Guatemala Tax Reforms: Inheritance Tax and IUSI Changes in 2026
Guatemala is undergoing significant reforms to the laws governing various taxes, either through their repeal or through amendments that establish tax benefits or exemptions for certain segments of the population.
One such example is Decree No. 6-2023 of the Congress of the Republic of Guatemala, which repealed the Inheritance, Legacies, and Donations Tax, effective April 1, 2026.
The recitals to the decree state that the repeal responds to the need to ensure a fair and equitable tax system founded on the principles of legality, ability to pay, and tax justice and equity.
In this regard, Article 243 of the Political Constitution of the Republic of Guatemala provides:
“The tax system must be fair and equitable. To this end, tax laws shall be structured in accordance with the ability-to-pay principle. Confiscatory taxes and double or multiple domestic taxation are prohibited. Double or multiple taxation occurs when the same taxable event attributable to the same taxpayer is taxed two or more times by one or more entities vested with taxing authority, in respect of the same event or tax period.”
According to Oscar Chile Monroy, “the elimination of this tax corrects a historical distortion in the transfer of wealth. In many cases, inheritance taxes amounted to double taxation: the assets had already been taxed when the wealth was generated and were taxed again upon their transfer after death. Repealing the tax corrects this effect and reinforces the principle of tax equity.”
What Does the Elimination of the Inheritance Tax Mean for Estate Proceedings?
Although estate proceedings still require an appraisal of the assets comprising the estate, the purpose of that appraisal is no longer to determine the tax previously payable on transfers by inheritance.
The appraisal remains necessary to prepare the formal inventory of assets comprising the estate. Where applicable, this documentation must be attached to the certified record of the relevant portions of the proceedings submitted to the General Property Registry when transferring ownership of the assets.
From an economic perspective, repealing this tax may help stimulate various sectors, particularly real estate, by facilitating property transfers without the tax burden previously imposed on inherited assets.
It may also help expedite proceedings that could previously be halted or delayed by the administrative steps required to assess and pay the tax before the Ministry of Public Finance.
As a result, estate proceedings may become simpler and less costly for families, while also generating increased professional activity associated with these procedures, particularly for notaries and other professionals involved in formalizing and transferring ownership of inherited assets.
Reforms to the Single Property Tax (IUSI) in Guatemala
The Impuesto Único Sobre Inmuebles (IUSI), or Single Property Tax, is an annual tax assessed on the value of real property located in Guatemala, including land, houses, buildings, and other real estate.
Revenue from this tax is collected by municipalities and serves as a source of funding for public services and local infrastructure projects.
Decree No. 18-2026 of the Congress of the Republic amended the Single Property Tax Law (IUSI). However, the reform has raised numerous questions among homeowners regarding its application and scope.
One key consideration is that the benefits established under the reform for properties used as residences will apply only from the date the legislation enters into force.
Importantly, the reform will not apply retroactively. Accordingly, it does not provide for refunds of taxes previously paid, nor does it exempt taxpayers from outstanding tax liabilities.
Properties used for commercial activities, on the other hand, will remain subject to the IUSI at the applicable rates of 3, 6, or 9 per thousand of the property’s value.
One example that has attracted particular attention concerns properties rented through platforms such as Airbnb. In these cases, the nature and use of the property must be assessed because a property used for occasional or tourist rentals may not necessarily qualify as a dwelling used exclusively as a residence.
IUSI Reform: Questions About Municipal Taxes and Property Owners
The IUSI reform has generated controversy, particularly over its potential impact on municipal finances. Concerns have been raised that some municipalities may seek to introduce new local levies to offset a possible decline in IUSI revenue.
Although municipalities have authority under the law to establish certain local levies and fees, they must exercise that authority within the limits prescribed by the Political Constitution of the Republic of Guatemala and other applicable laws.
Municipalities must therefore exercise particular caution when introducing new revenue-raising measures, as questions may arise concerning their constitutionality and legality.
It will also be necessary to monitor how the reform is implemented once it enters into force and to assess its actual effects on both property owners and municipal finances.
Conclusion: The Impact of Guatemala’s Tax Reforms
With respect to the repeal of the Inheritance, Legacies, and Donations Tax, the measure can be considered beneficial to the public because it reduces the financial burden associated with inherited property transfers and removes tax-related procedures that could prolong estate proceedings and increase their cost.
This reform helps facilitate the transfer of family wealth, streamline the formal registration and transfer of assets, and provide greater legal certainty in estate proceedings.
By contrast, the IUSI reforms have prompted greater uncertainty regarding their application and scope. Potential gaps, inconsistencies, and differing interpretations could prevent certain groups from obtaining the expected benefits and, in some cases, expose them to new burdens or difficulties.
The overarching objective of tax reform should be to establish a fairer and more equitable system that not only benefits taxpayers but also stimulates the economy, encourages investment and consumption, protects family wealth, and strengthens Guatemala’s competitiveness.
Consequently, it will be essential to monitor the implementation of these reforms and assess their practical effects, particularly to determine whether the legislative changes truly achieve the objectives that prompted their adoption.
By Cicely Samayoa
