Recent VAT changes in 2020
Changes related to recovery of input tax credits
Under Guatemala’s VAT, taxable persons can generally offset their input tax against their output tax (the VAT the taxpayer charges or collects on the sale of goods or services). If their input tax exceeds their output tax, the taxpayer has a VAT tax credit. The input tax credit is generally claimed (recovered) in the month the invoice is received or it can be carried forward to offset output tax in a subsequent VAT period.
Recently, the SAT (Superintendencia de Administración Tributaria) adopted different criteria related to how it interprets the recovery period for VAT input tax credits. The changes are reflected in modifications to form SAT-2237 Declaration of Value Added Tax, which is the electronic monthly VAT return that taxpayers must file. As a result, the electronic filing system currently does not allow:
- Increases in the amount of the tax credit related to corrections for previous periods. When a taxpayer tries to increase the amount of tax credit, the following message appears: “The values entered do not correspond to what was reported in the previous form. You cannot increase tax credit for this period according to what is indicated in Article 20 of the VAT Law.”
- Consigning an amount other than the remaining tax credit of the previous period for local operations or exports in the correction of the forms of previous monthly periods. When a taxpayer tries to do so, the following message appears: "The value entered does not correspond to the previous period, please check."
- Reporting of credits greater than the taxpayer’s debits for three consecutive months. The electronic form’s section 8.1 requires the taxpayer to provide a justification, this is automatically enabled. As a result, the taxpayer must include the reasons why more goods and services are being acquired in relation to the generation of income subject to VAT.
These changes related to form SAT-2237 have forced companies to strengthen their controls related to the date of receipt of invoices and to report them on VAT forms in a timely manner so that they do not lose the credits.
Exportation of services
With respect to exportation of services, the SAT has signed Institutional Criteria 10-2018, which sets forth the following types of exports of services that are not exempt from VAT in Guatemala:
- Provision of passenger cargo transportation services by taxpayers domiciled in Guatemala where those services start in another country and go through Guatemala en route to a destination in another country.
- Provision of professional consulting services from Guatemala to users domiciled abroad.
- Provision of billing services to clients in Guatemala on behalf of users who are domiciled abroad.
- Provision of advertising by cable companies domiciled in Guatemala to foreign businesses wishing to advertise in Guatemala.
- Provision of an intermediation service (including advice) to foreign businesses that wish to directly make investments or transactions in securities or merchandise on the Guatemalan stock market on behalf of persons domiciled abroad.
Online sales inspection
Recently, the SAT announced that online and network sales increased as a result of the COVID-19 pandemic. As a result, the tax authority has established plans to follow-up on sales of goods and services that are advertised through the internet to ensure that taxpayers are invoicing and reporting taxes on such sales. Taxpayers who do not fulfil their requirements will be subject to legal action.
One tool the SAT will use to implement these controls is Decree 20-2006, "Legal Provisions for Strengthening the Tax Administration", which requires credit card companies to withhold 15% of the VAT and to report to the tax authorities information on purchases made by credit or debit card.