In Guatemala, more than 200,000 taxpayers could face the suspension of their registration in the Value Added Tax (VAT) regime for omitting returns or making incorrect payments. This tax scenario also has significant repercussions for multinational companies that handle Transfer Pricing due to the risks and penalties arising from tax non-compliance.
Omitted Returns and Incorrect Payments: Consequences
The Guatemalan tax authority, SAT (Superintendencia de Administración Tributaria – Superintendency of Tax Administration), has intensified its control over taxpayers failing with their tax obligations. Those who fail to file returns or pay VAT incorrectly or partially face suspension of their registration, which removes them from the tax system and limits their ability to operate commercially. Companies with international operations must be careful with these provisions to avoid penalties affecting their local and global operations.
Transfer Pricing Implications
Multinationals with operations in Guatemala must ensure that their Transfer Pricing policies comply with local tax regulations, especially regarding correct registration and declaration of their operations. VAT registration suspension can lead to additional complications for companies handling related party transactions. In addition, tax authorities may see these omissions as signs of broader non-compliance with Transfer Pricing policies, which could lead to more exhaustive audits.
Strategies to Mitigate Tax Risks
Companies must implement appropriate tax strategies to avoid non-compliance affecting VAT obligations and Transfer Pricing policies. These include regular audits, proper documentation of Transfer Pricing, and rigorous compliance with local tax regulations. Companies must be prepared to account for their transactions and ensure that related party transactions comply with the Arm’s Length Principle.
Recommendations for Taxpayers
If your company is among the taxpayers affected or at risk of suspension due to VAT omissions, you must immediately correct any irregularities. In addition, reviewing the tax structure and Transfer Pricing policies will prevent additional penalties and maintain tax compliance.
Call to Action
Does your company need assistance to comply with tax regulations and avoid penalties related to VAT or Transfer Pricing?
Contact us at TPC Group. Our experts are at your disposal to support you with your tax obligations in Guatemala.
Source: Prensa Libre
