Guatemala: Tax Consequences for Omitted Taxpayers and the Impact on Transfer Pricing

October 29, 2024

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.

Omission of declarations and incorrect payments: What does it imply?

Guatemala’s Superintendencia de Administración Tributaria (SAT) has intensified its control over taxpayers who do not comply with their tax obligations. Those who fail to file returns or make incorrect or partial VAT payments face suspension of their registration, which not only leaves them out of the tax system, but also limits their ability to operate commercially. Companies with international operations must be especially vigilant of these provisions to avoid penalties affecting both 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 in terms of the correct registration and declaration of their operations. Suspension of VAT registration can create 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

To avoid falling into non-compliance that could affect both VAT obligations and Transfer Pricing policies, it is crucial that companies implement appropriate tax strategies. 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, it is vital to immediately correct any irregularities. In addition, reviewing the tax structure and Transfer Pricing policies will help prevent additional penalties and maintain tax compliance.

Call to Action

Does your company need assistance in complying with tax regulations and avoiding penalties related to VAT or Transfer Pricing? Contact us at TPC Group. Our experts are ready to provide you with the support you need to keep up with your tax obligations in Guatemala.

 

Source: 
https://www.prensalibre.com/economia/por-omisos-de-declaraciones-pagos-incorrectos-o-parciales-seran-suspendidos-del-iva-mas-de-200-mil-contribuyentes/