Guatemala: tax tension

Disputes over taxes usually have to do with a government, which wants to increase them, while taxpayers object.

In Guatemala, however, a new situation involves municipalities, which are inventing new payment obligations, which the Constitutional Court has in many cases declared unconstitutional.

At the moment, it is unclear, which side will prevail.

Meanwhile, entrepreneurs, investors, and other contributors, should obtain legal advice as to their potential obligations, before doing business in various municipalities.

Guatemala City, for example, applies charges for building permits, regarding which the Constitutional Court has ruled that, while the City may require a permit, in its exercise of territorial control, it can not charge for administrative work.

Other major Guatemalan municipalities, including Santa Catarina Pinula, Resume, Escuintla and Puerto Barrios, as well as several medium and small municipalities have in recent years been charging what they describe as service fees.

Among the services allegedly provided are business and construction permits, inspection fees, and licenses for delivery and vehicles.

In this regard, the Constitutional Court, has in many cases declared such levies to be unconstitutional.

But the law provides no penalties for a municipality, which exceeds its authority in this area.

As a result, municipalities whose rates have been declared unconstitutional in some cases simply invent new financial obligations.

For more information, please contact Elias Arriaza en [email protected] o (502) 2324-3939 / 2279-3939.