Tax liability of a legal entity in Guatemala can lead to prison sentences – 2024-02-17 16:58:22

Given the economic and technological advances in an era of Artificial Intelligence (AI), tax administrations have invested in equipment and technological tools that help them improve their control, inspection and tax collection work.

This is how the Superintendence of Tax Administration (SAT), through AI and data tax governance, carries out monitoring to analyze the tax risk of taxpayers and exercise the powers conferred by the Tax Code to sanction tax obligors who fail to pay. of taxes in form and time.

It is then when a Tax Compliance Program assists the company to prevent risks, so that there is reasonable certainty of complying with what the regulations establish, preventing related risks and avoiding litigation that can lead to a conflict of an administrative or administrative nature. tax criminal.

Given the above, through the Tax Compliance Program, the risks associated with non-compliance can be monitored in a manner that might be considered fraudulent and can serve as an element of proof of the willingness of the company (the company or legal entity) to comply to mitigate or exempt the penalty derived from a criminal tax process.

What the law says

In other countries, such as the Spanish model according to article 31 bis of the penal code, the figure of criminal liability of the legal entity is regulated, as well as the forms of exemption and mitigation of the penalty.

In our case (Guatemala), with the reform of article 38 of the penal code through Decree No. 31-2012 and effective as of November 30, 2012, the figure of criminal liability of the legal entity was legislated, which It is focused on sanctioning the legal entity indicating that directors, managers, executives, representatives, administrators, officials or employees of them who have intervened in a criminal act will be held responsible for the respective crimes, without whose participation the same would not have been carried out. .

Specifying that as for the legal entity as such, it will be responsible in cases where, with authorization or consent, the aforementioned personnel elements participate, and in the event that the legal entity is responsible and does not have a penalty assigned, it will be sanctioned. fine of US$10 thousand up to US$625 thousand or its equivalent in national currency, which will be determined in accordance with the economic capacity of the legal entity, always taking into account the circumstances in which the crime was committed. If he is a repeat offender, the definitive cancellation of his legal status will be ordered.

Given the above, we ask the question of whether a failure to control and supervise refers to “failure to comply with the duty of care and compliance programs”; Well, in this regard there is a ruling related to acts of corruption in which the controlling judge of the case resolved that “the measures of non-repetition” will have the objective of ensuring that the crime does not occur once more, as well as overcoming the structural causes that facilitated or allowed the commission of the crime.

Given that these acts occurred with the participation of a legal entity contracting the State, the company in which the convicted persons have participation must promote preventive measures, including:

Yo. An anonymous reporting channel.

ii. A risk assessment system.

iii. Development and application of an ethics and compliance anti-corruption program.

This ruling gives rise to local discussion on issues related to Compliance, and in tax matters such discussion would not be exempt regarding whether the legal entity in crimes of tax fraud established in article 358 “A” of the penal code would be applicable. this regulation (article 38 of the penal code of Guatemala), since the other crimes once morest the tax regime established in articles 358 “B”, “C” and “D” already contain a sanction for the legal entity, and in accordance with the last paragraph of article 38 cited, would not apply because there is already a penalty related to said responsibility.

In any case, the criminal liability of the legal entity is already a reality in Guatemala and the sanctions are considerable. Furthermore, the possibility of being subject to various sanctions, some main and others accessory, is also a risk that threatens every public limited company, its economic activity (financial losses) and its very existence (reputation and closure of the entity).

This calls for reflection and taking all necessary measures to avoid the commission of tax crimes within the company or others related to the criminal and economic law of the company.

Various suggestions

Some final recommendations for all taxpayers and especially for legal entities that, in the scope of their commercial operations, run the risk of being linked to tax crimes:

to. Adequate and updated tax advice with current laws and jurisprudential criteria on tax litigation issues through an ethical professional with due tax expertise, who manages the company’s taxes (Tax Compliance Officer – internal – or Tax Advisor – external – ).

b. Strict control of business decision making; document, through the books of assemblies and meetings of the board or administrative body, the decisions and authorizations to directors and executives. According to the law, there is responsibility in any act where there is authorization or consent for acts that may subsequently be criminally prosecuted.

c. Sufficient documentation of the company’s income and expenses, as well as its commercial and financial activity.

d. Tax Compliance Program. Here let us remember that the criminal liability of the legal entity occurs due to omission of control or supervision. Therefore, the way to reduce the risk of reproach for activities carried out by your representatives, executives or trusted personnel is precisely to exercise control.

and. A Tax Compliance Plan model with suitable measures should include:

• Risk Map.
• Tax Risk Assessment and Prevention Measures.
• Tax Compliance Policies.
• Fiscal Code of Ethics or Manual of Good Tax Practices.
• A complaints channel and a disciplinary system that appropriately sanctions non-compliance with the program measures.
• Monitoring and control actions with adequate periodic verification of the program and its eventual modification (external audit of the tax compliance program).

With information from Walfred Corado, director of Taxes and Transfer Pricing. Tax Experts, SA

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