Q&A on the release of bank secrecy in Guatemala
Article 3 minute read

Q&A on the release of bank secrecy in Guatemala

30 August 2017

Our experts in Guatemala answer questions about Decree 37-2016, commonly known as the Banking Secrecy Release Act, which has been issued to impose a tax order on companies and taxpayers in the country.

Last February, Decree 37-2016 or "Law for the Strengthening of Fiscal Transparency and Governance of the Superintendence of Tax Administration (SAT)" entered into force in Guatemala.

In this Decree, it is stipulated that the SAT may request information on banking operations, investments, available assets and other operations from the entities subject to surveillance by the Superintendence of Banks, micro-finance entities and micro-finance non-profit entities - even of individuals or legal entities - if there is reasonable doubt about their operations and that merits an investigation process. Some examples of situations that can be considered "reasonable doubt" are as follows:

  • avoid registration in accounting books, bank accounts and investments held in various banks in Guatemala or abroad
  • that the company only report losses and not profits every month
  • that the company frequently reports more expenses than sales.

This law, which has been commonly referred to in Guatemala as the "Banking Secrecy Freedom Act", has aroused concern among some taxpayers and entities. However, this requirement will be processed only by banks, if the SAT has a court order.

Some important points to remember are:

  • it is advisable to hold back up documents of all income transactions that the entities and taxpayers have in the bank
  • offshore entities are obliged to provide information to the SAT about depositors and investors, and all their movements must be detailed
  • anyone who does not register one or several bank accounts under the name of a person or financial groups in the country or abroad will be classified as 'resistant'.

We answer some questions that have arisen about the implementation of this law:

  1. What is the procedure to register a bank account?
    The bank accounts must be reflected in the inventory book, identified with the account number and the banking institution to which it belongs.
  2. How should an investment in the accounting be reflected?
    The information on investments must include the exact amount of the investment, type of investment, the specification, the institution to which it belongs and whether it is a national or foreign investment. In case the investment is foreign, you must specify the country where it is located.
  3. How should bank accounts be backed up?
    All bank transactions must be backed up with a document, whether with deposit slips, transfer vouchers, invoices, promissory notes or bank reconciliations.
  4. Does the registration of bank accounts apply to all types of taxpayers?
    This requirement applies to entities subject to surveillance by the Superintendence of Banks, micro-finance entities and non-profit micro-finance entities. The requirement does not apply to those who do not keep accounts such as university students, workers, professionals or artisans.
  5. How should the rental of real estate be supported?
    The owner of the property must deliver an invoice to the tenant in each monthly payment.
  6. Do people who sell and buy vehicles also have to register their bank accounts?
    People who sell and buy vehicles must have supporting documents because, if the main purpose is the vehicle trade and the person does not have proof of the purchase and sale of the same, could be subject to an audit.
  7. What is the procedure for bank transfers between family members?
    If a parent makes a transaction to one of their relatives for the purpose of covering personal expenses, they should not be subject to supervision. If this were the case, the provider must check their income. In summary, it is best to register any corresponding bank account, as well as having evidence and support of any movement or transaction.

Do you need more information? Contact us.

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