Alegalis analyzes tax changes in Guatemala

Alegalis analyzes the main tax reforms contained in Decree 18-2026, approved by the Congress of the Republic of Guatemala on July 29, 2026, which introduces changes to the Real Estate Tax (IUSI) and amends certain provisions relating to Income Tax (ISR) and the Stamp Tax applicable to second and subsequent sales of real estate.

The decree was forwarded to the Executive Branch on August 6, 2026. At the time of Alegalis’ analysis, the Executive had not yet ruled on whether to sanction or veto the legislation.

One of the main changes concerns the IUSI rates, which are currently determined solely according to the value of the property. Decree 18-2026 introduces the additional criteria of the property’s use and purpose.

Under the reform, properties used for housing, residential and mixed-use purposes would be subject to a zero-per-mille rate. Properties used for commercial and other purposes would be subject to rates of 3, 6 and 9 per mille, depending on their value.

Alegalis notes that the decree does not define "mixed use" or "other uses." Their classification would therefore be subject to the implementing regulations and the criteria applied by each municipality, creating a potential risk that residential or mixed-use properties could be reclassified as commercial.

Decree 18-2026 also introduces a significant change to Income Tax. The reform establishes an exemption for capital gains arising from the onerous transfer of real estate located in Guatemala when the seller is an individual whose ordinary business does not involve real estate activities.

Accordingly, an individual who is not engaged in the real estate sector would be exempt from the 10% Income Tax on capital gains arising from the sale.

The exemption would not apply to legal entities, trusts, undivided estates or other entities subject to Income Tax, nor to individuals who have real estate activities registered with the Taxpayer Registry.

With respect to the Stamp Tax, the decree maintains the 3% rate applicable to second and subsequent sales of real estate. According to Alegalis, the change concerns neither the tax rate nor the creation of a new taxpayer obligation, but rather the destination of the revenues collected.

The decree provides that the funds be transferred to the municipality where the property is located, after deducting pre-existing statutory allocations. The tax will continue to be paid to the Superintendency of Tax Administration (SAT), which will subsequently transfer the collected revenues to the relevant municipality.

For Alegalis, this change makes determining the property’s municipal jurisdiction particularly important. Jurisdictional disputes between municipalities could become more significant because the 3% tax on the transfer value represents a substantially larger amount than the IUSI. Accordingly, for transactions involving properties located in areas where municipal jurisdiction is disputed, it will be essential to determine precisely which municipality has jurisdiction over the property, potentially resulting in administrative delays.

The constitutional deadline for the President to rule on the decree expires at the end of August 2026. If the decree is vetoed, Congress may accept or reject the veto with the vote of two-thirds of the total number of deputies.

If sanctioned and published, the decree will enter into force 60 days after publication in the Diario de Centro América, except for the IUSI reforms, which will take effect 90 days after publication. The amendments to Income Tax and the Stamp Tax will take effect on January 1, 2027.

Until Decree 18-2026 enters into force, Alegalis notes that taxpayers must continue making the quarterly IUSI payments applicable for 2026.