I- Analysis of the different tax rulings in Guatemala in the period 2023.
In Guatemala, court decisions on tax matters have proven to be diverse and variable, reflecting a procedural dynamic that changes depending on the type of process and the nature of the conflict. This is evident when observing the results of the different types of tax proceedings resolved by the courts in 2023. All this based on the publications of the rulings made by the Tax Administration in both the first and second half of the year. The main trends in the different types of tax and administrative proceedings are detailed below:
- Closure of companies
- First semester: The courts issued 263 rulings in company closure processes, all of them favorable to the Superintendency of Tax Administration (SAT), with a success rate of 100%.
- Second semester: In the last six months of the year, 186 cases were resolved, maintaining a 100% success rate for SAT. This consistency suggests that the courts are invariable in their approach to these cases.
- Economic coercive
- First semester: Of the 16 cases resolved, SAT won 15 and lost 1, with a success rate of 93.75%.
- Second semester: SAT won all 15 cases resolved, raising the success rate to 100%. This increase in effectiveness demonstrates that SAT has been able to strengthen its arguments in this type of process.
It is worth considering that, in this process, SAT collects by judicial means the final tax debts, therefore, outside the statute of limitations (in case it has operated) or the payment (partial or total), the taxpayer’s defense window is small, since the opportunity to discuss the validity or inadmissibility of the debt has already been given and it has expired, therefore, in this procedure a mere judicial collection is verified and this is what makes the success rate for SAT so high in this type of process.
- Administrative litigation
- First semester: The courts resolved 7 cases, of which 5 were in favor of SAT, 1 was unfavorable and 1 was a partial decision, resulting in a success rate of 71.43%.
- Second semester: A significant increase was seen in the number of rulings, with 64 cases resolved, of which 62 were favorable to SAT, which represented a success rate of 96.88%. This reflects a positive trend in the resolution of contentious administrative disputes in favor of the State.
In relation to these processes, it is important to clarify that the sentences published by the Superintendence of Tax Administration refer to final sentences, which implies those that were not only issued by the Chamber of the Contentious Administrative Court, but also those that exhausted all ordinary appeals, such as the extraordinary appeal for cassation before the Supreme Court of Justice, Civil Chamber and later the sole instance appeal against such cassation before the Constitutional Court.
Within the administrative contentious process, the legality of the actions taken by the Tax Administration is discussed, that is to say, the taxpayer is the one who sues the Treasury for not being in agreement with what was resolved in the administrative phase. And, by means of a control of constitutional powers, the contentious court is empowered to establish whether such act of the SAT has infringed the constitution, constitutional laws, ordinary laws, regulations and principles of law.
The peculiarity of this process is that, being processed and known by specialized courts that even, by legal mandate (art. 165 of the Tax Code), the magistrates that integrate such Courts should preferably be specialists in tax matters, the claims are declared admissible in a good percentage, either totally or partially. However, the SAT before the Supreme Court of Justice, the Civil Chamber and the Constitutional Court, is where it usually has greater effectiveness in its appeals and is able to reverse such rulings through what I consider to be the plain and simple application of the ordinary law, leaving aside the solution of the controversy in attention to the legality of the administrative act that goes beyond the legality of the act, which, in our opinion, is what has caused the great majority of cases to result in favor of the Treasury. In simple words, once it leaves the sphere of the court of administrative litigation, it gives the impression that those who resolve it forget the importance of doing so based on the legality of the act and focus only on the legality of the act, which contravenes article 221 of the Constitution. This, in my opinion, denaturalizes the very purpose of the contentious-administrative matter.
- Amparo proceedings filed by SAT
- First semester: Out of 38 cases, SAT won only 8, while 30 were unfavorable, with a low success rate of 21.05%.
- Second semester: Although SAT improved in absolute terms, winning 34 out of 78 cases, the success rate remained modest (43.59%), reflecting that amparo actions brought by SAT continue to be an area of high complexity and lower success.
In this constitutional action, it is SAT who considers that its constitutional rights have been violated by some act of authority, usually related to a judicial resolution and, in view of this, once the ordinary remedies have been exhausted, requests that such infringement be verified. In these cases, the Constitutional Court is where it has proven to be, to a certain degree, more objective, evidencing that, if the taxpayer achieves success in the administrative contentious judgment and maintains it in cassation, the probabilities of the SAT’s amparo being dismissed are, at least in numbers, positive towards the taxpayer. The above shows that it is not impossible to obtain positive results in a tax dispute, of course, it has its great challenges, but it is definitely possible and, through a good strategy and tax defense, the desired result can be achieved.
