Employ
RecruitDoing Business in Guatemala
-
Drew Donnelly
- Published
- June 6, 2026
- 5 ★ on G2
Let Remote People handle payroll, compliance, and HR admin worldwide so you can focus on building your team.
Guatemala Economy Overview
Currency
Guatemalan Quetzal (GTQ)
Working hours
44 hours/week
Public/bank holidays
13 public holidays
Capital
Guatemala City
Languages
Spanish
Population
19 million
Minimum hourly salary
GTQ 11.49/non-agricultural sector
GTQ 10.82/ agricultural sector
GTQ 9.36/export sector
Tax year
1st Jan – 31st Dec
Date format
DD/MM/YYYY
Misclassification penalties
Misclassifying workers as independent contractors instead of employees can lead to penalties, including fines and back payments for unpaid social security contributions and taxes.
Fun fact
Guatemala is home to Tikal, one of the largest and most impressive ancient Mayan cities, known for its towering temples and pyramids.
Guatemala is referred to as the “Land of the Eternal Spring.” It is rich in culture and striking landscapes, and is among the world’s major coffee and sugar producers. Guatemala’s economy is the largest in Latin America and is described as moderately free.
The country’s population has grown to 18.4 million in 2024 and has experienced the least amount of economic decline in the last five years. Guatemala offers businesses trade freedoms and does not restrict the formation of companies. Despite a history of authoritarian rule, today, Guatemala is a diverse nation and a member of the United Nations, the World Trade Organization, and the Latin American Economic System.
If you are considering expanding your business in Guatemala, the country is ranked among the top 10 Latin American nations for macroeconomic stability. It is Central America’s largest exporter of raw materials, and recently, Guatemala’s 2024 budget bill has made provision for a $1 billion investment into infrastructure. These conditions make Guatemala an attractive choice for developing a strong workforce and expanding one’s business.
Overview of Guatemala's Economy
Guatemala’s 2023 GDP stood at $102 billion, the highest it’s been since the 1960s. From 2010 to 2019, the economy has seen stable growth of 3.5%. This is due to its judicious fiscal policy and open market conditions.
Guatemala’s GDP is driven by the private sector, which accounts for up to 85% of its gross domestic product. The top sectors in the country include agriculture and manufacturing.
Tourism Industry | Impact |
|---|---|
Annual Visitors | Approximately 2 million |
Economic Contribution | Around $1.4 billion |
Job Creation | Boosted by international tourists arriving by air |
Annual Economic Support from Air Arrivals |
The USAID plays a significant part in attracting direct foreign investment by supporting key stakeholders and creating new investment opportunities. The Guatemalan economy continues to strengthen and improve with ongoing foreign and national investments.
Taxes
Employer Tax: 12.67%
Social Security Contribution
10.67%
Occupational Risk Insurance
1%
Additional Contributions to IGSS
1%
Employee Tax: 4.83%
Social Security Contribution
4.83%
Income tax
Guatemala follows a progressive income tax system:
Gross Income (GTQ)
Up to 300,000
Over 300,000
Tax Rate
5%
7%
Business Regulation in Guatemala
The country’s labor law includes the Constitution of the Republic of Guatemala, the Guatemalan Labor Code (Código de Trabajo), and the country’s social security program. To conduct business in Guatemala, companies must familiarize themselves with the country’s employment law concerning working hours, leave, and employee benefits.
Guatemalans typically work a 44-hour week or 8 hours per day. Employees are not permitted to work more than 12 hours a day. In terms of annual leave, employees get 15 days off, provided they have worked for the company for one year. If an employee’s contract is to be terminated, they must be paid any leave days they have not used for the last 5 years.
Other types of leave employees are entitled to include sick leave, bereavement, maternity, and paternity leave. Employers are required to pay employee benefits, including income tax, social security, and life insurance. Guatemalan law requires the contribution of an allowance toward the average cost of living for each employee.
The minimum wage is GTQ 3384 ($437) per month. Employers offer 3 types of contracts, including fixed-term contracts that are active for a specific period, indefinite or permanent contracts, and temporary or specific work agreements.
