DOING BUSINESS IN GUATEMALA IN 2018
Since 2003, Healy Consultants Group PLC has assisted our Clients with starting companies in Guatemala. Our services include i) Guatemala business registration ii) government license registration iii) corporate bank account opening services in Guatemala and abroad iv) employee recruitment services v) visa strategies and vi) office rental solutions in Guatemala.
Guatemala company registration summary
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Advantages and disadvantages
Advantages of Guatemala company registration
- Forming a company in Guatemala can be done with only i) two shareholders and ii) one director, who both can be of any nationality and are not required to reside in Guatemala. The minimum paid-up capital required is only US$260 (GTQ2,000) and our Clients do not have to travel to complete registration of their Guatemalan company;
- Guatemala is a great place to form a manufacturing or agro-processing business because:
- Our Clients will benefit from low labor costs in Guatemala. Local salaries are recorded at an average of only US$270(GTQ2,200), one of the lowest levels amongst Central American countries;
- Clients incorporating a company in Guatemala can register it in an export processing zone: seventeen FTZs currently exist in this country and offer export-oriented businesses i) VAT exemptions ii) exemption from import duties and iii) corporate tax holidays;
- In Guatemala, it only takes approximately 5 weeks for entrepreneurs to get electricity for their new company, which is much shorter than other Latin American and Caribbean countries, where it takes at least 10 weeks;
- Our Clients forming a manufacturing company in Guatemala will be allowed to export their products to the United States free of custom duties, thanks to the country’s membership to the Central America Free Trade Agreement signed between Guatemala, the US and other Central American countries in 2004;
- The two main ports of Guatemala, Puerto Quezal and Puerto Barrios, allow the country to be connected to both the Pacific and Atlantic Oceans and its products to reach the US market within 4 business days;
- For all the reasons listed above, several US companies including i) Adidas ii) WalMart and iii) Joe Boxer are importing their apparel products from Guatemala.
- Withholding tax on distributions of dividends overseas is levied at a rate of only 5%;
- Guatemala is the leading exporter of cardamom in the world. The nation produces approximately 35,000 metric tons of cardamom annually. Cardamom is often called the “Green Gold of Guatemala” as it generates a huge amount of foreign exchange, majorly coming from Middle East and Europe.
Disadvantages of Guatemala company registration
- All Guatemalan companies are required to appoint a legal representative (locally known as a “trade auxiliary), who can be a foreigner but must then be ordinarily resident in Guatemala;
- In order to register a branch of their overseas company, investors must i) appoint a legal representative and ii) issue a bond of US$50,000, which cannot be used for the company’s operational expenses and must be kept in case of wrongdoing by the branch in Guatemala or abroad.
- The official language of Guatemala is Spanish, and all corporate documents of the subsidiary’s parent company will have to be translated in this language, resulting in extra-costs for the engagement. Language can also be a barrier for foreign entrepreneurs doing business in Guatemala;
- Guatemala is a small market offering little business opportunities for foreign investors due to i) its population of only 16 million and ii) a GDP per capita of only US$3,900 per year;
- There is rampant corruption in Guatemala which has led to i) poor macroeconomic environment and ii) inefficient government bureaucracy. As a result, the country has been ranked poorly in the 143rd (out of 180 countries) position in the Corruption Perceptions Index 2017.
Best uses for a Guatemala company
- Guatemala is a great place to form a company manufacturing apparel and garment, thanks to low labor costs, access to the US market and the presence of a dense network of maquiladoras companies.
- Time to incorporate: Five weeks
- Cost to set up: US$8,640
- Paid-up capital: US$260
- Physical office required: No
- Shareholders: 2
- Directors: 1
- Company secretary: Optional
- Resident director: No
- Corporate tax rate: 25%
- Corporate tax base: Territorial
- Shelf companies: Unavailable
- Main company type: SRL
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