Table of Contents
- Executive Summary: The State of Tax Law in Guatemala (2025)
- Major Legislative Changes Effective in 2025
- Corporate Taxation: Rates, Deductions, and Key Compliance Updates
- Individual Income Tax: New Brackets, Exemptions, and Reporting Requirements
- Value Added Tax (VAT) and Indirect Taxes: Adjustments and Enforcement Trends
- Transfer Pricing and International Taxation: Meeting New Global Standards
- Tax Administration and Digitalization: SUNAT Innovations and E-Filing
- Compliance Risks: Penalties, Audits, and Red Flags
- Statistical Overview: Revenue, Compliance Rates, and Enforcement Actions (Citing sat.gob.gt)
- Future Outlook: 2025–2030 Tax Policy, Reforms, and Strategic Considerations
- Sources & References
Executive Summary: The State of Tax Law in Guatemala (2025)
As of 2025, the tax law landscape in Guatemala is characterized by ongoing reforms aimed at improving revenue collection, compliance, and alignment with international standards. The Guatemalan tax system is primarily governed by the Tax Code (Decreto Número 6-91), along with specialized laws covering income tax, value-added tax (VAT), and other obligations. Tax administration is overseen by the Superintendencia de Administración Tributaria (SAT), which has intensified digitalization and enforcement strategies over recent years.
A significant development in recent years has been the push for greater fiscal transparency and anti-evasion measures. In 2023 and 2024, SAT implemented new electronic invoicing requirements under the FEL (Factura Electrónica en Línea) regime, making e-invoicing mandatory for most economic sectors. These measures are designed to reduce the informal economy, which, according to SAT estimates, still accounts for approximately 60% of economic activity in Guatemala. The increased adoption of digital reporting is expected to improve tax compliance and collection efficiency going into 2025.
Guatemala’s tax structure relies heavily on indirect taxes, with VAT set at 12% and corporate income tax rates ranging from 5% to 25%, depending on the taxpayer’s regime. Personal income tax is progressive, with rates from 5% to 7%, but the tax base remains narrow due to widespread informality. In 2024, tax revenues were equivalent to about 11% of GDP, among the lowest in Latin America, underscoring the ongoing challenges faced by the government in expanding the tax base and increasing state revenue (Superintendencia de Administración Tributaria).
Compliance remains a focal point for Guatemalan authorities. Recent years have seen increased audits, stricter enforcement of transfer pricing regulations, and enhanced international cooperation on tax matters. Guatemala is a participant in the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes, and it has committed to implementing international standards for information exchange (OECD).
Looking ahead, the outlook for tax law in Guatemala through 2025 and beyond includes further digitalization of tax processes, potential amendments to expand the tax base, and continued efforts to combat evasion. The government’s medium-term fiscal strategy prioritizes increased revenue mobilization to fund social programs and infrastructure, which may lead to new legislative initiatives or adjustments to existing tax rates and compliance requirements. Businesses and individuals operating in Guatemala should closely monitor regulatory developments and ensure robust compliance practices to adapt to this evolving environment.
Major Legislative Changes Effective in 2025
Guatemala’s tax law landscape is undergoing significant changes in 2025, reflecting both domestic fiscal priorities and growing international pressure for greater transparency and compliance. The most consequential legislative development is the enactment of Decree 10-2024, which amends the existing Income Tax Law (Ley del Impuesto Sobre la Renta) and introduces enhanced anti-evasion measures. These amendments, effective January 1, 2025, align Guatemala’s framework more closely with OECD standards and regional best practices.
Key provisions of Decree 10-2024 include a tightened regime for transfer pricing, obligating companies to submit detailed documentation that substantiates the arm’s length nature of intragroup transactions. The Superintendencia de Administración Tributaria (SAT) now requires annual transfer pricing reports from all taxpayers exceeding annual gross revenues of Q10 million (approx. USD 1.25 million), expanding from the previous threshold of Q12 million. Non-compliance may result in fines up to Q100,000 per infraction and potential criminal liability in cases of deliberate tax evasion Superintendencia de Administración Tributaria.
