A new decree introduces reforms to Guatemala’s rules on taxpayer refunds as from 29 November 2025. The decree was passed with urgency in response to long-standing complaints from the private sector regarding lengthy delays in tax refunds, as well as the need to improve the country's liquidity and competitiveness. The changes expedite the refund of undue or excess payments and introduce clear rules and procedures for obtaining refunds. The measures are grounded in the principles of fiscal fairness and justice, offering taxpayers streamlined, standardised and simplified legal mechanisms for requesting tax refunds.
The decree amends the refund procedures in the following laws:
The main changes introduced by the decree are as follows:
Overall, the tax refund reform simplifies administrative procedures and reduces bureaucratic barriers and strengthens transparency and legal certainty in the refund process. It provides taxpayers with more efficient tools for managing tax balances, whether through credits or refunds, and allows them to recover funds more quickly, which can then be used for working capital.
Yaneth Ralda
BDO in Guatemala
The decree amends the refund procedures in the following laws:
- Tax Code
- VAT law
- Law on Legal Provisions for the Strengthening of the Tax Administration.
- VAT credits
- VAT withholding surpluses
- Refunds for excess tax payments
- Refunds for undue tax payments
Key Changes
A central component of the reform is the implementation of a current account tax system by the Superintendence of Tax Administration. This system is designed to quantitatively and systematically reflect the tax debt or credit relationship between the tax authorities and each taxpayer. It provides detailed, chronological and consolidated records of all tax movements, including debits and credits recognised in the taxpayer’s favour. The resulting balance will determine the amount to be paid, credited against other taxes or refunded, once the enforceability and validity of each tax balance are verified.The main changes introduced by the decree are as follows:
- VAT withholding surpluses: The previous restriction preventing taxpayers from using refunded surpluses to pay for commitments other than taxes is eliminated. Taxpayers may now use these funds without limitation, removing a condition that could be perceived as confiscatory. The refund process is transferred to the Bank of Guatemala, which will manage a dedicated account for refund funds and operate under shorter deadlines.
- Refunds for excess payments: Requests for refunds of excess payments will follow a special procedure for determining tax liability, which may include a preliminary audit.
- Refunds for undue payments: These requests will be resolved without a prior audit. The tax authorities will base their decision solely on verification of the payment, its duplication or any circumstances that caused the undue payment.
BDO Takeaway
Overall, the tax refund reform simplifies administrative procedures and reduces bureaucratic barriers and strengthens transparency and legal certainty in the refund process. It provides taxpayers with more efficient tools for managing tax balances, whether through credits or refunds, and allows them to recover funds more quickly, which can then be used for working capital.Yaneth Ralda
BDO in Guatemala