Employer Of Record in Guatemala

Guatemala Country Facts

Guatemala offers an exciting environment for companies exploring the opportunities tied to offshoring their work. Guatemala boasts a young workforce, many of whom speak English, have a strong interest in developing tech and IT sectors, and the country is conveniently located near North America (Central Time Zone). Its location with access to both the Atlantic and the Pacific makes it an attractive hub for global trade between Asia, North America, Europe, and other Central American countries.

The Economy

While Guatemala’s technology sector continues to develop, the rest of the market has a rich, diverse base and the largest economy in Central America. Another positive to this country is that taxation is a simple formula. 5% on the first 30,000 quetzals (GTQ) and 7% on all income over that level. GTQ 30,000 is around $3,750 USD. While an average turnover rate is unavailable for Guatemala, certain sectors show higher turnover rates, especially in the construction industry. However, these rates are not a matter of concern for most companies looking to offshore. Instead, they should be seen as signs that workers are looking for better opportunities, which offer a pathway to advancement and a table career.

The Importance of Small and Medium-Sized Companies

Guatemala also has a large pool of workers trained in the United States in technical fields like programming. So, in addition to having solid technical skills, they’re also better adapted to dealing with Americans in a business setting. While the country is still recovering from a long civil war (1960 to 1996) much of the economic recovery is focused on encouraging tech startups and leveraging graduates with domestic and foreign technology training.

Population Characteristics

There are 18.3 million people and 70% of them are under the age of 30. Making Guatemala the most populous country in Central America. Spanish is the official language of Guatemala however, most students who complete primary and secondary education in state-sponsored schools will have ten years of English classes under their belt. This exposure means that many people in Guatemala have a high degree of proficiency in English, even if they technically are not fluent.

Economic Opportunities

Guatemala offers an exciting environment for companies looking to offshore their work. With a high population of English speakers, a strong interest in developing its tech and IT sectors, and its convenient location relative to North America (including the Central Time Zone), Guatemala is ripe for further development.

Key Sectors of the National Economy

Human Talent

• Tech Startups: Guatemala is home to several tech startup companies, and digital technology has grown by more than 8% in recent years.
• Human Resources: In addition to an increasing number of graduates from Guatemala’s public and private universities, a significant number of citizens received a university education in the United States, giving Guatemala a solid base in technical training.
• Focus on Support Development: The Guatemalan tech workforce provides both content and software development services. This mix makes it easy for companies looking to outsource to find qualified individuals to take on these tasks.
• Manufacturing: Guatemala produces many goods for consumption, from chemicals and petroleum products to textiles and furniture.
• Agriculture: The Guatemalan agricultural industry comprises mainly smaller farms with some medium- and large-scale operations. Agriculture employs roughly 50% of the workforce in Guatemala, making it a highly important part of the economy.
• Service and Tourism: Tourism and services serve as Guatemala’s economic linchpin, making up nearly 60% of the Guatemalan economy. These services include hospitality, retail, healthcare, and other specialties.
• Financial Services: A subset of the service economy, several foreign and national banking services are available in Guatemala.

Prominent Cities for Business

• Guatemala City: The capital of Guatemala, this city is far and away the most important economic center in the country. The government focused many of the nation’s development efforts on improving the city, and it shows. Guatemala City is home to most of the country’s largest corporations.
• Quetzaltenango: Also known as “Xela” to most Guatemalans, Quetzeltanango boasts a population of around 300,000. It is home to many of the most important universities in the country, and the population swells when classes are in session. It is an excellent source of fresh new talent.
• Escuintla: One of Guatemala’s oldest cities, Escuintla is the nation’s largest agricultural center and is an important region for producing and packaging farmed goods.

Technological Ecosystem

Tech Graduates & Workforce Tech startups find success leveraging graduates with domestic and foreign technology training. Guatemala has a large pool of workers trained in the U.S. in technical fields like programming. This education means they have solid technical knowledge and are better adapted to dealing with Americans in a business setting.

Facilities for Foreign Investment

Guatemala does not assess taxes on income not derived from the country itself. That income includes numerous sources, such as:

• Salary
• Bonuses
• Moving expenses
• Paid leave
• Domestic help paid for by an employer
• Education allowances
• Housing and other accommodations provided by an employer

To be considered to be a resident, a worker must live in Guatemala for at least 183 days out of the year.

