Guatemala is committed to the World Trade Organization - WTO - to eliminate export subsidies, and adjust such incentives to WTO requirements. These incentives should be derogated no later than by the end of 2015. Currently, export incentives are regulated in Decree 29-89, and Decree 65-89, both of the Congress of the Republic. These norms contemplate benefits for exports and temporary import/admission activities for the drawback industries and free zones. As part of its commitment, in 2013, the Bill No. 4644 that contains the Law of Investment Promotion and Employment, which aims to derogate and modify the actual fiscal regime of said activities, was presented to Congress.

Its main objective is to foster the conditions for the creation of gainful employment by means of investments and to improve overall competitiveness. The bill seeks to create two mechanisms for generating new investments: Economic development zones and units of economic development. The first are constituted as entity groups engaged in the production of goods or services, operating under the free zone regime, and the second are entities operating under temporary admission without being grouped in an enclosed area.

The law includes incentives for the Income Tax, Real Estate tax, Value Added Tax on machinery, raw materials and supplies, the Solidarity tax, and import taxes.

The status of the bill remains undefined in Congress, so uncertainty arises on how this Legislative Organ will act to meet the commitment of the Republic of Guatemala to the WTO. We deem appropriate to inform you of its existence, since it may impact businesses on free-zone areas, and drawback industries to all users.