In Guatemala, lucrative activities engaged by taxpayers are subject to Income Tax ("ISR" by its acronym in Spanish), in accordance with the provisions of Decree 10-2012. Guatemalan taxpayers can choose to register under one of the following regimes:

1. Regime over profits: with a 25% tax rate over profits, the tax is paid quarterly by applying one of the following formulas:

a. Partial accounting closings or preliminary liquidations of their lucrative activities at the end of each quarter, to determine the taxable base; or,

b. The taxable base estimated at an eight percent (8%) of the total gross income derived from lucrative activities quarterly, minus the exempted income.

2. Simplified optional regime on gross revenue:

a. Gross income between Q.1.00 to Q.30,000.00: taxed at a 5% rate payable monthly.

b. Gross income over Q.30,000.00 is taxed at a fixed amount of Q.1,500.00 plus 7% rate over the surplus of Q.30,000.00.

Article 51 of Decree 10-2012allows taxpayer to modify their income tax regime prior written notice to the Guatemalan Tax Authority. Such notice shall be given during the month preceding the beginning of the each fiscal year.

Consequently, December is propitious to apply for the change of income tax regime for the following year. If taxpayers consider such modification convenient to their interests, the abovementioned notice must be given within the next days, for the new regime to apply form January 1st, 2018.