Well, you may be wondering what SAT office means. Behind this placid view of this government building hides one of the reason why Guatemala is so poor; a beggar really if we consider that Guatemala begs money for road repairing, road building, new modern national identification card, fertilizers, schools, libraries and the list goes on and on. The picture above is the local office of the Superintendencia de Administración Tributaria, SAT for short and the equivalent of the IRS.
The SAT is in charge of collecting the taxes and to funnel this money to fund all the government needs. The SAT does such a poor job at collecting taxes and thus the government is not autarkic and needs to beg for international funds. The reasons the SAT does a poor job at funding the government are complex and it would require huge and extensive entries to cover them. Suffice it to say that most Guatemalan earn their money in the informal economy, which does not pay income taxes, like town market vendors, street vendors, convenience stores, et-cetera. Then, we have the many small businesses who do not hand out facturas (invoices) for which they are charging sales tax, yet not passing this collected tax money to the SAT. Finally, we have the big businesses and wealthy Guatemalans who have very creative accounting departments to do every imaginable thing to withhold the taxes due on their accumulated fortunes; how fortunate for them! In the mean time, it is mostly the salaried workers, the independent service providers and the honest businesses who transfer the collected sales taxes and income taxes to the SAT. As you can see, tax evasion is a huge problem in Guatemala. I don’t have with me actual figures, but I am sure that less than 20% of the population pay their income taxes.
Perhaps Edgar or can provide the actual figures and even expand on or clarify the subject.
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