The Superintendency of Tax Administration (SAT) announced this week that it detected more than 2,600 people and companies that have not paid taxes for occasional rentals of their property that they have made through the Airbnb platform and that other means are supervised digital sales of services and products.
Given this, experts in tax issues were consulted who provided recommendations regarding what to take into account to regularize before the treasury and the first question was: regarding occasional rentals through electronic platforms, How is tax collected?
According to auditor Óscar Chile Monroy, from the firm MGI Chile Monroy y Asociados, if the rent is habitual, the owner of the property (lessor) must issue an invoice in the name of the tenant, charging VAT, and then must also pay the tax on income (ISR) according to the regime in which you are registered. He adds that this applies to any platform.
As for whether there are differences for national and foreign owners, Walter Martínez, tax partner at the Deloitte Guatemala firm, explains how the tax collection is applied in Guatemala, in the event that the owner of the properties that are rented through Airbnb (or other similar platforms) whether national or foreign:
- The basis of the generating event of taxes in Guatemala is territorial. This means that, regardless of the nationality or residence of a natural or legal person, the generation of income within Guatemalan territory activates the obligation to pay the taxes that arise from the activity carried out. In this line of thought, the ownership of real estate in Guatemalan territory and the generation of income by exploiting these assets is a fact that generates tax obligation. The taxes generated by this type of activity in Guatemalan territory are the value added tax -VAT- and the income tax -ISR-. In addition, we must consider the taxes applicable for the simple ownership of the property, such as the Single Property Tax.
- In this particular case, the foreigner must domicile for tax purposes, generate his or her tax identification number (NIT), register for the corresponding taxes and submit the appropriate declarations monthly and annually. In this case, the foreigner must evaluate the ISR regime that best adapts to his line of operation, that is, 7% on gross income or 25% on determined taxable income.
Another question was and There is a difference for the payment of ISR, whether it is occasional or habitual rental of real estate. and the answer was yes, because according to the frequency of the productive activity, there is a different rate to apply the ISR, explain the auditors Chile Monroy and Edy Oswaldo Pérez, managing partner of the firm Grant Thornton Guatemala.
For the rental of properties, such as those offered for vacations or short-term lodging, there are two ways to pay the ISR and depending on the frequency of the rentals, this will be the tax rate to be applied:
The occasional or sporadic rental of real estate It is classified as capital income or real estate capital income. In this case, the rate is 7% of the gross income, and the payment is through withholding tax made by the landlord, who is obliged to keep complete accounting. But in the event that the withholding is not made, the person providing the lease is obliged to pay the tax to the SAT in the first 10 business days of the immediately following month.
If he leasing of real estate is habitual or frequent As part of the taxpayer’s line of activities, the law establishes that the income is income from lucrative activities and must be taxed according to the ISR regime in which it is registered:
If you are affiliated with the optional simplified regime the rate is 5% for up to Q30 thousand per month; and if it exceeds that amount, you must pay the fixed amount of Q1,500 plus the 7% on surplus of Q30 thousand per month.
If you are affiliated with the profit regime on lucrative activities, the 25% rate on profits.
Taxes on electronic platforms
Another question was whether Taxes may be applied to platforms (Airbnb and others similar)to which Martínez explains that there are two schools of thought on this topic:
- The first is that because they are services provided outside Guatemalan territory and in consistency with the principle of territoriality, these types of services are not subject to taxes in Guatemala, since this would imply an excessive application of the law by taxing income generated outside the territory. Guatemalan.
- The second criterion in this issue is that local taxes are generated, considering that the counterparty is a Guatemalan taxpayer and that the benefit of said service is generated within the national territory. In the past, this has been the criterion applied by the tax administration, but it is to be expected that in the inspection stage and the international agreements signed, the position and requirement for entities such as Airbnb, but also for any trading platform, will be ratified or clarified. electronic, including streaming providers such as Netflix and the like.
Furthermore, if local taxes are applied for commissions and other charges made by this type of platforms (foreign entities), the applicable tax would be income tax. Since local VAT legislation does not contemplate a tax on the import of services, it is considered that this tax charge would not apply.
Meanwhile, Chile Monroy exposes other criteria:
- The fee charged by the platform company may be subject to various interpretations and may be considered a “royalty payment,” which is subject to 15% ISR withholding. This must be done by the person who pays the platform, that is, the owner of the property. This rate is contemplated in article 104, paragraph 3, subsection c) of the ISR law.
