TRANSFER PRICING REGULATIONS IN GUATEMALA

APPENDIX TO THE ANNUAL INCOME TAX RETURN, REGARDING RELATED PARTIES

To determine whether a transaction is subject to transfer pricing rules, the provisions of Article 57 of the Tax Update Law (LAT), Decree 10-2012, as amended, must be observed. This article specifies that this scope includes commercial transactions involving tangible assets, intangible assets, financial transactions, and services, among others, that have been carried out with foreign related parties and that have an impact on taxable income.

Article 65 of the Tax Update Law establishes that taxpayers must have, at the time of filing the Annual Income Tax Return (ISR), sufficient information and analysis to demonstrate and justify the correct determination of prices, the amounts of consideration, or the profit margins recorded in their transactions with related parties. This information is submitted via the Income Tax Transfer Pricing Schedule, which must be completed in the SAT’s virtual agency system by March 31 of the year following the tax period being reported.

Furthermore, failure to comply with the reporting and documentation obligations regarding transactions with related parties will be penalized in accordance with the provisions of the Tax Code, which establishes a penalty for failure to file the transfer pricing report upon request by the Tax Administration, of Q.5,000.00 for the first offense; Q.10,000.00 for the second offense; and in the event of more than two violations, the aforementioned fine of Q.10,000.00 plus the equivalent of 1% of the gross income earned by the taxpayer during the last fiscal year in which income was reported.