On April 28 of the current year, the Congress of the Republic of Guatemala approved Decree 13-2026, which amends various provisions of the Tax Update Act (Decree 10-2012) regarding Income Tax (Impuesto Sobre la Renta – ISR) applicable to income from subordinate employment.
The decree, published in the Official Gazette (Diario de Centro América) on May 15, 2026, includes provisions for immediate application, as well as structural modifications for phased implementation that will enter into force on January 1, 2027. Consequently, companies must immediately consider both the effects on the 2026 fiscal period and the adjustments required for the upcoming year.
Purpose and Importance of the Reform
The recent reform seeks to update the tax regime applicable to employment income and adapt various parameters to the country's economic and wage reality, ensuring that employees earning the minimum wage are not subject to this tax, which would heavily impact their personal finances.
Among the most significant changes is the incorporation of adjustment mechanisms linked to the minimum wage, aiming to prevent future wage increases from inherently generating a higher tax burden for lower-income employees. Under the previous scheme, the annual deduction of Q48,000 remained fixed despite periodic increases in the minimum wage, causing employees earning these wages to become subject to Income Tax. However, under the new framework, this base may be adjusted based on annual minimum wage increases.
As part of the transitional measures, the decree establishes a one-time extraordinary deduction of Q3,024 applicable to the 2026 fiscal period, which may be used without the need for supporting documentation
Operational Impact
This measure also has important operational implications for employers in their capacity as withholding agents for Income Tax on employment income. In this context, organizations must verify the proper application of the new provisions and follow up on the administrative criteria and guidelines issued by the Superintendency of Tax Administration (Superintendencia de Administración Tributaria – SAT) within its scope of competence for implementation.
At BDS Asesores we recommend that organizations timely evaluate the impact of this reform on their payroll processes, withholdings, and tax compliance to identify the necessary administrative, operational, and technological adjustments.
Our team remains at your disposal to provide the necessary legal counsel for analyzing the new provisions, reviewing internal procedures, and implementing measures that facilitate a smooth adaptation to the new regulatory framework.