From Guatemala: Access to Bank Records for Tax Purposes
Stuardo Ralón - Ralón, Orellana & Asociados, a Guatemalan Member Firm of Andersen Global
On February 23, 2017, the Decree 37-2016 was released allowing the Tax Authority to obtain taxpayers information from banks, financial institutions and microfinance entities. This regulation is intended to be used to compare tax returns with the taxpayers' actual cash flow.
Before such decree came into force, there was a disconnection between stockholders and their own companies' tax filings. The new decree is intended to track the money flow across commercial entities and individuals.
This new rule has two important implications for taxpayers:
- Tax Risks: There may be risks causing adjustments on income tax and Valued Added Tax (VAT) if reconciliations between tax income and bank records cannot be met.
- Criminal Investigation: Any transaction without suitable evidence in the light of the Tax Authority could face criminal investigation for tax defraud, money laundering, among others charges.
There are current discussions in the business community about the possibility of releasing the banking secrecy retroactively up to four tax periods, as the Tax Authority has openly shared their intention to review banking records of prior years. Further analysis of the regulation is expected to take place at the Federal Court in the following months.
Please contact Stuardo Ralón at Ralón, Orellana & Asociados in Guatemala for additional information.