Guatemala moves towards transparency in banking
Article 4 minute read

Guatemala moves towards transparency in banking

22 March 2018

It’s been a year since Guatemala’s Decree 37-2016 - the Law for the Strengthening of Fiscal Transparency and Governance of the Superintendency of Tax Administration - came into effect, but there are still questions about it.

The law stipulates that the Tax Administration Office (SAT) may require any entity that is subject to surveillance by the Superintendent of Banks, including microfinance entities and non-profit microfinance entities, individuals or legal entities, to supply information on banking operations where the SAT considers there is reasonable doubt meriting an investigation process.

Guatemala calls this the "Liberation of Banking Secrecy", and sees the Central American country moving towards compliance with global regulation on financial transparency.

Although some taxpayers and entities eyed this move with suspicion, the requirement will only be processed by banking entities as long as the SAT has a judicial order. It is, however, worth mentioning that offshore entities are obliged to respond to SAT information on depositors and investors, and all movements must be detailed. Those who do not register one or several bank accounts that are in the name of a person or financial groups of the country, or foreigners, will be classified as “resistant”.

Some experts suggest the best way for entities and taxpayers to deal with this new law is by documenting all movements in income.

Banking secrecy in Guatemala: FAQs

There are still some questions that many in Guatemala have about getting away from banking secrecy, here we take a look at them.

What is the procedure to register a bank account in a company’s accounting?

Bank accounts must be noted in the inventory book, identified with the account number and the banking institution to which it belongs.

How should an investment be reflected in accounting?

Detail the exact amount of the investment, its type, specification and the institution to which it belongs, whether it is national or foreign - and, where the investment is foreign, the country where the account is located.

How should bank transactions be recorded?

All bank transactions must be backed up by a document, whether a deposit slip, transfer vouchers, invoices, promissory notes, bank reconciliations, and so on.

Is anyone exempt from registering their bank account?

The rules do not apply to those people who do not keep accounts such as university students, workers, freelance professionals or artisans.

How should the rental of real estate be supported?

The owner of the property must deliver an invoice to the tenant with each monthly payment.

Do people who sell and buy vehicles also have to register their bank accounts?

If the main purpose is the trade of vehicles and the parties do not have proof of purchase and sale, they could be susceptible to an inspection. They should ensure they have back-up documentation.

What is the procedure for bank transfers between relatives?

If a parent makes a transaction with one of their relatives, and this amount is for personal expenses, they should not be subject to inspection. If needed, the provider of funds is the one who should check their income.

Seek local expertise before making any big decisions

It’s important to note that Guatemala now imposes a tax order on companies and taxpayers who have not complied with the declaration and compliance with taxes. We highly recommend companies register every corresponding bank account, as well as keep evidence and support of any funds movement or transaction. The law relates to the registration of bank accounts, investments related to commercial transactions, and accountant records.

TMF Guatemala’s local experts are on hand to help companies and investors in Guatemala - especially those from other countries concerned about what this law means for them. Get in touch with our team to discuss how you can remain compliant.

Written by

Alejandro Medrano

Former Sales Execuitve

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