Foreign Investment in Guatemala
Types of Guatemalan Companies
Registration of a Local Company
for a Local Company
Establishing a Branch of a
Registration with the Tax Authority
Temporary Operations in Guatemala
Operations Requiring no
Registration or Authorization
Annual Company Tax
Foreign Exchange Regulations
Trademark and Patent
Law for the Protection and
Improvement of the Environment
Agreement on U.S Capital Investment Guarantee
One Step Export Bureau
Drawback Industries Law
Free Trade Zone Law
law promotes foreign investment and includes provisions
that recognize and guarantee private property rights
equally for Guatemalan nationals and foreign investors.
No restrictions are placed on foreigners for owning any
amount of stock in Guatemalan business entities. Main
economic sectors of Guatemala are open to both local and
foreign investment and ownership; however, some
restrictions apply to sectors considered to be of
strategic interest, such as military and some forms of
transportation. Other than applicable taxes, no
restrictions apply to remittance of profits and
repatriation of capital. Guatemalan law supports an open
market, respecting the entrepreneurial activity and
Foreign Investment in Guatemala:
investment in Guatemala is usually carried out by
establishing a local company or a branch of a foreign
The Guatemalan Commercial Code regulates the formation
of the following types of companies (Article. 10 of the
Guatemalan Commercial Code):
Partnership (Sociedad Colectiva): partners are
jointly and severally liable to the full extent of
their personal assets.
Liability Partnership (Sociedad de Responsabilidad
Limitada): maximum of twenty partners, in which each
partner is personally liable up to the amount of
equity paid in.
Partnership (Sociedad en Comandita Simple): formed
by two types of partners: one or more general
partners who direct business and are jointly and
severally liable for debts, and one or more limited
partners whose liability is limited to the amount of
equity paid in. The limited partners can have no
management voice in the operation of the firm.
Limited Partnership (Sociedad en Comandita por
Acciones): same as limited partnership except shares
Corporation (Sociedad Anónima): equity is divided
and represented in equal value shares.
Responsibility of each stockholder is limited to
shares held. The corporation must have a board of
directors, or a sole administrator, and must hold an
annual meeting whose minutes must be notarized.
limitation exists on the number or percentage of
foreigners serving on a board of directors of a
Guatemalan company. Companies are required to have a
legal representative, who must be a resident alien with
a work permit or be a Guatemalan citizen. Shares may be
made out to the stockholder's name or issued to the
Registration of a Local
Establishing a local company in Guatemala is a process
that takes approximately two weeks for provisional
registration and a maximum of 2 months for final
registration. A company may begin operations under
Registration Requirements of a Local Company
Registration requirements for a local company include
foundation by a minimum of two persons, individual or
corporate, is required to form a company. To operate in
most sectors of the economy, there is no requirement for
a Guatemalan national to participate in the
incorporation. Likewise, no restrictions are placed on
foreign participation. The charter of the company must
be executed in a public and notarized document.
copy of the charter must be filed with the Commercial
Registry (Registro Mercantil) within thirty days. The
company's accountant or accounting firm must be
registered with the Ministry of Finance.
verifying compliance with legal requirements, the
Commercial Registry provisionally registers the company.
The company must then publish notification of the
registration one time following the granting of
provisional registration. The notices must appear in the
Official Gazette (Diario de Centro America). If no
opposition is tendered within 8 days, the Commercial
Registry proceeds with final registration.
Establishing a Branch of
a Foreign Company
legally established in a country other than Guatemala
can register a branch office in Guatemala by meeting the
following requirements of the Commercial Registry:
Demonstrate that it has been duly organized in
accordance with the laws of the country of origin.
a certified copy of its articles of incorporation,
by-laws and amendments.
an authenticated copy of the minutes containing the
company's decision to operate in Guatemala and to
file for registration and approval.
a representative, either a foreign resident with a
work permit, or a Guatemalan citizen with sufficient
authority, as specified in the company's by-laws, to
conduct business and represent the company in legal
the operating capital in a legally registered bank
and agree to be liable for business conducted
to submit to Guatemala law and the jurisdiction of
the Guatemalan courts.
a declaration of commitment to fulfill all legal
obligations prior to withdrawing from Guatemala.
