Transfer Pricing Reforms are getting closer in Guatemala

November 16, 2022

The Superintendencia de Administración Tributaria (SAT – Superintendence of the Tax Administration) announced new tax reform proposals for transfer pricing in Guatemala this year. Congress could approve these modifications next year. These proposals will be described below.

Initial Proposals

Deductibility of royalties paid to related parties, which shall not exceed 1% of the income subject to the transaction.
A more accurate definition of the Arm’s Length Principle and Transfer Pricing to be according to international standards.
Updating of SAT’s powers concerning Transfer Pricing.
Further definition of “related parties” in Guatemala.
Explaining the application scope of Transfer Pricing.
Explanation of the valuation method for import and export of goods when using international markets.
Improved deadlines for the stipulation of APAS or between competent authorities.
Filing of mandatory Transfer Pricing Study when having related party transactions.
Determination of the Arm’s Length range to know if there is a comparable transaction.
Validation of technical reference in Transfer Pricing

The application of a local related party rule would focus more on multinational groups in Guatemala to review whether the prices of their local related party transactions comply with the Arm’s Length Principle. Otherwise, it would result in upcoming tax contingencies.