Back to index
V3868-15 3 December 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención de dividendos

Exempt dividends from Guatemalan subsidiary may apply if Article 21 LIS requirements are met

A company enquired whether dividends from its Guatemalan subsidiary were exempt from Corporate Tax, given that the subsidiary operates under a simplified tax regime. The DGT ruled that the requirements for participation and taxation are met for the exemption to apply.

The question raised

Question raised 1) Whether, in view of the nature of the Guatemalan Income Tax and taking into account the option for the simplified regime formulated by the taxpayer's subsidiary, and considering that its effective taxation rate for Income Tax is higher than 10%, the dividend double taxation exemption provided for in Article 21 of Law 27/2014, of November 27, on Corporate Income Tax, could be applied.

The DGT's ruling

To apply the dividend exemption under Article 21.1 of the LIS, a holding of at least 5% must be held uninterruptedly during the previous year. Likewise, the non-resident entity must be subject to a foreign tax of an analogous nature with a nominal rate of at least 10%. In this case, as the effective rate on profit is higher than 10%, the taxation requirement is deemed met, regardless of whether the entity opts for a rate based on income of 7%.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

Book a meeting Write to the firm
Email
Contact