Additionally, the 2025 reforms revise Value Added Tax (VAT) compliance. Electronic invoicing (Factura Electrónica en Línea, FEL) is now mandatory for all registered businesses, regardless of size or sector, eliminating prior exemptions for microenterprises. This is expected to bring an estimated 60,000 informal businesses into the formal tax system in 2025 alone, contributing to an anticipated 9% increase in VAT collections according to projections by the SAT Superintendencia de Administración Tributaria.
Guatemala has also updated its tax treaty network, ratifying new agreements with Mexico and Spain. These treaties, effective from fiscal year 2025, provide for information exchange and mutual assistance in tax collection, furthering efforts against cross-border tax avoidance Ministerio de Finanzas Públicas.
Enforcement is set to intensify: The SAT has been granted expanded investigative powers, including real-time access to certain financial data and the authority to freeze accounts suspected of being used for tax evasion. Businesses are advised to review compliance protocols and ensure alignment with the new requirements.
Looking ahead, Guatemala’s tax authority aims to increase the tax-to-GDP ratio from its current 11.2% (one of the lowest in Latin America) to at least 13% by 2027, as stated in the government’s medium-term fiscal plan Superintendencia de Administración Tributaria. The 2025 legislative changes mark a pivotal step toward this objective, signaling a new era of modernization and stricter compliance in Guatemalan tax law.
Corporate Taxation: Rates, Deductions, and Key Compliance Updates
Guatemala’s corporate tax regime is governed primarily by the “Ley de Actualización Tributaria” (Decree 10-2012) and its subsequent amendments. For the 2025 fiscal year, the principal corporate income tax (Impuesto Sobre la Renta, ISR) rate remains at 25% for entities under the general regime, which is based on net taxable income. Alternatively, companies can opt for the simplified regime, which applies a 7% rate on gross income, subject to specific eligibility criteria. Selection of regimes is typically binding for a minimum period, and companies must notify the Superintendencia de Administración Tributaria (SAT) of their choice within the statutory deadlines.
Key deductible expenses under Guatemalan law include costs that are necessary and directly related to generating taxable income, such as salaries, social security contributions, rent, utilities, depreciation (as per SAT’s schedules), and certain interest payments. Non-deductible items prominently include expenses lacking proper documentation, fines, or those not directly associated with the core business. Recent administrative oversight by the SAT has intensified scrutiny over documentation requirements, particularly electronic invoicing (Factura Electrónica en Línea, FEL), which is now mandatory for virtually all corporate taxpayers as of 2023, with ongoing compliance reviews expected in 2025.
Transfer pricing regulations are a critical compliance focus. Entities engaged in transactions with related parties abroad must adhere to the arm’s length principle and provide contemporaneous documentation upon SAT’s request. The SAT published updated guidelines and increased audit activity in 2024, and this trend is projected to continue through 2025 and beyond, especially for companies in manufacturing, distribution, and resource sectors.
Guatemala’s VAT rate remains at 12%, with monthly filing and payment obligations. The SAT’s electronic VAT credit system, also implemented in phases through 2023–2024, aims to reduce fraud and streamline credit claims. Non-compliance with VAT rules or failure to use FEL-compliant invoicing results in penalties and potential criminal liability.
Key statistics for 2023 show that corporate tax collection represented roughly 2.5% of GDP, and VAT revenue accounted for 5.8% of GDP, according to the Superintendencia de Administración Tributaria. The SAT’s strategic plan for 2025–2028 prioritizes digitalization, expanded audits, and cross-border information exchange to close the estimated 25% tax compliance gap.
Looking ahead, companies operating in Guatemala should anticipate continued enhancements to digital compliance systems, stricter enforcement of transfer pricing and VAT rules, and a sustained focus on reducing informality. Early preparation and robust internal controls are critical to avoid penalties and ensure ongoing compliance with evolving Guatemalan tax law.
