Decree 22-2026: Temporary IDP and VAT exemption on fuels in Guatemala

The VAT exemption covers both imports (no VAT is paid at customs) and sales and transfers throughout the distribution chain. Other petroleum products (LPG, kerosene, aviation fuels, bunker fuel and lubricants) are not included and remain subject to their ordinary tax treatment.

III- When does it start and when does it end?

The exemptions apply from October 1 to December 31, 2026, inclusive. Article 13 provides that the decree enters into force on the day after its publication, which took place on September 30; articles 2 and 3, in turn, set the end of the period.

Starting January 1, 2027, fuels will once again be subject to IDP and VAT at their ordinary rates, and withholding on card payments will resume, with no need for any additional provision. It is not prudent to plan on a possible extension: unless Congress issues a new decree, the ordinary regime returns automatically.

For purposes of the exemption, what matters is the date of the taxable event (art. 10): taxes triggered before October 1 cannot be refunded, credited or reimbursed under this law.

IV- The absence of regulations does not suspend the exemption

This is the most important point: the exemption applies from October 1, whether or not implementing regulations have been issued. No supplier, distributor or service station may invoke the absence of regulations or pending adjustments to its systems to keep charging IDP or VAT.

The decree itself closes that door through three provisions:

• • Article 12. The Executive Branch, through the Ministry of Energy and Mines (MEM), must issue the regulations within five business days after the decree enters into force. The provision adds that the expiration of that deadline without regulations does not suspend the effectiveness or application of the exemptions, the mandatory pass-through or the penalty regime, because the law contains sufficiently defined terms and parameters.
  • Article 11. The Superintendency of Tax Administration (SAT) has five business days to issue administrative provisions and adapt the FEL system and customs records. The expiration of that deadline does not suspend the exemptions or the obligations under the law either.
  • Article 13. The decree sets its effective date directly: the day after its publication.

The argument also has a constitutional basis. Under the principle of legality set forth in article 239 of the Political Constitution of the Republic, exemptions are a matter reserved to law. In this case, Congress defined the products, the taxes and the period in the decree itself; the regulations may only govern the how, not condition or postpone the what. Regulations that added substantive requirements to qualify for the exemption would exceed the law they implement.

In practice, if you receive an invoice charging IDP or VAT on these fuels on or after October 1, you should object to it. Likewise, if you are the seller, the absence of regulations does not exempt you from passing on the benefit or from the penalties for failing to do so.

V- VAT: less output tax, but also less input credit

A VAT exemption is not neutral for those who participate in the distribution chain. Article 3 provides that exempt sales do not generate output VAT and do not give the buyer the right to an input VAT credit. This has three practical effects:

• • Companies that buy fuel (transportation, logistics, agribusiness, manufacturing). If you are a VAT taxpayer, you previously recovered that VAT as a credit. Now you do not pay it, but you cannot credit it either. Your real savings come mainly from the IDP. Keep in mind that, with less credit, your VAT payable for the quarter may increase.
  • Importers, distributors and service stations. VAT borne on non-exempt inputs, capital goods and operating services is governed by the general rules of the VAT Law, which restrict credits linked to exempt transactions. Businesses with mixed operations (convenience store, lubricant sales, car wash) should allocate their input VAT credit carefully.
  • Inventory acquired before October 1. The VAT paid on its purchase has already been triggered, and article 10 prevents its refund or reimbursement under this law, even if the subsequent sale is exempt. This point warrants a case-by-case analysis.

In contrast, for end consumers, exempt taxpayers and small taxpayers, the VAT exemption does represent direct savings.

VI- Card payments: withholding is suspended

While the decree is in effect, article 4 of Decree 20-2006 is suspended, solely for purchases of premium gasoline, regular gasoline, diesel and gas oil paid with a credit or debit card. The measure is logical: if the sale does not trigger VAT, there is no tax to withhold.

Service stations should confirm with their acquiring bank that withholding no longer applies to these sales as of October 1 and reconcile any withholding made after that date. The suspension does not extend to other products sold at the same station. Starting January 1, 2027, withholding will apply again.

VII- The benefit belongs to the consumer: pass-through, invoicing and penalties

The exemption is not an additional margin for the distribution chain. Article 6 requires the full exempt amount to be passed on through an equivalent reduction in the sale price at service stations. To verify compliance, the decree establishes specific controls:

• • At every link in the chain, the electronic invoice must record the IDP and VAT exemption and itemize the value of the benefit per gallon dispensed.
  • Daily price reporting. Retailers must report their sale prices every day to the MEM, which will publish them on its website.
  • Oversight and penalties. The MEM, in coordination with the Consumer Assistance and Attention Directorate (DIACO) and the SAT, oversees the pass-through. DIACO penalizes, under the Consumer and User Protection Law, anyone who fails to apply the price reduction, fails to report prices or breaches article 6, without prejudice to any applicable civil and criminal liability.

The pass-through obligation is already in force, even though the regulations have not yet been issued (art. 12). We therefore recommend documenting, from day one, how each price adjustment was calculated.

VIII- Year-end inventories and export ban

Exempt inventory as of December 31. Fuel acquired under the exemption that remains in inventory at the end of the period must be sold to end consumers, until stocks are depleted, without adding the reinstated tax. Charging IDP or VAT on that inventory from January onward is penalized as a failure to pass on the benefit (art. 10). It is advisable to identify and separately account for those stocks at year-end.

Export ban. Exporting, re-exporting or removing from the customs territory, under any regime, fuel that benefited from the exemption is prohibited (art. 8). Anyone who does so must immediately repay the exempted taxes and is subject to the Law Against Customs Fraud and Smuggling, without prejudice to criminal liability. The Inter-Institutional Commission Against Smuggling (COINCON) will step up inspection and traceability operations (art. 9), especially at the borders.

IX- What should your company review?

If you import, distribute or sell fuel:

• • Stop charging IDP and VAT on invoices as of October 1, with or without regulations.
  • Adjust FEL to record the exemption and the benefit per gallon.
  • Report prices daily to the MEM and document the pass-through calculation.
  • Confirm with your bank that card withholding has been suspended.
  • Review the allocation of input VAT credit and the treatment of inventory acquired before October 1.
  • Plan for year-end: exempt inventory as of December 31 and reinstatement of taxes in 2027.

If you buy fuel for your operations:

• • Verify that your invoices reflect the exemption and object to those that do not.
  • Adjust your VAT projection for the quarter to reflect the reduced input credit.
  • Review contracts with fuel price adjustment clauses.

X- A temporary measure already in force

Decree 22-2026 is an exceptional measure with a short, defined term. Its text is sufficient for it to apply from October 1: the regulations may establish procedures, but they cannot condition a right that Congress has already granted. The benefit must reach the consumer, and non-compliance has administrative, civil and criminal consequences. If you would like to assess how Decree 22-2026 affects your company, contact us: our team is at your disposal.