3 March 2016
Global Tax Alert
News from Americas Tax Center
Guatemalan
Congress modifies
tax incentive
regimes
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On 25 February 2016, the Guatemalan Congress approved Decree No. 19-2016
(the Decree) (formerly Bill No. 5007), modifying the tax benefits granted by
Decrees No. 29-89 (Drawback Law) and No. 65-89 (Law on Free Trade Zones).
The purpose of the law is to limit the access to benefits exclusively to taxpayers
operating in the textile industry and technology services through call centers.
The Decree first has to be approved by the Executive Branch before it gets
published in the Official Gazette and is enacted.
Under the modifications to Decree 29-89, the current regimes would continue,
but would be limited to a temporary suspension of customs duties on raw
materials, materials, containers, packaging and labels used for exporting. Also,
the Decree would add two new tax regimes:
•Producer under temporary admission: Related only to goods for the clothing
and textile industry
•Service provider: Includes call centers or contact centers that provide services
to nonresidents
The modifications to Decree 65-89 would eliminate industrial and commercial
users of Free Trade Zones. Notwithstanding, the entities could be qualified as
producers of industrial goods or producers of services.
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Global Tax Alert Americas Tax Center
Additionally, the Decree does not contain modifications
for qualified users of the Free Trade Zone for Industry and
Commerce of Santo Tomás de Castilla.
Companies benefited by Decree 29-89 or 65-89 would
continue to enjoy the tax benefits until they expire with the
following effects:
•Companies qualified as draw-back entities under the
temporary admission regime (not belonging to the apparel
and textile industry or call centers) that had been granted
an income tax exemption for 10 years or less would not
be allowed to retain the exemption for the term granted
beginning 1 January 2016.
•Companies that wish to qualify as producers under the
temporary admission or service provider regimes (only
apparel or textile industries and call centers) would be
granted the current benefits under Decree 29-89, including
the income tax exemption for a 10-year period. Local
acquisitions of supplies and services would not be subject
to value added tax.
•The tax benefits for Free Trade Zones qualified as
administrative entities would not change.
•Industrial users in a Free Trade Zone would continue to
enjoy the tax benefits granted under current law, except
they would not qualify for the income tax exemption and
customs duties and import taxes exemption on machinery,
equipment and tools. They could, however, apply to be
qualified as “producers of industrial goods” users for the
remaining period of the income tax exemption previously
granted.
•Service users in a Free Trade Zone that had been granted
a 10-year income tax exemption would be allowed to
complete the 10-year term.
•Commercial users in a Free Trade Zone would continue
to enjoy the tax benefits granted, except they would not
qualify for the income tax exemption and the customs duties
and import taxes exemption on machinery, equipment and
tools. They could, however, apply to be qualified as a service
user for the remaining period of the income tax exemption
previously granted.
•Companies that wish to qualify as producers of industrial
goods or services in a Free Trade Zone would be granted
the current benefits established in Decree 65-89.
For additional information with respect to this Alert, please contact the following:
Ernst & Young, S.A., Guatemala City
• Manuel Ramirez
• Delia Cantoral
+502 2386 2407
+502 2386 2431
Ernst & Young, S.A., San José, Costa Rica
• Rafael Sayagués
• Alexandre Barbellion
+506 2208 9880
+506 2208 9800
manuel.ramirez@cr.ey.com
delia.cantoral@gt.ey.com
rafael.sayagues@cr.ey.com
alexandre.barbellion@cr.ey.com
Ernst & Young LLP, Latin American Business Center, New York
• Ana Mingramm
• Enrique Perez Grovas
• Pablo Wejcman
+1 212 773 9190
+1 212 773 1594
+1 212 773 5129
Ernst & Young LLP, Latin American Business Center, London
• Jose Padilla
+44 20 7760 9253
ana.mingramm@ey.com
enrique.perezgrovas@ey.com
pablo.wejcman@ey.com
jpadilla@uk.ey.com
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