Individual Income Tax: New Brackets, Exemptions, and Reporting Requirements
In 2025, Guatemala’s individual income tax regime continues to be governed primarily by the “Ley del Impuesto Sobre la Renta” (Decree 10-2012), with several recent updates reflecting the government’s efforts to enhance compliance and revenue collection. The Superintendencia de Administración Tributaria (SAT), Guatemala’s tax authority, has issued new guidelines regarding income tax brackets, exemptions, and reporting requirements, effective for the 2025 fiscal year.
For resident individuals, income tax is assessed under two primary regimes: the “Simplified Optional Regime” (7% flat rate on gross income) and the “General Regime” (progressive rates based on net income). As of 2025, the General Regime features updated brackets, with income up to GTQ 300,000 taxed at 5%, and income exceeding this threshold taxed at 7%. The basic annual exemption remains at GTQ 48,000, with additional deductions permitted for certain expenses such as social security contributions, educational expenses, and mortgage interest, subject to documentation and limits Superintendencia de Administración Tributaria.
Recent amendments have clarified that all individuals earning income from Guatemalan sources, including self-employed professionals, freelancers, and rental income earners, are required to file annual returns if their gross income exceeds the basic exemption. SAT has intensified oversight by expanding electronic reporting obligations. Taxpayers must now register updated personal and economic data online and are required to submit supporting documents electronically through the Declaraguate system Superintendencia de Administración Tributaria.
Compliance measures have also been strengthened. The SAT has implemented digital cross-checking of information from employers, financial institutions, and property registries to identify discrepancies in reported income. Penalties for late filing or underreporting have increased, with fines ranging from 5% to 25% of the understated tax. Notably, the SAT reported that individual income tax compliance improved by 8% in 2023 and is projected to increase further as digital enforcement matures by 2025 Superintendencia de Administración Tributaria.
Looking forward, the Guatemalan government is considering further reforms to broaden the tax base and increase progressivity, in response to fiscal pressures and commitments to international transparency standards. Taxpayers should expect continued enhancements in digital reporting infrastructure and stricter enforcement, with the SAT prioritizing both voluntary compliance and targeted audits in the years ahead.
Value Added Tax (VAT) and Indirect Taxes: Adjustments and Enforcement Trends
Guatemala’s value added tax (Impuesto al Valor Agregado, IVA) remains the cornerstone of the country’s indirect tax regime, representing a significant share of government revenue. The standard VAT rate is 12%, applicable to most goods and services supplied domestically and on imports. In recent years, and moving into 2025, the Guatemalan tax authority, Superintendencia de Administración Tributaria (SAT), has intensified both its enforcement strategies and modernization efforts to address VAT compliance gaps and broaden the tax base.
Adjustments to VAT administration have been evident in the ongoing digitalization of invoicing and reporting processes. The implementation of the Electronic Online Invoicing Regime (FEL) has become mandatory for an increasing proportion of taxpayers, with SAT extending FEL requirements to all legal persons and various economic sectors through 2023 and 2024. By 2025, universal adoption of e-invoicing is expected, aiming to reduce evasion, improve audit trails, and facilitate real-time monitoring of transactions. According to Superintendencia de Administración Tributaria, the FEL system has already led to a noticeable rise in declared VAT, with electronic invoices exceeding 2 billion issued since inception.
VAT collection remains a priority, given that it consistently accounts for over 35% of Guatemala’s total tax revenue. In 2023, VAT revenue reached approximately Q29.7 billion, and preliminary reports show further increases in 2024, attributed to the FEL system and stricter audit programs. SAT has expanded risk-based audits and cross-checking of electronic data to identify under-reporting and fictitious credit claims. Penalties for non-compliance include fines and the suspension of taxpayer operations, particularly for repeated failure to issue electronic invoices or submit VAT returns on time (Superintendencia de Administración Tributaria).
- Exports remain zero-rated, while certain basic goods (e.g., unprocessed foods, some medicines) are exempt from VAT.
- Input tax credits are strictly monitored; SAT requires supporting digital documentation and routinely audits refund claims.
