Doing Business in Guatemala
Foreign Investment Legal Framework
Guatemala´s legal framework actively promotes foreign investment and incorporates provisions that recognize and guarantee private property. Additonally, Guatemalan law grants favored nation status to foreign investment thorugh the Foreign Investment Law (Decree 9-98) and its Regulations (Decree 893-98). All sectors of Guatemala´s economy are open to both local and foreign investment and ownership and, other than applicable taxes, no restrictions apply on remittance of profits and repatriation of capital.

Foreign Direct Investment in Guatemala
Forming a local corporation or establishing a branch of a foreign corporation accomplishes foreign direct investment in Guatemala. No requirements for registration of foreign investment are currently in place.

Taxation – Income Tax
According to Guatemalan law, taxable income is all income generated by capital, property, services, and rights invested or used in the country as well as income derived from any type of activities taking place in Guatemala. All individuals, corporations and businesses, domiciled or not in Guatemala, are subject to income tax. Income tax filing must be presented 90 days after the end of the accounting year. Companies may choose fiscal year closures of December 31 or June 30. Individuals must file by June 30 of each year for the preceding calendar year.

Foreign Loans
Loans from foreign financial institutions are allowed and interest produced is deductible without tax withholding if the foreign currency was sold in the domestic banking system.

Capital Gains
Capital gains are subject to a 10 percent of income tax. Capital losses can only be deducted from capital gains produced within the next five calendar years.

Carry Forward Losses
Losses incurred form operations can be deducted from profits obtained within the next two calendar years.

Foreign Exchange Regulations
All foreign currency transactions must be completed through approved financial institutions. A form must be filled out for all transactions involving foreign investments, remittance of dividends and repatriation of capital. Other than compliance with applicable taxes, no further control and restrictions apply for the remittance of profits and repatriation of capital. The foreign currency exchange rate floats freely and is determined by the market. A new law that authorizes transactions is foreign currencies and precious metals went into effect in May 2001. *

*Agexpront, apparel and textile exporters committe