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Guatemala VAT on foreign digital services

Guatemala to adopt Brazilian and Chilean platform for non-resident digital service providers

The Guatemalan Superintendency of Tax Administration (SAT) has proposed a voluntary regime for non-resident providers and marketplaces for digital services to register and report Value Added Tax. The current standard VAT rate is 12%. Any seller failing to register would have their receipts subject to a Withholding VAT.

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Adopting Brazil and Chile’s DEC IT platform

Guatemala is looking to adopt the Digital Economy Compliance IT platform, creating by a range of international organisations to help emerging economies to implement sound and efficient tax regimes for digital trade. It is already used in Brazil and Chile. This includes the voluntary registration regime, with the Withholding VAT net via payment providers to catch any missed transactions.

You can follow VAT Calc’s global VAT and GST on digital services tracker to see which other countries have introduced indirect taxes on electronic services to consumers.

What transactions are likely to be taxable

The following example electronic or digital services have been initially highlighted:

  • streaming media service providers,
  • cloud services providers,
  • software-as-a-service providers,
  • digital goods and services providers,
  • providers of services through digital platforms, and
  • providers of online advertising,

Withholding VAT on digital services

Many states around the world use payment provider Withholding VAT regimes, including Costa Rica and Cambodia. It obliges payment providers – banks, credit cards, e-wallets, online payment companies – to identify a payment to a foreign digital services provider, and split off the standard VAT rate element. It then pays this directly to the tax authorities. Payment providers may usually rely on publically available lists from their tax authorities to track which major foreign digital service provider is not VAT registered and therefore should be subject to Withholding VAT.

Guatemala has updated its payment platform, FEL, on 1 July 2021.

Central and South America VAT on digital services

Comments (click for details) Rate Date Threshold Comments
Argentina 21% Apr 2018
Bahamas 10% Jan 2015 BSD 100,000
Barbados 17.5% Dec 2019 BBD 200,000
Bolivia 13% Nov 2022 -
Brazil n/a n/a n/a Various proposals
Chile 19% Jun 2020 Nil
Colombia 19% Jan-18 Nil
Costa Rica 13% Oct 2020 Nil Withholding VAT option
Dominican Republic 18% 2023? Nil Currently withholding VAT
Ecuador 12% Sep 2020
El Salvador 13% 2022 - Replace Withholding VAT
Guatemala 12% TBC
Honduras 15% 2022 HNL 250,000
Panama 10% 2022 Withholding VAT
Paraguay 10% Jan-21 Nil Withholding VAT; 4.5% DST
Peru 18% 2022 Nil Withholding VAT
Puerto Rico 10.5% Jan 2020 $100,000; or 200 transactions Marketplaces
Uruguay 22% Jan 2018 Nil VAT and Withholding Tax

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