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 31% 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, levied marginally depending on the taxable income.

Residents can deduct allowances and credits from their gross income to arrive at their taxable income. Each taxpayer is entitled to a GQT36,000 (US$4,457) personal allowance.

Residents are also entitled to deduct the following expenses: contributions to the social security system, premiums for life insurance, medical expenses incurred in Guatemala, certain qualifying gifts, alimonies fixed by court decision, and membership fees paid to recognized professional bodies. 

Residents can also deduct the following credits:

• VAT paid for the acquisition of goods and services for the taxpayer’s personal use, including acquisition of real properties. This credit is limited to 12% of the taxable income.
• Taxes paid as quarterly advance payments (only applicable if optional regime is elected)
• Taxes withheld at source on income derived during the tax period, except final withholding taxes

RENTAL INCOME
Rental income may be taxed under the general regime (5% on gross income) or under the optional regime (31% 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 by residents may be taxed under the general regime (10% on gross income) or under the optional regime (31% on net income). Under the general regime, the tax rate is 10% for capital gains instead of the standard 5%.

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 or rental of real estate.

LEASING REAL ESTATE
VAT imposed on leasing properties is based on the gross rent plus any financing charge. 

SELLING REAL ESTATE
VAT is imposed on the selling of immovable properties in Guatemala and the taxable amount is the selling price.

PROPERTY TAX

Real Tax or Property Tax (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.