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GUATEMALA
We have a team of experienced professionals dedicated to supporting all your business requirements—ensuring smooth operations and full regulatory compliance. This strong foundation enables you to confidently establish and grow your business in Guatemala with efficiency and assurance.
WHY GUATEMALA?
Guatemala, officially the Republic of Guatemala, is a country in northern Central America. It is bordered to the north and west by Mexico, to the northeast (in the adjacency zone) by Belize, to the east by Honduras, and to the southeast by El Salvador. It is bounded by the Pacific Ocean to the south and the Gulf of Honduras to the northeast.With an estimated population of around 17.6 million, Guatemala is the most populous country in Central America, the fourth most populous country in North America and the 11th most populous country in the Americas. Its capital and largest city, Guatemala City, is the most populous city in Central America.It is a Central American country known for its rich Mayan heritage, stunning geography (volcanoes, rainforests, Pacific/Caribbean coasts), vibrant culture, and historical sites like Tikal and Antigua. Guatemala City, with Spanish as the official language, though Mayan languages are also recognized. Guatemala offers unique tourism, with attractions centred around nature, history, and its “Land of Eternal Spring” climate.
Guatemala is the largest economy in Central America. The Guatemalan News Agency issued a report in October 2025, referencing World Bank projections, which indicated that GDP is expected to grow by 3.9% in 2025 (one of the highest rates in the region alongside Panama) and by 3.7% in both 2026 and 2027. Remittances from Guatemalans living abroad, especially in the US, are equivalent to around 20% of the country’s GDP. In October 2025, the Guatemalan Bank reported a 19.8% increase in remittances between January and September of 2025.The country’s credit rating is considered stable by major global credit rating agencies. Guatemala’s laws relating to foreign investment create an open environment for overseas investors. The general rule is that foreign investors can wholly own investment vehicles and real estate in Guatemala free of any legal requirements concerning local partners, co-investors, or any restrictions on the number of foreign shareholders.
ADVANTAGES
- Strategic Location & Logistics: Acts as a regional hub, close to the U.S. (same time zone) with ports on both Atlantic & Pacific, facilitating faster supply chains to North America.
- Skilled & Young Workforce: A large, young population (over 58% under 30) provides graduates in technical & business fields, with competitive wages.
- Economic Stability: Stable macroeconomics, low public debt, significant foreign reserves, and a credible financial system provide security for investment.
- Open Economy & Investment Climate: Open to foreign investment with few barriers, few restrictions on capital repatriation, and a constitution supporting foreign entities.
- Trade Agreements: Benefits from CAFTA-DR with the U.S. and other FTAs, plus agreements for investment promotion and protection.
- Incentives: Free Trade Zones (ZOLIC) and Special Economic Development Zones offer significant tax and customs benefits for export-oriented businesses.
- Growing Sectors: Strong opportunities in agribusiness, light manufacturing (textiles, medical devices, automotive parts), tourism, and BPO/Tech.
- Renewable Energy: Over 53% of energy comes from renewables, appealing to sustainability-focused businesses.
Supportive Policies
- Pro-Business Environment: Government supports private sector growth, offering clear regulations and incentives.
- Investor-Friendly Immigration: Policies facilitate visas for foreign investors and entrepreneurs.
Opportunities & Growth
- Nearshoring Hub: Ideal for companies relocating or expanding to serve the North American market due to cost, proximity, and flexibility.
- Diversifying Economy: Moving beyond traditional exports into more complex manufacturing.
TAX REGIME
Corporate Taxation
Businesses must choose between two primary regimes:
- System on Profits: A 25% tax on net taxable income (gross income minus deductible expenses).
- Simplified Optional Regime: A flat tax on gross revenue, excluding VAT. The rates are 5% for monthly income up to GTQ 30,000 (~$3,900) and 7% on the excess.
- Solidarity Tax (ISO): Companies on the Profit System also pay a 1% tax on the greater of total assets or gross revenue, which can be credited against their income tax.
Individual Taxation
Resident individuals are taxed on Guatemalan-source employment income at progressive rates:
- 5% for annual taxable income up to GTQ 300,000.
- 7% plus a fixed fee of GTQ 15,000 for income exceeding GTQ 300,000.
Individuals are considered residents if they remain in the country for more than 183 days in a calendar year.
Value-Added Tax (VAT) and Other Taxes
- Standard VAT Rate: 12% applies to most sales, services, and imports.
- Small Taxpayer Regime: As of 2025/2026, the annual income cap for small taxpayers has increased to approximately GTQ 465,381. They pay a flat 5% tax on gross monthly income instead of standard VAT and income tax.
- Capital Gains: Taxed at a flat rate of 10%.
- Withholding Taxes (WHT): Dividends are subject to a 5% WHT, while interest is generally taxed at 10%, and royalties at 15%.
GUATEMALA COMPANIES
Sociedad Anónima (SA) – Corporation:
Most common for foreign investors, capital divided into shares, limited shareholder liability, flexible.
Sociedad de Responsabilidad Limitada (SRL) – Limited Liability Company:
Capital in contributions (not shares), partners’ liability limited to their contribution.
Sucursal – Branch:
For foreign entities, an extension of the parent company.
Sociedad Colectiva – General Partnership:
Partners share profits and losses, often with unlimited liability.
Sociedad enComandita – Simple/Limited Partnership:
Has general partners (unlimited liability) and limited partners (limited liability).
Sociedad enComanditaporAcciones – Partnership Limited by Shares:
Combines elements of limited partnerships and corporations.
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Contact Us
Get in touch with the right people to get the right help in setting up your business in Guatemala .
enquiries@chandrawatpartners.com.