WHY INVEST IN GUATEMALA?
Several factors favor Guatemala as a destination for investors. The country contributes to 40% of the economic performance of the region and, with 17 million inhabitants, stands out as the most important market in Central America. Business activity is a very important part of Guatemalan society and economy, where 50% of companies are founded by people under 35 years of age. Likewise, the country has a very young population, as half of Guatemalans are under 25 years of age. Guatemala’s strategic geography also offers logistical access through the Pacific and Atlantic oceans, as well as free trade with the economies of the United States and Mexico. Guatemala is distinguished by its macroeconomic stability and a very low public debt. The country has high international monetary reserves and a solid financial system. Furthermore, the country’s GDP has grown steadily around 3% over the last few years.
According to data from BANGUAT, direct foreign investment in Guatemala in 2019 amounted to a total of 1,032 million dollars. Swiss investment flows were $ 19.5 million, ranking the country 11th among the largest investors.
In Guatemala the following investment options can be distinguished:
- Creation of a local company: In this case, the local company operates independently from the parent company. The same legislation applies to Guatemalan companies. However, local business owners are not required to be Guatemalan. Forming a local business involves the following steps and takes about two months:
- Adaptation of a prescribed form of trade
- Training by notarial certification with at least two shareholders
- Payment of the share capital (minimum 250 GTQ)
- Registration in the commercial register
- Creation of a subsidiary company: In this case, the parent company needs a permit to operate in Guatemala through a subsidiary. This way is usually less complicated and less expensive than starting a local business. For their training, the following steps must be followed:
- Proof that the company is legally registered in the country of origin
- Copy of the registration documents and the statutes
- Confirmation that the foundation has been approved by the board of directors
- Appointment of a local director with the legal authority to manage business in Guatemala.
- Payment of working capital and creation of a guarantee fund for third party claims in the amount of USD 50,000.
- Obligation to act in accordance with local law and the courts of Guatemala
- Confirmation that the company will comply with all legal obligations before leaving the country.
- Certified copy of the last balance sheet and the profit and loss account
Foreign Investment Law 9-98
It reduces obstacles to investment and prohibits the discrimination of foreign investors against nationals, except for the constitutional protection of national security.
Free Currency Trading Law 94-2000
The law regulates the free possession, transfer, purchase and sale of foreign currency.
Private property rights are protected by the Constitution, which stipulates that people can freely dispose of their property.
Guatemala currently does not have double taxation agreements with any country. All companies domiciled in Guatemala are required to register with the Tax Administration Superintendency (SAT) and to request a Tax Identification Number (NIT) in order to issue invoices.
In Guatemala there are special regimes to promote foreign investment. Free Zones allow companies that manufacture products for export and companies that offer services in international trade to benefit from favorable tax conditions. In addition, export goods from the maquila sector are especially promoted, in which concessions are offered, regardless of whether the companies operate in a Free Zone.