Welcome to #FreshStartMonday!

The guiding principles of the Guatemalan tax system are legality and contributive capacity.

These principles are the guarantees that the citizens have against the arbitrariness of the State when decreeing ordinary and extraordinary taxes, excise taxes and special contributions, or when interpreting the application of the rules that regulate them.

Arévalo's principle of legality implies that taxes must be contained in a law in force. Therefore, the Guatemalan Congress has the power to decree all taxes and special contributions according to the needs of the State, based on tax equity, justice and the collection standards.

The main characteristics of the principle of legality are:

• Typicality: the law must contain all the elements required to identify the existence of a tax.
• Non-delegability: only Congress may decree ordinary and extraordinary taxes, excise taxes and special contributions. The Executive doesn’t have the power to do so.

On the other hand, the principle of contributive capacity consists of the fact that the Guatemalan tax system is fair and equitable, the tax burden is distributed among citizens according to their economic capacity, regardless of the use they make of the goods and services provided by the public sector.

The main characteristics of this principle are:

• Justification: it provides a justification for taxation and measures the amount of the tax.
• Limit: it functions as a limit to the taxing power, thus it is a guarantee against arbitrariness.

Next week we will be addressing the principles of non-confiscation and double or multiple taxation.

Enjoy your coffee!