Employer Tax Contributions

Tax Type	Rate	Base
Social Security (IGSS)	12.67%	Employee's gross salary
Workers Recreational Institute (IRTRA)	1%	Payroll
Professional Training Institute (INTECAP)	1%	Payroll

Filing & Compliance

• Employers must register with the Tax Administration Superintendency (SAT) to obtain a Tax Identification Number (NIT).
• Monthly payroll declarations and contributions to SAT and IGSS are due by the 15th of the following month.
• Annual reconciliation and reporting of employee income tax withholding are due by February 28 of the following year.

In Guatemala, employers are responsible for withholding various taxes from employee salaries, including income tax and social security contributions.

Income Tax

Income tax is levied on all income derived from employment in Guatemala. A standard annual deduction of GTQ 48,000 is applied. Additionally, employees can deduct up to GTQ 12,000 for VAT paid on personal expenses, donations (up to 5% of total income), and life insurance premiums. The tax is calculated based on the net taxable income (gross income less deductions). The tax rates are progressive:

• Up to GTQ 300,000: 5%
• Above GTQ 300,000: GTQ 15,000 (on the first GTQ 300,000) plus 7% on the excess

Employers withhold income tax monthly and remit it to the tax authorities by the 10th of the following month. The annual summary of withheld taxes is due in February of the following year.

Social Security Contributions

Both employers and employees contribute to the Guatemalan social security system (IGSS).

• Employee Contribution: 4.83% of the monthly salary.
• Employer Contribution: 12.67% of the monthly salary.

These contributions cover various social security benefits such as healthcare, pensions, and maternity leave.

Value Added Tax (VAT) Credit

While not a deduction, employees can claim a credit of up to GTQ 12,000 annually for the VAT paid on personal expenses. This credit is applied against their income tax liability.

Other Deductions

Other potential deductions include union dues, court-ordered garnishments and voluntary deductions such as life insurance premiums. It's important to consult with local tax advisors for specific situations.

14-Month Salary System

Guatemalan law mandates a 14-month salary system, where employees receive two additional payments, often referred to as a "Christmas bonus" and a "mid-year bonus." These bonus payments are subject to income tax and social security contributions.

Additional Considerations

• The tax year in Guatemala ends on December 31st.
• The information above pertains to the tax year 2025 and may be subject to change in future years. It's essential to stay updated with the latest tax regulations.