Lately, the Superintendence of Tax Administration (SAT, from Spanish) has been focusing on transactions between local related companies.
Although Article 57 of the Tax Update Law (Decree 10-2012) clearly establishes that the scope of the Transfer Pricing rules is limited to transactions between companies domiciled in Guatemala and related parties located abroad, the SAT has begun paying particular attention to billing between local related parties that may seek to erode the national taxable base.
In the context of a potential reform project aimed at strengthening tax collection, particularly focusing on the Value Added Tax (VAT) and the Income Tax (ISR, from Spanish), the SAT may rely on Article 98 of the Tax Code to conduct reviews and question transactions between local related parties.
If a transaction between related parties is not adequately documented, the SAT could challenge the substance of the transaction and generate a specific presumed income based on the incorrect documentation of the transactions.
Additionally, the inclusion of new types of related party relationships could be anticipated:
- Ownership relationship.
- Management relationship.
- Membership in a corporate group.
- Membership in a family group.
- Transactions with the companies of another family member, without being part of the group.
- Relationship with an exclusive distributor, both locally and abroad.
- Relationship with a branch.
This broader approach of the regulations would allow for better control over transactions between related parties.