Guatemala: Financial transaction confidentiality

Author: | Published: 27 Mar 2017
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Consortium Legal – Guatemala

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Diagonal 6 10-01 zona 10 Centro Gerencial Las Margaritas Torre II, Oficina 1101, Guatemala City, Guatemala.

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+502 2279 3939

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+502 2279 3938 Visit Website

In August 2016, the Guatemalan Congress approved decree 37-2016 (Ley para el Fortalecimiento de la Transparencia Fiscal y la Gobernanza de la Superintendencia de Administración Tributaria). Through this decree, Congress seeks to reform the organisational structure of the Superintendency of Tax Administration (SAT). This reform will include incorporating mechanisms that contribute to the achievement of SAT's objectives, and in particular, providing the financial resources necessary for the State to comply with its constitutional obligations.

As of February 23 2017, the decree reforms the principle of confidentiality of financial transactions contained in the law of banks and financial groups. Before the reform, the Monetary Board, the Bank of Guatemala and the Superintendency of Banks had access to information on all banking operations, and therefore financial institutions were exempt from maintaining the confidentiality of client operations as regards those public institutions. The reform now adds the SAT to the list of public authorities that can receive this information. However, none of these entities can make public the data obtained without advance judicial authorisation.

Furthermore, the SAT, following the newly created corresponding procedure, may request and receive this confidential information from banking operators without having previously made a criminal complaint regarding the individual whose information it requires.

This newly created procedure has generated unrest among taxpayers and financial institutions due to its unusual nature. Using the new procedure, the SAT may request, via a court created specifically for this purpose, information on any taxpayer's financial operations. The procedure has generated two main concerns: 1) the SAT must justify the request by citing a reasonable doubt as regards the taxpayer's fiscal information; however, reasonable doubt as such, is not a defined or common term under Guatemalan law; and, 2) The taxpayer may not be informed that the SAT has requested the information from the corresponding financial institutions.

The fact that taxpayers are not to be informed could generate doubts from a constitutional point of view, since the taxpayer could be said to be defenceless in the face of actions that could be excessive or unjustified.

It will be interesting to see how the procedure works in practice and the effects it will have on the relationship between taxpayers, financial institutions and the corresponding tax authority.

Diego Alejos Rivera

Diego Alejos Rivera