Guatemala: Congress Approves Decree to Expedite Tax Refunds

EY Law - The plenary session of the Congress of the Republic of Guatemala approved Decree 17-2025, Law for the Facilitation of Compliance in Tax Refunds, which introduces amendments to the Tax Code and the Value Added Tax (VAT) Law.

On 18 November 2025, the Congress of the Republic of Guatemala approved Decree 17-2025 to speed up tax refunds. Among the most relevant provisions are the following:

• The main objective of the Decree is to streamline, simplify, and standardise the procedures for refunding tax credits and other taxes to taxpayers, addressing the historical backlog of thousands of files, a problem that has generated constant complaints in the business sector and has been linked to cases of corruption.

Reforms to the Tax Code, Decree 6-91 of the Congress of the Republic of Guatemala

• The reform of Article 153 of the Tax Code expands and details the procedure for the refund of excess payments. This amendment also establishes a mechanism for the refund of undue payments, which will be resolved without the need for a prior audit. In addition, mention is made of the refund or substitution of Value Added Tax (VAT) credits, indicating that the provisions of the relevant law will apply. This reform seeks to improve efficiency and transparency in the handling of refund requests, thus facilitating tax compliance.

Reforms to the Value Added Tax Law, Decree 27-92 of the Congress of the Republic of Guatemala

• Article 23: Introduces significant changes to the regulation of budget programming. This article no longer provides for budget programming by the Ministry of Public Finance to cover tax credit refunds, an amount that was previously included in an annex to the general budget of State revenues and expenditures. However, Article 23 ‘B’ is added, establishing a specific account for tax refunds and detailing the mechanism for crediting funds to that account. This reform seeks to optimise the management of refunds and ensure greater clarity in the handling of public resources.
• Article 23 A: Establishes important changes in the handling of tax credit refunds. As a result of this reform, the charge for tax credit refunds made by the Bank of Guatemala will no longer be recorded in the VAT Fund account. Instead, the charge must be made to the account designated in the new Article 23 ‘B’, called ‘Specific funds for VAT tax credit refunds and other tax refunds’.
• Article 25: Introduces significant changes to the regulation of the tax credit refund account. The account known as the VAT FUND, which was previously regulated in this article, is no longer covered. Instead, reference is made to the new Article 23 ‘B’, which establishes that the Bank of Guatemala is authorised to open a specific account called ‘Specific funds for VAT tax credit refunds and other tax refunds’.
• Article 23 ‘B’ is added:

Article 23 ‘B’ Specific account for refunds. From which the following excerpt is taken*... For the purposes of processing the corresponding refunds, the Bank of Guatemala is expressly authorised to open a specific account called ‘Specific funds for the refund of VAT credit and other taxes’ which, as a reference, will be credited with the resources resulting from separating at least eight per cent (8%) of the daily deposits of Value Added Tax from the account ‘Government of the Republic, Common Fund-Single National Account’.

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