Taxation
How companies are taxed in Guatemala
In short
Guatemala taxes on a territorial basis: only Guatemalan-source income is taxed. Companies choose between two corporate income tax regimes — 25% on net profit, or 5% and 7% on gross income. VAT is 12%. Dividends paid to shareholders, local or foreign, carry a 5% withholding.
The territorial principle
This is the first thing most foreign investors want confirmed, and it is favourable: Guatemala taxes income from Guatemalan sources. Income earned abroad by a Guatemalan company is generally outside the scope of Guatemalan income tax.
The counterpart is that Guatemala does not generally grant relief for foreign taxes paid, and its double taxation treaty network is very limited. If your home country taxes worldwide income, the interaction between both systems should be modelled before you structure the investment, not after.
Two corporate income tax regimes
Under the Income Tax Law (Decree 10-2012), a company elects one of two regimes. The choice is not cosmetic: it can change the effective tax burden substantially.
Corporate income tax (ISR) regimes under Decree 10-2012. Rates current as of 2026; verify before relying on them.
|
Profits regime |
Simplified optional regime |
| Tax base |
Net taxable income (revenue less deductible costs) |
Gross income, without deductions |
| Rate |
25% |
5% on the first Q30,000 per month; 7% on the excess |
| Payment |
Quarterly advances, annual return |
Monthly withholding or direct payment; quarterly filing |
| Losses |
No tax payable if the company reports a loss |
Tax is due on revenue regardless of profitability |
| Solidarity tax |
Applies |
Exempt |
The practical rule of thumb used locally: the break-even point sits at a profit margin of roughly 25% of revenue. Above that, the simplified regime tends to be cheaper; below it, particularly for high-volume, thin-margin businesses such as distribution, the profits regime usually wins.
The regime can be changed, but not at will: notice must be given to the tax authority in November, taking effect from 1 January of the following year.
The other taxes you will meet
Principal taxes affecting companies operating in Guatemala.
| Tax | Rate | Notes |
|---|
| Value added tax (IVA) |
12% |
On sales of goods and services; input VAT is creditable against output VAT |
| Solidarity tax (ISO) |
1% |
Quarterly, on the greater of one quarter of net assets or of gross income; creditable against income tax |
| Dividends |
5% |
Withholding on distributions, regardless of the beneficiary's country |
| Interest |
10% |
Exemptions apply to certain payments between regulated financial institutions |
| Royalties, fees, technical advice |
15% |
Withholding on payments to non-residents without permanent establishment |
| Other non-resident income |
25% |
Residual rate for items not specifically listed |
| Capital gains |
10% |
Losses may only be offset against capital gains |
| Stamp tax |
3% |
On certain documents; does not overlap with transactions subject to VAT |
| Import duties (DAI) |
0–20% |
Under the Central American Tariff System |
The solidarity tax, explained
The ISO surprises investors who read only the headline income tax rate. It applies to companies under the profits regime whose gross margin exceeds 4% of gross income, at 1% of the greater of a quarter of net assets or a quarter of gross income.
It is creditable against income tax, so a profitable company generally absorbs no net cost. A company that reports losses year after year, however, does pay it. That is the design of the tax, and it is worth factoring into projections for a start-up phase.
Companies under the simplified regime are exempt from ISO. Newly incorporated companies are exempt during their first four quarters.
Rates change and exemptions have conditions. The figures above reflect the position in 2026 and are given as orientation, not as tax advice. Before committing capital, the structure should be reviewed with tax counsel who can model your specific case, including the interaction with taxation in your home country.
Special regimes
Guatemala maintains free zone and export-oriented regimes offering fiscal treatment different from the general rules, subject to qualifying conditions on activity, location and operation. Whether your project qualifies is a technical question worth resolving early, since it can change the economics of the investment materially.