- Cross-border digital services are a growing focus: since late 2023, discussions have intensified regarding VAT collection on foreign-provided digital services, with regulatory proposals expected by 2025.
Looking ahead, Guatemala is anticipated to further leverage technology for indirect tax enforcement, possibly introducing real-time reporting obligations and enhanced data sharing mechanisms. Legislative changes may be considered to address VAT on the digital economy and close remaining loopholes, as SAT targets a sustained increase in compliance and revenue mobilization for the coming years (Superintendencia de Administración Tributaria).
Transfer Pricing and International Taxation: Meeting New Global Standards
Guatemala’s tax law has undergone significant evolution in the context of transfer pricing and international taxation, particularly as the country aligns with global standards championed by the Organisation for Economic Co-operation and Development (OECD). Transfer pricing regulations were first introduced with Decree No. 10-2012, which established the obligation for taxpayers engaged in cross-border transactions with related parties to comply with the arm’s length principle. In recent years, the Superintendencia de Administración Tributaria (SAT) has increased enforcement efforts, requiring more rigorous documentation and closer scrutiny of transfer pricing compliance.
As of 2025, companies operating in Guatemala and conducting cross-border transactions must prepare and submit transfer pricing documentation if their annual gross income exceeds GTQ 5 million and they transact with related parties in jurisdictions deemed tax havens or with preferential regimes. The required documentation must demonstrate that the prices and terms of intercompany transactions are consistent with those that would have been agreed upon by independent parties, following the OECD Guidelines. Failure to comply may result in adjustments, penalties, and interest as outlined by the SAT.
Recent years have seen the SAT intensify audits and information requests, reflecting the increasing global trend toward transparency and anti-avoidance. In 2023 alone, the SAT reported a 15% increase in transfer pricing audits compared to the prior year, focusing on sectors such as manufacturing, agriculture, and services. The authority has also adopted electronic platforms for documentation submission and risk assessment, paving the way for more robust data analytics in tax inspections (Superintendencia de Administración Tributaria).
On the international front, Guatemala is progressively adopting measures to counter base erosion and profit shifting (BEPS), aligning with the OECD’s recommendations. While Guatemala is not an OECD member, it has demonstrated commitment by joining regional forums and working toward implementation of the OECD’s minimum standards on transfer pricing and tax transparency (OECD). Discussions are ongoing regarding further legislative updates to harmonize local law with global best practices, especially concerning country-by-country reporting and mandatory disclosure rules.
Looking ahead, tax authorities in Guatemala are expected to enact tighter compliance requirements and adopt international reporting standards. Multinational enterprises and local companies engaged in cross-border operations should proactively review their transfer pricing policies, enhance documentation, and monitor legislative developments to ensure compliance and mitigate the risk of costly disputes.
Tax Administration and Digitalization: SUNAT Innovations and E-Filing
In recent years, Guatemala’s tax administration has undergone significant modernization, with particular emphasis on digitalization and the implementation of innovative technologies to improve tax compliance and efficiency. The Superintendencia de Administración Tributaria (SAT), Guatemala’s tax authority, has spearheaded these efforts, aligning with regional trends and responding to evolving economic and fiscal challenges.
A major milestone in tax administration is the expansion of e-filing systems. Since 2023, SAT has required the mandatory electronic filing of most tax returns, including Value Added Tax (IVA), Income Tax (ISR), and special regimes, through its Declaraguate portal. By 2025, the platform is expected to incorporate enhanced functionalities, including pre-filled forms, real-time validation, and integration with electronic invoicing systems. According to SAT data, over 85% of tax returns in 2024 were filed electronically, a sharp increase from just 60% in 2021, reflecting robust adoption and growing taxpayer familiarity with digital processes (Superintendencia de Administración Tributaria).
Electronic invoicing (Factura Electrónica en Línea, FEL), introduced in 2019, has become central to tax compliance and revenue collection. As of 2025, participation in the FEL regime is compulsory for most businesses, with phased implementation for microenterprises and certain sectors. The FEL system enables real-time reporting of sales and service transactions, reducing opportunities for tax evasion and streamlining VAT collection. As of early 2024, over 500,000 taxpayers were registered in the FEL system, and SAT projects this figure will exceed 650,000 by the end of 2025 (Superintendencia de Administración Tributaria).
