The TerraLex Cross-Border Guide to Business Investment in Latin America & the Caribbean provides key insights into the legal and regulatory considerations for foreign investors establishing or expanding operations in the region. This concise guide covers entity formation, registration processes, capital requirements, tax considerations, labor laws, investment incentives, dispute resolution, and foreign ownership rules, helping businesses understand the investment landscape across jurisdictions in Latin America and the Caribbean.
Under the Commercial Code of Guatemala (Decree No. 2-70), foreign investors can set up as:
The Commercial Code of Guatemala, Decree No. 2-70.
All commercial entities must register with both the General Commercial Registry and the Tax Administration. Information is submitted simultaneously via the Registry's platform. With the exception of Entrepreneurship Companies, which are incorporated electronically using the Registry's provided form, all other commercial entities must be incorporated by public deed before a notary. Once the complete documentation has been filed, the process usually takes eight business days, although this may increase to 15 days if objections or observations are raised.
Yes. Article 90 of the Commercial Code requires corporations to have a minimum initial capital of GTQ 200.00 (approximately USD 26.09). Article 196 establishes the same requirement for Limited Partnerships by Shares.
No. Guatemala does not impose exchange control regulations restricting the transfer of funds to or from foreign sources. The country operates under a free convertibility regime, allowing unrestricted capital movement.
Nevertheless, Anti-Money Laundering (AML) regulations do apply. Under the Law Against Money Laundering and other Assets, financial institutions are required to monitor and report certain transactions to the Special Verification Intendancy (IVE).
No. The Commercial Code does not require directors to be Guatemalan nationals.
No, Guatemala does not have any general legislation that imposes mandatory demographic quotas on legal entities or private companies.
Yes. According to Article 380 of the Commercial Code, all commercial entities, including authorised foreign entities, must publish their balance sheet in the Electronic Bulletin of the Commercial Registry at the end of each accounting period.
In addition, entities must comply with periodic tax reporting obligations to the Tax Administration, in accordance with their applicable tax regime.
Entities in regulated sectors (e.g. banking, insurance and telecommunications) may also be required to submit additional periodic statutory reports to their respective supervisory authorities.
The main labour laws and regulations applicable to foreign and local employers and employees are set out below.
Foreign workers in Guatemala must obtain a temporary or permanent residence permit from the Guatemalan Migration Institute, as well as a work permit issued by the Ministry of Labour and Social Welfare.
The employer must also be registered as a guarantor with the Migration Institute.
The process involves submitting the application forms and required documentation (a valid passport, police/criminal record certificates, an employment offer or contract and proof of employer registration) and obtaining residence authorisation from the Guatemalan Migration Institute. 3. Once residence is granted, apply for the work permit from the Ministry of Labour. 4. Registering the foreign worker with the Guatemalan Social Security Institute (IGSS).
According to the Labour Code, foreign personnel cannot exceed 10% of the total workforce and their combined salaries cannot exceed 15% of the total payroll, unless the Ministry of Labour grants exceptions for specialised roles.
In Guatemala, nationals and foreigners generally have the same rights and obligations regarding land ownership. However, the Constitution establishes two key restrictions:
State Territorial Reserves. Land classified as part of these reserves cannot be privately owned by anyone, whether Guatemalan or foreign. This restriction does not apply to land with registered property rights prior to 1 March 1956. Foreigners seeking to acquire such exempted land must first obtain authorisation from the Executive Branch.
Border Zone Restrictions: A 15-kilometre-wide strip of land along Guatemala’s borders may only be owned or possessed by Guatemalans by birth or by companies whose members are all Guatemalan citizens. The same exceptions apply in Guatemala, where both nationals and foreigners generally have the same rights and obligations regarding land ownership. However, the Constitution establishes two important exceptions.
The first is set out in Article 122, which regulates the State’s Territorial Reserves. Land classified as part of these reserves cannot be privately owned by anyone, whether Guatemalan or foreign. This restriction does not apply to urban land or land with registered property rights prior to 1 March 1956. If a foreigner wishes to acquire such exempt land, they must first obtain authorisation from the Executive Branch.
The second exception is set out in Article 123 and applies to a 15-kilometre-wide strip along Guatemala’s borders. Only Guatemalans by birth or companies whose members are all Guatemalan citizens may own or possess land in this border zone. As with the first restriction, this rule does not apply to urban land or land with registered property rights prior to 1 March 1956.
To be enforceable against third parties, all land ownership must be duly registered in the General Property Registry.
Guatemala is currently party to the following Bilateral Investment Treaties (BITs):
Guatemala is also a signatory to the Dominican Republic–Central America Free Trade Agreement (DR-CAFTA), alongside the United States, Costa Rica, El Salvador, Honduras, Nicaragua and the Dominican Republic. The agreement promotes trade and investment among its members.