Establish a bond in the amount of US dollars 50,000
on behalf of the Guatemalan state for compliance of
any obligations they don’t fulfill when doing
business in the company.
certified copies of the company's latest financial
statements (balance sheets, profit and loss
documents must be legalized by at a Guatemalan
Consular Office, and then translated into Spanish by
an accredited translator.
documents must be recorded by a registered
Guatemalan notary prior to being submitted to the
submission, the Commercial Registry will verify
compliance with all legal requirements and establish
that charter provisions are not contrary to Guatemalan
law. Subsequently, one notice of the registration
request is published on separate dates within a
one-month period in the Official Gazette. If no
opposition is tendered, the documents are submitted to
the Mercantile Registry for approval. After verifying
that the operating capital has been duly deposited in an
authorized bank, the registry proceeds with
registration. The company must initiate operations
within a year of the date of registration. The process
of filing for registration and approval takes
approximately three months.
Registration with the Tax Authority (Superintendencia
Registration with the SAT, Guatemala's equivalent
of the Internal Revenue Service, is required to obtain
the tax identification number (Número de Identificación
Tributaria (NIT)). The following documents are
the publication in the Official Gazette.
of the provisional registration issued by the
of the documents filed with the Mercantile Registry.
Temporary Operations in Guatemala:
companies may also request approval from the Mercantile
Registry for temporary operations in Guatemala for a
period of less than two years. A company is required to
provide proof of being duly organized in its country of
origin and must appoint a legal representative in
Operations Requiring no Registration or
companies or individuals do not require any type of
registration or approval to do the following:
purchase from independent commercial agents legally
established in Guatemala.
Purchase orders through agents legally established
in Guatemala provided such purchases are subject to
confirmation or acceptance abroad.
maintain accounts in an authorized Guatemalan bank.
real estate, with the exception of land near
international borders and waterfront properties.
loans to businesses established in Guatemala.
endorse or contest credit instruments in Guatemala.
Participate in any legal action or proceeding before
a Guatemalan court or public office.
Guatemala's Ministry of Finance considers
taxable income to be any for of ingress
generated by capital, property, services,
and rights invested or used in the country
as well as income derived from any type of
activity taking place in Guatemala. All
individuals and companies domiciled or not
in Guatemala, are subject to income tax. .
Companies are presently taxed at a flat rate
of 31 percent of income after allowable
deductions. Allowable deductions include
operating expenses and other taxes paid.
Personal income taxes are computed according
to the following table.
Taxable Income Table * Tax Payable
On Excess of
Q65,000 – Q180,000
Q180,000 – Q295,000
Currently, withholding tax for
payments to individuals or businesses not
domiciled in Guatemala applies as follows:
10% percent on dividends...
10% percent on payment or credits of
31% percent on payment or credits for
Depreciation is determined on a straight
line basis. Authorization to exceed the
maximum rates established by law may be
granted under special circumstances. Yearly
depreciation rates allowed:
Buildings and Improvements
Furniture and Fixtures
Vehicles and Equipment
Bushes and Fruit
Ships and Office Equipment
Any Other Depreciable Assets
Annual Company Tax:
There are two possible ways to pay the
Annual Company Tax. Companies domiciled in
Guatemala can either pay monthly 5% of the
total of their income and at the end of the
year, release a report that summarizes the
amount paid monthly for that year. The other
possibility is to pay 31% over all
utilities. This payment is made annually,
but the company must present for a trimester
the state of their results and their general
balance. Then the company must do their “Pago
Value Added Tax:
Value Added Tax
(Impuesto al Valor
Agregado (IVA) is levied at a uniform
rate of 12% and is applied, among others, to
the following: Sale of movable assets and
rights regarding those assets;
Services performed in Guatemala; Goods
imported into Guatemala;
Sale or rental of real estate.
Value Added Tax withheld by businesses and
owed to the government may be offset in
equal amount by the tax paid in other
transactions. Application for reimbursement
of any remaining credit may be made to the “Superintendencia
de Administración Tributaria (SAT)”.
