In accordance with the provisions of Article 97 of Decree 10-2012, the taxable event for the Income Tax ("ISR") is the obtaining of any taxable income by non-resident taxpayers who act with or without a permanent establishment in the national territory. Additionally, any transfer or credit to their parent companies abroad, without consideration, made by permanent establishments of non-resident entities in Guatemala constitutes a taxable event.

Which taxpayers are responsible and withholding agents according to Articles 98 and 99 of Decree 10-2012?

Responsible parties and withholding agents are individuals, legal entities, those responsible or representatives of entities or estates, who pay or credit in bank accounts or in any other way make available to non-residents income from Guatemalan sources.

In light of the above, according to the provisions of Article 104 of Decree 10-2012, the applicable tax base for income obtained by non-residents is as follows:

The tax rate of five percent (5%) applies to:

International freight and passenger transportation activities.
Insurance premiums, bond premiums, reinsurance, retrocessions, and re-guarantees obtained by non-residents.
Telephony, data transmission, and international communications of any kind and by any means, originating from communication services of any kind between Guatemala and other countries.
Dividends, profit distribution, gains, and other benefits, as well as transfers or payments in account to their parent companies abroad.

The tax rate of three percent (3%) applies to:

The supply of international news to user companies in the country, whatever the form of remuneration.
The use in Guatemala of motion pictures, comic strips, photo novels, musical and audio recordings, and any other similar projection, transmission, or diffusion of images or sounds.

The tax rate of ten percent (10%) applies to:

Interest generated by income from profitable activities, labor income, and capital income paid or credited to non-residents.

The tax rate of fifteen percent (15%) applies to:

Salaries and wages, per diems, commissions, bonuses, and other remunerations that do not involve expense reimbursement.
Payments or bank credits to athletes and theater, television, and other public or performance artists.
Royalties.
Fees.
Scientific, economic, technical, or financial advice.

The tax rate of twenty-five percent (25%) applies to:

Other taxable income not specified in the activities listed above.

Responsible parties and withholding agents must withhold the ISR tax from non-residents definitively, applying the established percentage to the taxable base and reporting the tax through a sworn statement to the Tax Administration within the first 10 business days of the month immediately following the one in which the payment or bank credit was made, and must issue a certificate of the withholding made.

Comments:

It should be noted that transactions with non-resident related parties are also subject to transfer pricing studies.

Guatemala's taxation system is eminently territorial and does not have bilateral or multilateral agreements to avoid double or multiple international taxation.

Guatemala does not regulate the gross-up procedure for the absorption of withheld Income Tax for non-residents.

The Income Tax Withholding Regime for Non-Residents in Guatemala