Business Culture in Guatemala

Formal Guatemalans tend to be a conservative people who prefer formal etiquette and interactions. Titles are extremely important so use everyone’s proper title during business dealings and even into social gatherings. Snacking is Serious Lunch is the biggest meal of the day and afternoon snacks, called refracciones, are a set part of the meal schedule. Whereas dinner is a smaller meal, usually eaten around 8 p.m. Accountability It’s common for Guatemalan businesspeople to inform everyone around them that he or she is leaving, usually accompanied by a circular head motion.

Guatemala Gastronomy: Regional and Traditional Cuisines

Mainstays of the Guatemalan diet include corn, rice, beans, cheese, chicken, beef, and pork. Meat stews and soups, called caldos and sopas, are the most popular local cuisines.A hearty breakfast of eggs, tortillas, and beans is common, or for breakfast one may enjoy a mash of oats and milk. Lunch is large, the refracciones (afternoon snack) will include a small sandwich, tostada, tamal, or pastry.

General Highlights

Year	2022
Country	Guatemala
Capital	Guatemala City
Num. States / Province	22 provinces
Principal Cities	1.  Guatemala City 2.  Mixco 3.  Villa Nueva 4.  Quetzaltenango 5.  San Miguel Petapa
Language	Spanish
Local Currency	Quetzal Exchange Rate 1 Quetzal =. $0.1292 US Dollar
Major Religion	Catholic
Date Format	DD/MM/YY
Thousands Separator Format	999,999,999,.99
Country Dial Code	+502
Time Zone	GMT-6
Population	18,345,876
Border Countries	Mexico, Belize, Honduras, El Salvador
Continental surface	108.889 km²
Fiscal Year	January 1st to December 31st
VAT %	12% all other taxable goods and services, including imports
Minimum Wage	GTQ 92.88 per day (approximately 12 USD)
Taxpayer Identification Number Name in the country	NIT
Current President	Alejandro Giammattei

What you need to know about employing personal in Guatemala

Key Tax and Labor Authorities

Laws	Brief Description
Superintendencia de Admin- istracion Tributaria	The tax office
Ministry of Labor	Sets labor codes employers must follow
IGSS – Social Security Insti- tute	The equivalency to the US Social Security

Labor Contracts

Employers Contribution or Labor Cost

Annual Taxable Income In Guatemala, both residents and non-residents are subject to taxes on all income generated within the country. Corporate Tax Rates The only income that is subject to taxation is that generated by sources in Guatemala. Guatemala offers two different regimes for determining your tax rates based on net income or gross receipts. If you decide to tax your company based on net income, you will be subject to a 25% tax on all income, less passive income, ex- empt income, and income from foreign sources. This tax is due quarterly. Guatemala taxes resident companies, meaning they meet one of the following conditions:

• The company is legally incorporated in Guatemala
• The corporate headquarters or fiscal domicile is in Guatemala
• A branch or extension of a foreign country operating in Guatemala

The optional gross receipts regime is intended to be a much simpler form of corporate taxation. All income from Guatemalan sources is taxed at a graduated rate.

Taxable Gross Income	Tax Rate
The first 30,000 GTQ	5%
All income over that level	7%

Types of Disabilities

About 1 in 10 Guatemalans has a disability. The Health and Hygiene Unit is in charge of hygiene and safety, to eliminate risks of accidents and occupational diseases in order to improve the environmental conditions in the Work Centers.

Termination

Guatemala’s Labor Code outlines rules for termination of an employment contract

Justified Dismissal	The Law establishes a legal procedure to terminate an employment relationship in the event of a justified direct dismissal, which is described below: •          The employer must prepare the evidence in order to demonstrate the cause or causes that justify the termination of the labor relationship. •          The employer must then communicate the dismissal in writing to the employee, stating the cause for the dismissal. •          The employee must effectively cease the performance of his work. t’s important to note: According to Article 259 of the Labor Code, the employer’s right to terminate an employment contract is twenty days.
Unjustified Dismissal	Any employee who is dismissed for an unjustified cause is entitled to indemnification and as damages, up to 12 months of salary for the time he/she has not received the indemnification. She/he is entitled to the payment of bonus, Christmas bonus and vacations proportional to the time of dismissal.
Voluntary resignation	If the employee decides to voluntarily leave the company for reasons beyond the employer’s control. This does not entitle the employee to indemnification, but it does entitle him/her to the payment of outstanding benefits and salaries.

Other forms of compensation upon termination include severance if the employee is terminated without just cause. And they have 30 days to make a claim to a court. If the employer is unable to justify the reason in court, the employee receives up to 12 months of severance pay but cannot return to their previous job.