Legal documents require a 3% tax on the
value of the transaction being documented.
Most Civil documents are subject to stamp
Included in documents subject to stamp taxes
are documents executed abroad, that are
effective in Guatemala, public and private
documents resulting in the collection,
transfer or cancellation of letters of
credit, real estate leases, and receipts for
Transactions subject to Value Added Tax (IVA)
are not subject to the Stamp Tax.
Imports from outside the Central American
region are subject to a tariff ranging
between 5 and 20 percent ad valorem on CIF
value, except for items covered by special
incentives or purchased directly by
governmental agencies. The Value Added Tax (IVA)
is also paid on imports, unless the import
falls under special exonerations.
Foreign Exchange Regulations:
foreign currency transactions must be made through
approved financial institutions. A form must be filled
out for all transactions involving foreign investments,
remittance of dividends and repatriation of capital.
than the compliance with applicable taxes, no further
controls and restrictions apply to the remittance of
profits and repatriation of capital. The foreign
currency exchange rate floats freely.
immigration matters are regulated by Decree 22-86, which
oversees the admission of immigrants and their
activities. Unless otherwise exempt from visa
requirements pursuant to international agreements,
immigrants should apply for a visa to enter Guatemala at
a Guatemalan Consulate in their country of origin. Most
immigrants enter the country with a tourist visa and
later apply for a resident visa should they choose to
remain in Guatemala.
Trademark and Patent Legislation:
Trademark protection is acquired through registration
with the Patent and Trademark Office of the Ministry of
Economics. It is granted for a ten year period after
which it may be renewed. To be eligible for a patent, an
invention must be new, innovative, and be suitable for
industrial application. Patent registration is valid for
a maximum period of fifteen years.
and obligations of employers and employees are governed
by the Labor Code (Código de Trabajo). Remuneration for
services by an employee must be paid in local currency
(Quetzals) and may be based by time, task or profit
sharing, or percentage on common sales or collections
made by the employer. Wages must meet the minimum level
established by the government. The minimum wage varies
according to type of work. All payroll workers receive
two annual bonuses equivalent to one month's salary: one
payable at year's end (Christmas Bonus), and the other
in July (July Bonus).
employer terminates an employee without just cause,
(just cause is defined by the Labor Code and includes
dangerous behavior, excessive absenteeism, disclosing
commercial secrets, etc.), the employee is entitled to a
severance payment calculated on the employee's income,
including perquisites, and the length of time the
employee has worked for the employer. Proportional
Christmas and July Bonus calculations must be included
in severance payment. Day shifts may not exceed eight
hours per day and forty-four hours per week. Night
shifts may not exceed six hours per night and thirty-six
hours weekly. Foreign workers require special permission
by the Ministry of Labor to work in Guatemala. Approval
must be requested prior to arrival in the country.
Foreign nationals may comprise no more than ten percent
of the company's work force. The combined salaries of
non-Guatemalan employees may not exceed fifteen percent
of the non-management payroll.
banks may establish branches in Guatemala subject to
approval by the Monetary Board and the Ministry of
Economics. To establish a branch in Guatemala, the
foreign bank must have been in operation in its country
of origin for at least ten years.
minimum initial capital outlay of US$2 million is
required for establishing a new bank, which must remain
in the Guatemalan branch. Applications must be submitted
to the Superintendence of Banks along with the required
documents, including balance sheets, profit and loss
statement, and a certificate of good standing issued by
the corresponding authority of the country of origin.
Branches of foreign banks are subject to the same legal
regulatory framework as charter banks, as well as the
jurisdiction of the Monetary Board and the
Superintendence of Banks.
branches do not require a board of directors; however,
at least one officer in charge of the branch must be
domiciled in Guatemala. This officer must be a resident
alien or a Guatemalan citizen.
