Small taxpayers’ tax obligations in Guatemala

By: Alejandra Fuentes

On February 2, 2023, the Superintendence of Tax Administration published a statement indicating that it detected “typology of tax non-compliance of exporters registered as Small Taxpayers”[1] The publication states that, derived from the cross-checking of information in auditing processes, a group of exporters registered as small taxpayers was identified that are not complying with tax obligations and payment of taxes related to export activities.

It was identified that, during the years 2020 and 2022, “taxpayers have made exports mainly of agricultural products; however, in a first scenario detected: the simplified affidavit and monthly payment is submitted with zero value and in a second scenario identified: only local sales or services are reported.”

The small taxpayer regime is regulated in the Value Added Tax Law from Article 45, which regulates a single tax that can be paid by taxpayers who sell goods or provide services, and whose annual turnover amount is less than Q150,000.00. The rate applicable to the tax is 5% of the total gross income from sales or rendering of services. In other words, under this regime the taxpayer is not entitled to any deduction of the costs and expenses incurred for the rendering of services and sale of goods.

The payment of the tax must be made on a monthly basis, generally through withholdings. However, the taxpayer is obliged to file the tax return and liquidation of the tax and, in case the withholding is not made, the taxpayer must make the direct payment of the tax. It should be emphasized that the declaration is mandatory, regardless of whether or not the taxpayer performs the activities concerned.

The main attraction of this regime is its simplicity, since in addition to the obligation to file the monthly return, the taxpayer must only keep the book of purchases and sales authorized by the Tax Administration. Also, regarding invoicing, the small taxpayer invoice must be issued in the case of amounts greater than Q50.00 and consolidate the amount of these if they are less at the end of the day. However, the main disadvantage is that the invoices issued by the small taxpayer do not generate the right to tax credit for compensation or refund of the Value Added Tax for the buyer of the goods and services.

What was communicated by the Tax Administration is related to the requirements to remain in the small taxpayer regime, since the taxpayer can only remain in this regime if its income does not exceed Q150,000.00 during the previous calendar year. Therefore, if it is evidenced, with the crosschecks of information that the amounts of sales and services exceed the value of Q150,000.00, the taxpayer is in default of the other tax obligations since in this case it would be a normal taxpayer and must declare the Income Tax and the Value Added Tax.

Therefore, taxpayers must be aware of the amount invoiced and paid monthly in order to be in compliance.