Guatemala offers attractive tax incentives through special regimes, particularly for export-oriented businesses. These benefits include Income Tax exemptions in Free Zones or Special Public Economic Development Zones (ZDEEP), as well as Value Added Tax (VAT) and customs duty exemptions on imported machinery, equipment, and raw materials.
Further incentives are available under the Law for the Promotion and Development of Export and Maquila Activities (Decree No. 29-89), the Free Zones Law (Decree No. 65-89) and the Law on Legal Stability for Investments (Decree No. 9-2018). The latter allows investors to obtain a contractual guarantee from the state regarding the stability of certain legal, tax and administrative conditions for up to ten years. Sector-specific tax exemptions and benefits are also available for renewable energy, tourism, and infrastructure projects.
All legal entities operating in Guatemala must obtain a Tax Identification Number (NIT), register under an income tax (ISR) regime and the Value Added Tax (VAT) regime, and complete their Unified Tax Registration (RTU). These tax registration is processed simultaneously with incorporation.
Additionally, companies must request authorization of their accounting books from the Tax Authorities.
Guatemala’s competition rules apply equally to local and foreign investors. Articles 361 to 367 of the Commercial Code include provisions to protect free competition, while the Tax Update Law incorporates competition principles for international transactions between related parties.
In 2024, Guatemala enacted its first dedicated Competition Law (Decree No. 32-2024), which applies to all economic agents in the country, including foreign entities, and does not impose nationality-based restrictions. The law aims to guarantee free competition and prevent anti-competitive practices. Part of the law came into force in January 2024, with the remainder due to take effect on 9 December 2026.
Yes. Guatemala recognises arbitration, mediation and conciliation as valid alternative dispute resolution (ADR) mechanisms and has centres dedicated to these processes. Both national and international arbitral awards are recognised and enforceable.
Decree No. 67-95, also known as the Arbitration Law, regulates domestic and international arbitration and sets out the procedure for the recognition and enforcement of arbitral awards. Guatemala is also a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and the Arbitration Law stipulates that foreign awards are to be enforced in accordance with the Convention.
Yes, the primary legislation specifically designed to protect foreign investments and investors is the Foreign Investment Law (Decree No. 9-98). It provides definitions, rights and guarantees for investors, as well as setting out the obligations of state entities involved in investment-related procedures.
Guatemala offers a favourable investment climate, characterised by:
The Ministry of Economy's National Strategy for Attracting Foreign Direct Investment identifies priority sectors for foreign investment in the short, medium and long term. In the short term, opportunities are concentrated in the processing of food and non-alcoholic beverages, the production of chemicals and pharmaceuticals, and the manufacture of clothing and textiles. Other opportunities lie in the ICT and software sectors, as well as in business services such as contact centres and BPOs. In the medium term, the focus expands to include shared services centres, the electrical and electronics industries, health services, metalworking and tourism. In the long term, Guatemala is prioritising high-value sectors such as biotechnology, medical devices and equipment, electronic components and equipment, and information technology for advanced manufacturing.
Guatemala offers a functional infrastructure base for investment, with networks of roads, ports, airports, energy and telecommunications that support business operations. While ports and airports are generally in acceptable condition, there is uneven operating performance, and energy and internet coverage is strong in urban areas.
However, there are clear opportunities for improvement. The road network requires expansion and rehabilitation to reduce logistics times and costs, and the ports and airports would benefit from modernisation. Rural areas still have limited access to energy and internet services. Addressing these challenges could significantly boost competitiveness and create attractive investment opportunities in infrastructure development.
Investing in Guatemala carries certain risks. These include corruption and institutional weaknesses that may undermine trust and transparency; organised crime and money laundering, which present reputational and legal challenges; fiscal instability due to potential changes in tax policy; legal uncertainty stemming from slow and unreliable dispute resolution; and social conflicts, particularly in sectors such as mining, energy, and agriculture. Other risks include infrastructure deficiencies, which increase logistics costs and limit market access, as well as external economic volatility, which affects sectors that rely on exports or remittances. However, seeking specialised legal and tax advice can mitigate these risks. This includes incorporating anti-corruption and international arbitration clauses into contracts, implementing compliance and due diligence programmes, engaging with the local community, undertaking corporate social responsibility initiatives, establishing well-structured public–private partnerships, taking out political risk insurance and foreign exchange coverage, and strategically locating operations to ensure access to essential services.
Notably, on 23 May this year, S&P Global Ratings upgraded Guatemala’s credit rating from BB to BB+, reflecting an improved perception of the country’s investment climate.
Disclaimer: This guide contains summaries of general principles of law. It is not a substitute for specific legal advice and should not be relied upon in relation to the application of the law or subject matter covered.