loan agreements must be signed and witnessed by a
licensed Guatemalan attorney. Loan agreements secured by
mortgages or pledges must be signed in a legalized
public document before an attorney and duly registered
in the Property Registry (Registro de la Propiedad). The
Guatemalan Commercial Code provides for several types of
notes and drafts, which include: promissory notes, bills
of exchange, debentures, and checks. Notes and drafts
are negotiable and their transaction involves a few
simple procedures. The negotiation and transfer of
instruments payable to the bearer is effective upon
delivery of the instrument. Instruments payable to a
specific name or account are negotiated by endorsement
environmental impact study is required before beginning
any construction, industrial project, or other activity
that could modify or disturb the environment. The study
must be carried out by qualified technicians, either
companies or persons approved and certified by the
National Commission on the Environment (CONAMA), and
submitted to CONAMA. Stiff fines for non-compliance are
Law for the Protection and Improvement of the
Environment: (Decree 68 – 86):
Guatemalan legislation prohibits the emission and
discharge of polluting matter or agents that may affect
the environment. It also prohibits the storage of
contaminating or radioactive materials, as well as those
products or materials not freely and legally marketed in
their countries of origin. The importation of human or
animal wastes, treated or untreated, is banned.
Agreement on the U.S
Capital Investment Guarantee (Decree 1 545)
Overseas Private Investment Corporation (OPIC) provides
investment guarantees for qualifying U.S. investment
projects in several countries. Guatemala is a
participant in this program, and upon approval by the
Guatemalan Government, the qualifying project is
eligible for guarantees by OPIC covering losses
resulting from inconvertibility of currency or
expropriation. Parties choosing to be covered by the
agreement must first apply to OPIC and then submit their
application to the Ministry of Economics.
covered investment may be in cash or in capital goods.
An investment is considered to be of U.S. origin when
classified as such by the Government of the U.S. or
OPIC. In the case of cash investments, the money must be
exchanged through one of the authorized banks in the
One Step Export Bureau:
Procedure for exporting Guatemalan Products were greatly
simplified by the establishment of the One-Step Export
Bureau (Ventanilla única de Exportaciones) at the
Ministry of Economics. The bureau brings together in a
single office all organizations and institutions
associated with the export activities. Export permits
are routinely issued in a matter of hours.
Drawback Industries Law (Decree 29 – 891):
Drawback Industries Law encourages the manufacture of
goods for export to countries outside Central America
and regulates the drawback industry under specific
classifications. The law offers temporary exemption from
tariffs and Value Added Tax on imported raw materials,
samples, machinery, equipment and other items. Approval
by the Ministry of Economics is required to obtain the
benefits granted by this law.
addition to traditional incentives and tax holidays, the
Drawback Industries Law allows single business to
qualify as a stand-alone free trade zone anywhere in the
Free Trade Zones Law (Decree 65 – 89):
trade zone is defined as an area of land especially
designated and subject to a special customs
classification, in which individuals and enterprises
manufacture or merchandise goods for export or
re-export, or engage in foreign trade services. A free
trade zone may be established anywhere in the country by
private as well as public enterprises. Private
enterprises need approval by the Ministry of Economics.
Incentives provided by the Free Trade Zone Law include:
manufacturing and service firms established in a free
tax exemption is permitted on imports for equipment,
machinery, tools, raw materials, inputs, seem-finished
products, containers, and packaging used for
manufacturing or rendering of services.
income tax exemption is also allowed for a twelve-year
period, on income from the manufacture or rendering
services originating in the free trade zone.
Added Tax exemption on goods transferred between free
trade zones within Guatemala.
businesses located within the free trade zone engaging
in commercial activities:
Exemption from taxes, custom duties or import charges on
commodities and components stored in the free trade zone
for their commercialization,
income tax exemption, for a five-year period, on income
derived from commercial activities within the free trade
Exemption of Value Added Tax, on goods transferred
inside and between free trade zones in Guatemala.
Tourism Law (Decree
1701 and its reforms, Decree 22-71, Decree 22-73 and
Tourism Law contains important provisions to encourage
and develop the tourism industry including the following
tax incentives, available for a ten-year period to
investors in this sector.
Exemption from all duties and import taxes on raw
materials, construction materials, operating machinery,
electrical appliances, vehicles, ships, cutlery,
furniture and entertainment equipment, not produced in
Guatemala or Central America.
Exemption from real estate taxes on new construction and
the expansion of existing structures.