SAT continues to invest in digital tools for risk analysis, taxpayer profiling, and automated audits. Machine learning and data analytics are increasingly leveraged to detect non-compliance and improve targeting of enforcement actions. In 2023, SAT reported a 17% increase in audit findings linked to digitalized risk models, and this trend is expected to continue as technology matures (Superintendencia de Administración Tributaria).
Looking ahead, Guatemala’s tax administration is poised to further integrate digital innovations, with a focus on user-friendly compliance, transparency, and broader tax base coverage. Key priorities for 2025 and beyond include expanding digital onboarding for new taxpayers, enhancing interoperability with other government systems, and offering more proactive taxpayer assistance online. These initiatives are expected to boost revenue, reduce administrative burdens, and promote a culture of voluntary compliance in Guatemala’s evolving tax landscape.
Compliance Risks: Penalties, Audits, and Red Flags
Guatemala’s tax compliance landscape in 2025 is defined by robust enforcement mechanisms, with the Superintendencia de Administración Tributaria (SAT) acting as the principal authority overseeing tax collection, audits, and penalties. The national Tax Code (Decreto Número 6-91) and sector-specific statutes guide taxpayer obligations, with recent reforms focusing on broadening the tax base, digitalization of processes, and increased scrutiny of high-risk sectors.
Failure to comply with tax obligations can result in significant financial and legal consequences. The Tax Code outlines administrative penalties for late or inaccurate filings, ranging from monetary fines to interest charges calculated at variable rates. For instance, as of 2025, late filing penalties for VAT, income tax, or withholding taxes can reach up to 100% of the omitted tax, with monthly interest imposed until full payment is made. Deliberate tax evasion—defined as intentional underreporting, concealment of assets, or use of falsified documents—can trigger criminal prosecution, with potential imprisonment and asset forfeiture under Articles 358 A and 358 B of the Penal Code Organismo Judicial.
Audits remain a central pillar of SAT’s compliance enforcement. In 2025, SAT continues employing risk-based audit selection, leveraging analytics to identify discrepancies between taxpayer declarations and third-party data, such as banking movements, supplier invoices, and customs records. The authority prioritizes audits in sectors with historically low compliance, including construction, agriculture, and services, as well as for taxpayers flagged for abrupt changes in revenue, persistent losses, or inconsistent VAT credits. In 2023, SAT conducted over 14,000 audits, recovering approximately Q2.8 billion (about USD 357 million) in unpaid taxes; current-year figures are expected to match or exceed this level as digital oversight expands Superintendencia de Administración Tributaria.
Red flags likely to attract SAT attention in 2025 include: repeated late filings, significant discrepancies between reported income and banking records, excessive or unjustified VAT refund claims, and unexplained fluctuations in declared profits. The use of electronic invoicing (Factura Electrónica en Línea, FEL) provides SAT with near real-time transaction data, intensifying scrutiny and shortening the audit timeline.
Looking ahead, compliance risks are expected to rise as SAT upgrades digital tools for cross-checking taxpayer information and implements stricter enforcement policies. Businesses and individuals should prioritize robust internal controls and proactive engagement with SAT to mitigate exposure to penalties, audits, and reputational damage.
Statistical Overview: Revenue, Compliance Rates, and Enforcement Actions (Citing sat.gob.gt)
Guatemala’s tax system is primarily administered by the Superintendencia de Administración Tributaria (SAT), which is responsible for tax collection, enforcement, and monitoring compliance. In recent years, the country has focused on improving tax revenue mobilization and narrowing the tax gap, a persistent issue due to evasion and informality. For fiscal year 2024, SAT reported tax revenues of approximately Q82.7 billion (about USD 10.6 billion), reflecting a year-on-year increase of 6.4% from 2023 collections. Early projections for 2025 anticipate a continued upward trend in tax revenue, aided by ongoing digitalization and modernization of tax administration processes.
