EXPENSES MADE BY THE HEADQUARTERS OF AIRLINES OPERATING IN GUATEMALA WILL BE DEDUCTIBLE

Decree 02-2020 of the Congress of the Republic of Guatemala

Dear clients and friends,

On February 10th2020, Decree 02-2020 was published in the Official Gazette, which amends Decree 10-2012. Through this amendment, articles 21bis and 21ter were incorporated to Decree 02-2020 and article 38 was modified.

The additions and changes indicate that taxpayers that carry out cargo and passenger air transportation activities between Guatemala and other countries, through a branch in the country, will be able to determine their deductible expenses through the proportional allocation of expenses in which the headquarters incurs. For that matter, the law establishes the formula that must be followed. The expenses allocation must be calculated based on the company audited financial statements in accordance with the International Accounting Standards, duly apostilled and translated to Spanish.

Allocated expenses may be deductible only if these are useful, necessary, relevant or essential to generate taxable income for the company’s branch in Guatemala.