In order to comply with the World Trade Organization, the Congress of Guatemala has received Initiative 4894 to pass the Employment Promotion Act, which aims to promote new investment and create new jobs. Companies that meet the conditions to maintain a certain number of employees (5-80), and invest certain amount ($ 500,00.00) will be eligible to apply to the new law.
The bill is currently in Congress for discussion, and early approval is expected to benefit Guatemala.
The benefits contemplated in the Employment Promotion Act include exemption from income tax, the temporary raw material import regime, import tax exemption for machinery and equipment, VAT exemption on local purchases of supplies and services, among others.
The new law has different possibilities for industrial, commercial, service companies and operations. The new act promotes different benefits depending on whether the ventures are established in the urban or rural areas.
The new law establishes that the actual Draw Back and Export Promotion Act, Decree 29-89 and Free Zones Law, 65-89 Decree will remain in effect, and companies can continue to work in the current decrees, just taking into account that the income tax benefit will terminate on December 31, 2015. Companies have to weigh your options for implementing this new initiative or to maintain operations in the current decrees. There are limitations in some areas to be considered, along with the opportunities in the benefits.