Bill 4895 (the Factoring Agreement and Discount Law) and
Bill 4896 (the Leasing Agreement Law) have been thoroughly
discussed in Congress recently. Both aim to help the
development of the nation's economy, by providing individuals
with new financing methods. Both bills also introduce some
interesting concepts which, if applied, could be beneficial to
the contracting parties.
The Factoring Agreement and Discount Law allows for the
discount of credit rights relating to the payment received by
the fulfillment of certain contractual duties. This is a new
concept in Guatemalan legislation, and opens the door to a new
scope of application of discounting. If the contracting parties
embrace this new concept, the discounted parties will have a
new way to obtain funds and liquidity. This would, in turn,
boost the economy by providing new sources of financing to
individuals that don´t necessarily qualify for
traditional financing products.
Clearly, the Factoring Agreement and Discount Law may prove
beneficial to Guatemalans. Nevertheless, it is the Leasing
Agreement Law which may have the biggest effect on the economy.
This piece of legislation is important because it seeks to
establish the legal framework for leasing operations. Although
these operations are already undertaken in Guatemala, they are
not regulated and are governed solely by what the contractual
parties agree to.
An important aspect of the Leasing Agreement Law is the tax
treatment of the various payments made within the lease.
Another important aspect relates to the enforcement of the
agreement: the new law provides the lessor with a variety of
options, depending on the nature of the leased asset.
If, as expected, Congress passes these two bills in the near
future, a variety of financial products may soon enter the
market. This will, in turn, give rise to numerous economic