1. Revenue Control

The fact that a company records income each year is always good news. But they must keep good records, given that when they when they file their taxes, each category will have to go under specific rows.

Make sure you include these four:

• Income subject to Income Tax (ISR): Will be those earned from the sale of the goods and/or services you offer as a business. You must declare and pay them.

• Income exempts from ISR: For example, if you have an investment in government bonds, the interest you receive is exempt from taxation.
• Income subject to final withholding tax: If you have other funds in a savings account in a local bank, the interest you earn will be included in this group.
• Capital gains or losses: If during the tax year you made a sale unrelated to your business, you should include it here. For example, if your business is to sell shoes, but you also sold some property, you would record it here. You should pay attention to whether you have a capital gain or loss, which is calculated by subtracting the original cost of the asset from the sale price.

2. Deductibility of Expenses

It is important to note that most of the tax adjustments in the payment of income tax are generated by the non-compliance with the rules related to the deductibility of expenses. These happen when it is not possible to justify that these expenses are necessary for the generation of business income.

In general, and in accordance with the law, the expenses claimed as deductible must be necessary to generate or maintain the source of taxable income[1].

For example, if you run an architectural firm, the architect's fees for professional services are deductible because, without them, the business would not be able to generate income. In this sense, it is also important to review the cases where there are limits or ceilings on the deductibility of certain expenses, such as the partners salaries, donations or interest payments[2].

But then, the holidays are approaching, and the office will host a Christmas party to thank the whole team for their work during the year. This is a nice detail and a joyful day of celebration, but these expenses are not deductible because they are not necessary to generate income for the organization.

3. Transactions with Related Parties

Another issue where we are aware of taxpayers who have been subject to tax adjustments is in the payment of income tax for expenses deemed nondeductible by the SAT that result from transactions with related entities[3].

For example, a company in Guatemala sells oils and lubricants that it imports directly from its parent company in the United States. These prices are regulated both locally[4] and internationally, and the laws require that the sales price of each product to a related entity be the same as if it were sold to any outside company. This avoids market distortions and possible penalties. This is because in the past, it was common practice to invoice at a price below the actual selling price.  

4. The Solidarity Tax (ISO) is not used as a Payment on Account of Income Tax 

It is recommended to keep a good control on the use of the Solidarity Tax (ISO), in order not to lose the possibility of deducting as expenses, if applicable, the remainder of the unused ISO.

According to Decree 73-2008, the ISO paid during a year may be credited to the payment of income tax until it is exhausted during the following three calendar years.  

5. Change of Tax Regime

If, as a result of the tax planning carried out by your financial department, you are thinking of changing your tax regime for the payment of income tax, remember that you can do so until the end of December. However, regardless of the month in which you do it, the new regime will not take effect until January of the following year[5].

Finally, for companies that have stocks of goods for sale, remember that you must take inventory at the end of June and another at the end of December, to be sent to the SAT the following month[6]. These should be done in July and January, respectively.