- Amparos filed against the SAT
- First semester: Out of 32 cases, SAT obtained 16 rulings in its favor and 12 against, with 4 partial rulings, reaching a success rate of 50%.
- Second semester: Of the 26 cases, 22 were favorable to SAT, 3 unfavorable and 1 partial, which represented a significant increase in its success rate, reaching 84.62%. This demonstrates a clear improvement in SAT’s defense against amparos.
In this constitutional action, it is no longer the SAT who considers that its constitutional rights have been violated by some act of the authority; on the contrary, it is the authority against whom the constitutional complaint is filed, that is to say, it is the taxpayers who file the amparo under the estimation that the tax authorities have violated their fundamental rights and/or constitutional principles.
In this type of process, there is a great difference between the success rates obtained by the tax authorities in the first semester compared to the second semester, since there is a 34.6% increase in the success rate in the second semester. It is difficult to give a logical or reasonable explanation for such judicial behavior without having knowledge of the object of each and every one of such amparos in order to understand if there is really a valid justification for such an abrupt change or if it is simply due to the fact that the taxpayers’ complaints did not have a constitutional basis that would make the constitutional protection viable, which inevitably causes the rejection of the amparo, which can also happen.
- SAT as an interested third party in amparo proceedings
- First semester: Out of 74 cases, SAT was successful in 60, with 13 unfavorable rulings and 1 partial, achieving a success rate of 81.08%.
- Second semester: 138 cases were resolved, with 123 favorable rulings, 15 unfavorable and none partial, increasing the success rate to 89.13%. SAT’s participation as an interested third party has been consistently favorable, with an improvement in the effectiveness of its intervention in these cases.
In this type of constitutional amparo action, as its name indicates, the SAT is neither a plaintiff nor a respondent authority, but an interested third party, i.e., it was part of the underlying process as antecedent. Although it seems that it was the tax authority who was “successful” in this type of process, this is not necessarily the case. The usual thing is that the taxpayer denounces an act of authority, usually related to some judicial resolution and, in view of this, once the ordinary appeals have been exhausted, requests that such infraction be verified. Therefore, the Constitutional Court, once the constitutional thesis has been verified, may establish whether or not the denounced infringement against the taxpayer occurred or not and, if it does not consider it appropriate, it will reject such amparo. In this case, it is really the taxpayer who recently received the negative ruling and the SAT who benefits from such situation without it being a merit of the tax authorities.
We see then that this type of processes, as happens when they are filed by the SAT, the probabilities of success for the taxpayer are also low (even lower in percentage), which shows that the Constitutional Court in some way or another seeks to maintain and respect the independence of judgment of the ordinary courts of justice, which again reinforces the idea that it is not impossible to obtain positive results in a tax dispute, through a good tax strategy and defense, but if a positive result is not achieved in cassation, the chances of success of the case are considerably reduced to only 11. 87%, according to the statistics of the last semester of 2023, to vacate such judgment and seek to reverse such ruling.
II- Conclusions
The variability in judicial resolutions in Guatemala is notorious depending on the type of process. Despite the fact that since 2023 SAT has shown a high percentage of success in business closure and coercive economic processes, it has had greater difficulty in the amparos it promotes. However, in the amparos against it, the trend reversed in the second half of 2023, with a notable improvement in its ability to defend its actions. This suggests that the courts have been more favorable to SAT in some proceedings, while, in others, the complexity of the circumstances has reduced its effectiveness. The second half of 2023 shows a clear trend of improvement in favorable resolutions towards SAT, especially in administrative litigation and amparo proceedings.
However, it must be understood that the above reflects a statistic per year, which, although it has been more or less the constant in the last 2 or 3 years, it must be taken into account that on October 13, 2024 the new Magistrates of the Supreme Court of Justice as well as the Magistrates of the Chambers of the Contentious Administrative Court were elected for a term of 5 years, Therefore, time will determine whether this trend is maintained or, on the contrary, reversed, since in previous years, such as in 2011, the success rate of the SAT in the administrative litigation cases was so low that it did not even reach 20%.
It remains to be hoped that the new courts resolve in an objective manner, in accordance with the law, but, above all, that they comply with their constitutional mandate to resolve tax controversies based on the legality of administrative acts, ensuring that these do not violate the constitution, constitutional laws, ordinary laws, regulations or the general principles of law, so that with this a true confidence in our judicial system is achieved.