Guatemala: Reforms to the Free Zone Law

October, 2021 - Antiguo Cuscatlán, El Salvador

On May 12, 2021, the Congress of the Republic approved 3 amendments to Decree 65-89 regulating the Law of Free Zones in Guatemala through Decree 6-21.

In accordance with this amendment, the following was modified in bold type:

1. Article 1 of the law was amended in which it was established that “The purpose of this law is to encourage and regulate the establishment in the country of Free Trade Zones, which promote national development through the activities carried out in them, particularly in actions aimed at strengthening foreign trade, promoting new options for domestic and foreign investment, employment generation and technology transfer”.

2. Article 41 is amended, which excludes 11 activities from the limitation established in said article, thus expanding the activities that may operate in the free trade zone:

Animal feed Leather and footwear
Plastics Medicines
Cosmetic industries Paints
Furniture Recreation centers and hotels
Toys Electronics and household appliances
Ceramic products
3. Article 5bis of the law is added in which literal i. is added and it is added that the following are not eligible to benefit from the present law: “Individuals or legal persons, public or private, national or foreign, whose activities in the national customs territory are taxed and by virtue of which they are taxed, may not migrate or benefit from the provisions of the present law. Excepted from the above are the persons who create new entities, with different activities for the generation of new investments and jobs, different from those registered and taxed in the national territory”.

It also adds that the Tax Administration must issue a technical opinion stating that in fact a new investment is being made in this case and that it does not represent a transfer of operations affected by this regime.

4. Article 50 bis is added to the law which establishes that it is considered a special case of customs fraud to obtain the qualification referred to in this Law by means of simulation, concealment, maneuver, trickery or any other form of deceit to the Ministry of Economy or to the Superintendence of Tax Administration.

This amendment adds a penal type to the one established in Article 2 of the “Law against customs fraud and smuggling, Decree 58-90”, which establishes the special cases of fraud in the customs branch.

5. Finally, the transitory article is modified in which the persons that were authorized to operate in the free trade zone, according to Decree 65-89, maintain the legal status granted by said decree, for the term granted in the resolution issued by the Ministry of Economy.