- Article 4, paragraph 3 of the Tax Update Law (LAT) decree 10-2012 must also be taken into account, which refers to royalties such as income and capital gains, which is where these hosting platforms come in.
What the client pays
Regarding which taxes are applied to the client who contracts the lease of the property through these platforms, the experts reiterated that the client or lessee, whether national or foreign, must be issued an invoice for the value of the lease, including VAT. because the income is made in national territory and is subject to said tax, according to numeral 4 of article 3 of the law.
This tax becomes part of the cost of rent in the case of final consumers and must be supported with an electronic invoice (FEL). If the invoice amount is greater than Q2,500, the client must be identified through their NIT, CUI or passport number if not domiciled.
This last case has been particularly conflictive in sectors such as air transport, since international agreements have been signed that protect the identity of passengers, so it is prudent and necessary that before issuing regulations of this nature, the acquired international commitments.
Recommendations to taxpayers
The SAT warned that by crossing information with the leasing platform, it already has specific data on each owner or lessor and that it began to supervise them, and as part of that process You can request the bank transfer not only of them as owners and providers of the service, but of the other related people.
Chile Monroy reports that many who rent their properties, They make the mistake of thinking that by not having NIT or because they are not registered in the SAT, they do not have the obligation to pay taxes on the income they receive, but this is not the case because they are legally liable for the corresponding taxes.
Therefore, it is recommended that you register, to regularize your situation and your tax returns. When registering you should analyze which regime is best for you to join.
In VAT, there is the small taxpayer regime with a 5% rate, but with a maximum income limit of Q150 thousand per year. The other is the general regime with a 12% rate, with no limit on the amount of income.
For the ISR, it is also important to analyze which regime would be appropriate, according to the profitability of each case. According to the Tax Update Law, taxpayers must indicate to the SAT which regime they will apply to; If they do not do so, it will register them in the Profits from Lucrative Activities.
Nor should one make the mistake of believing that if it is paid in cash it will not be detected, since now the SAT observes different types of operations, and has implemented the request for information from tax authorities of the countries that host the electronic platforms.
For example, according to the case disclosed of 2,659 taxpayers who lease real estate through Airbnb, the SAT is aware of the records of all forms of payment of income received for the rentals provided during the period from January 1, 2021. at December 31. This includes bank account deposits, international transfers and online payment systems.
Furthermore, if they are not regularized, the entity will be requiring the movement of credit cards and banking information.
“The best thing is to voluntarily attend to regularize your situation before the SAT, because then you will be eligible for a reduction in fines, a benefit that is lost if a citation from the SAT arrives.”
What the SAT says
Superintendent Marco Livio Díaz said in a radio interview that since 2021 he has been working with the Inter-American Center of Tax Administrations (Ciat), which brings together more than 42 countries, in a system called DEC, Digital Economy Compliance, so that digital platforms can pay taxes in the countries.
He said that Mexico already uses it and has made progress in cases such as Netflix, which already pays VAT in that country. The SAT is in talks with the company to begin paying VAT in Guatemala, he added.
In addition, the national entity monitors the platforms where products such as Facebook, TikTok and others are advertised.
The official said that, since they have not had the collaboration of these companies, they are communicating with the tax administrations of the countries where they are registered to obtain information.
When asked, Díaz responded that in the case of Netflix there is a real possibility that this firm will have to assume the VAT, but they indicate that if there is legislation that forces them, they are willing to do so, although according to the official, the advisors of That company tells them that the country does not have adequate legislation.
However, the superintendent states that every service provided in Guatemala generates VAT and they are obliged to pay, for this a legal opinion will be issued, since the SAT is regarding to file legal lawsuits once morest these companies, if they do not begin to pay taxes in the country.
Regarding occasional rentals of properties, he maintains that they must collect VAT (and pay it to SAT) and must pay ISR, since the law establishes it and these rentals have become unfair competition for hotels that do pay.
He even said one of the next steps is to start charging hotels that have registered with Airbnb and do not pay taxes.
Fuentes: Óscar Chile Monroy, auditor of the firm MGI Chile Monroy y Asociados; Edy Oswaldo Pérez, managing partner of the firm Grant Thornton Guatemala; Walter Martínez, tax partner at the firm Deloitte Guatemala, statements by SAT superintendent Marco Livio Díaz to the radio outlet Con Criterio, and information from the SAT in a press conference on April 16, 2024.
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