- Compliance Rates: According to the most recent data published by the Superintendencia de Administración Tributaria (SAT), the overall tax compliance rate has gradually improved, reaching 64.5% in 2024. This marks a significant advance from the 59% registered in 2022, attributed to stronger enforcement mechanisms and targeted taxpayer education campaigns.
- Enforcement Actions: SAT intensified its audit and enforcement activities throughout 2023 and 2024, conducting over 14,000 tax audits and investigations in 2024 alone. These actions resulted in the recovery of more than Q2.3 billion (approx. USD 295 million) in previously unpaid tax liabilities. The authority also expanded its use of electronic invoicing (Factura Electrónica en Línea, FEL), which is now mandatory for most economic sectors and has been credited with reducing opportunities for evasion and improving real-time transaction monitoring.
- Key Statistics: Value-Added Tax (VAT) remains the largest source of tax revenue, accounting for about 43% of total collections, followed by income tax at approximately 32%. The informal sector continues to present compliance challenges, with estimates indicating that up to 70% of economically active individuals may not be fully integrated into the formal tax system (Superintendencia de Administración Tributaria (SAT)).
Looking ahead to 2025 and beyond, SAT aims to further increase compliance rates through enhanced taxpayer services, expanded digital platforms, and stricter enforcement of reporting requirements. The authority’s strategic plan emphasizes the integration of new technologies, risk-based audit selection, and cross-agency data sharing. These measures are expected to support higher revenue collection, reduce evasion, and contribute to fiscal sustainability in the coming years.
Future Outlook: 2025–2030 Tax Policy, Reforms, and Strategic Considerations
Looking ahead to the period 2025–2030, tax policy and administration in Guatemala will be shaped by ongoing efforts to modernize the fiscal framework, increase tax revenue, and improve compliance. The Guatemalan government has signaled its intention to strengthen domestic resource mobilization to address persistent budget deficits and fund social development priorities. This will likely involve both legislative reform and administrative modernization within the Superintendencia de Administración Tributaria (SAT), the national tax authority.
Guatemala’s tax-to-GDP ratio remains one of the lowest in Latin America, hovering at approximately 12.1% in recent years, well below the regional average of 22.9% as reported by the Comisión Económica para América Latina y el Caribe (CEPAL). This structural challenge has prompted calls for broadening the tax base, reducing evasion, and enhancing collection efficiency. Key focus areas through 2030 are expected to include: strengthening the value-added tax (VAT) regime, rationalizing exemptions, and expanding the use of digital tools for taxpayer services and audits.
In the near term, Guatemala is expected to continue the implementation of electronic invoicing (Factura Electrónica en Línea, FEL) as mandated by SAT, aiming for near-universal adoption by 2025. This digitalization initiative is designed to improve transparency, reduce tax evasion, and facilitate real-time monitoring of transactions. Expanded digital reporting obligations and integration of taxpayer data are likely to be central features of compliance policy, with SAT investing in technological infrastructure and capacity building (Superintendencia de Administración Tributaria).
- Policy reforms: Legislative proposals under consideration include measures to adjust income tax brackets, limit the use of preferential regimes, and strengthen transfer pricing rules to align with international standards as recommended by the OECD.
- Enforcement and compliance: SAT is expected to deploy advanced data analytics and risk-based audit selection to target high-risk sectors and improve voluntary compliance. Enhanced cross-border cooperation to counter illicit financial flows and tax base erosion is also anticipated.
- Strategic considerations: Businesses should prepare for increased scrutiny of cross-border transactions, evolving reporting requirements, and stricter documentation standards. Sector-specific incentives, particularly in the export and renewable energy sectors, may be gradually revised or phased out.
Overall, Guatemala’s tax law landscape for 2025–2030 will be characterized by incremental but meaningful reforms aimed at fiscal sustainability, digital transformation, and alignment with global best practices. Stakeholders should closely monitor SAT’s regulatory updates and legislative developments to remain compliant and strategically agile.
