SAT Office in La Antigua Guatemala

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 Mauricio can provide the actual figures and even expand on or clarify the subject.

Manolo says:

February 29, 2008 at 9:42 am

I wouldn’t mind working for the SAT, as my dear brother does, if it is in this nice looking office. I never earned enough to do a tax declaration in Guatemala, so I cannot say anything “valid”. Back then if you didn’t earn a certain sum per year you didn’t have to pay income tax. In Canada you make your income tax declaration regardless of your salary and if you don’t make enough the government gives you back what was deducted as income tax from each paycheque.

However, my impression is that the begging in Guatemala is not only external, but also internal. As far as I know there is no “tax culture” and vendors very openly offer you to take the taxes off if you don’t ask for an invoice. How is a country going to thrive if his citizens do not pay taxes? Yeah yeah yeah… the government is corrupt and taxes go into politicians pockets and whatnot. But that is THEIR problem, isn’t it?

Touchy subject Rudy… be careful 😉

The law-abiding citizen.

patsy poor says:

March 1, 2008 at 6:40 am

looks like they collect enough taxes to have a nice building. the street vendors probably do what they do because they can’t get work else where.

Mauricio Romero says:

March 3, 2008 at 8:19 pm

There are too many ideas and misunderstanding, don’t know were to start. SAT work is to collect taxes according to laws, laws as you know are approved by Congress based on proposals that Ministry of Finance prepare. So if you think that taxes must be redefined to response to other strategies you might be right, but this cannot be fixed by SAT, only can be fixed by a technical, consistent proposal that doesn’t get trimmed at Congress. In the meantime, proposal like Ley Antievasión from 2006 have enable SAT to have better information and have payed back with an increase of tax collection despite custom tax rates being cut down for free trade’s sake.

Then, people think that people with salary are the ones who pay, let me tell you it the other way around, there are a few hundred tax payers that pays more than 80% of taxes. Custom taxes are also very important and they are not payed by people with a salary, they are payed by business people (importers).

Manolo also raises an issue, about Tax Culture, in other countries Tax Culture is a central government issue because from the moment the Goverment returns taxes in the form of services the collecting naturally gets better. Manolo can tell you how high the tax load is in Canada, but they don’t complaint as much because they see services.

Finaly some links you might find interesting: Tax Stats. Cultura Tributaria. SAQB’E. SAT might improve its work, but calling it “poor”, no, I don’t think so.

March 3, 2008 at 8:22 pm

By the way, SAT actually ocuppies and has restored what in old times used to be “La Casa de la Moneda”, I remember there is some information at the entrance, maybe you could share a picture 🙂

Rudy says:

March 3, 2008 at 8:30 pm

Mauricio: The poor adjective was planted to get you to comment… it only took 5 days. I know the hands of the taxman (as The Beatles would call you) or tax collector (SAT) are tied until better legislation is approved, a tax culture is instituted. Thanks for stopping by and clarifying the misinformation. 😉

March 4, 2008 at 6:18 am

Got me, but not in five days, it took me 5 secs to feel like commenting the moment I read the post 😉

SAT Office in La Antigua Guatemala

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