be initiated by the tax office.

No. only the registered taxpayers can request the refund of the VAT. And the refund applies only for exporters of services or goods, also some entities that sale to some Government entities can claim a VAT refund.

A VAT invoice must show:

• an invoice number provided by the tax office, due these forms are electronically;
• the seller's name and address;
• the seller's VAT registration number;
• the invoice date;
• the date of issuing;
• the customer's name and address;
• the customer’s tax id (if applicable);
• a description sufficient to identify the goods or services supplied to the customer;
• the rate of any cash discount;
• the total amount of the sale, the VAT should be included in the price.

Where a VAT invoice includes zero-rated or exempt goods or services, it must:

• show clearly that there is no VAT payable on those goods or services.

VAT invoices only can be issued on electronic basis. The method used to ensure the authenticity of origin, the integrity of content and legibility of the invoices is a business choice and can be achieved by any business controls which create a reliable audit trail between an invoice and a supply of goods or services.

Yes, the taxpayers have to send the information related to its VAT Book on semestral basis to the tax office on electronic basis.