Employees can only have their contracts terminated without pay if they are guilty of misconduct, according to Article 77 of the Guatemala Labor Code. If an employer fails to adhere to these business and employment regulations, they will face penalties.
Benefits of Doing Business in Guatemala
One of the major reasons businesses invest in Guatemala is because of its central location. Companies can facilitate trade between North and South America, and with its free trade agreements in place, it becomes easier for businesses to expand across local and international markets.
For Guatemalan businesses looking to export goods, the free trade agreement with North and South America and Europe makes this process easier and more efficient. Businesses interested in saving on their operational costs can benefit from the affordability of rent, property, and an economical labor force.
In terms of tax, the Guatemalan government makes various tax incentives available to businesses. Companies can benefit from tax exemptions such as the absence of tax on import duties for machinery. Under the Law of Promotion and Development of Export Activities and Drawback Industries (Maquila), you will not have to pay income tax on qualifying goods for 10 years.
Business Expansion Options in Guatemala
It makes business sense to invest in expanding your workforce in Guatemala because of its affordability, tax benefits, and employment law. Investors are provided the flexibility to choose a company structure to suit their brand initiatives and operations with the following types of entities:
Guatemala Employer of Record (EOR)
The Guatemala EOR becomes the official legal employer of your Guatemala team. This method is fast and efficient, making it perfect for companies that need to quickly deploy staff on the ground.
An EOR handles payroll, benefits, taxes, and compliance with local labor laws, allowing businesses to focus on their core activities. They may also provide additional services, such as Guatemala talent acquisition and visa support.
Recruitment Agencies
A Guatemala recruitment agency can help you source employees in Guatemala quickly and cost-effectively. Guatemalan recruiters often work in tandem with Professional Employer Organizations or Employers of Record (see below) to ensure that your Guatemalan team is hired and paid in full compliance with local laws.
Guatemala Professional Employer Organization (PEO)
A PEO is a Professional Employer Organization, and an EOR is an Employer of Record. Both services are provided by companies that work closely with individual clients and employees; however, only the EOR has a registered business in Guatemala. A PEO is best for companies that want a simple, streamlined service to help them find talented employees, facilitate payroll, and protect business interests.
An EOR, on the other hand, can help employers with payroll, HR tasks, onboarding, and undertaking various legal measures that a PEO cannot perform. Hiring a PEO or an EOR is a good idea if you don’t want to establish a subsidiary or branch in the country.
Partnering with a professional employer organization (PEO) allows companies to employ local staff in Guatemala without the need to establish a legal entity. This approach is quicker and less expensive, making it ideal for businesses testing the Guatemala market or those with limited operations.
PEOs handle administrative tasks and ensure that companies comply with Guatemala regulations, reducing the complexity and risk associated with hiring local employees.
Subsidiary Incorporation
Setting up a subsidiary in Guatemala requires careful consideration of the legal requirements to prevent issues of non-compliance. Look into the type of business entity or company you wish to establish. International investors often register a partnership or an LLC.
The next step is to choose a unique company name and provide copies of the company’s statutes to facilitate incorporation. The drafted statutes must be certified, and the subsidiary registered through the Mercantile Registry can be completed online.
Investors must provide a registered physical address or office for the company and post a bond of $50,000 before the new business can be registered. Before any business can operate in Guatemala, you must assign a legal representative who can complete the remaining details of incorporation. It can take up to one month to successfully incorporate a business.
Branch Registration
A branch office is part of the parent company that simply operates in a different location. To register a branch, you will need copies of the company statutes, to submit the information, and to make the relevant payment to the General Mercantile Registry.
The investor or employer must pay a $50,000 bond and submit the relevant details concerning the physical location or company address. A registered agent must be assigned.
The documentation needed to register a branch consists of proof of owners’ identification, a public deed of the constitution, and a certificate confirming the addresses of the individuals responsible for the company’s legal compliance.
Business Opportunities in Guatemala
Guatemala is a strong and independent country that has overcome many sociopolitical hurdles over the last two decades. Considering its independence and partnership with the US government, businesses can take advantage of the country’s strategic location and trade agreements.
Business Opportunities | Reasons |
|---|---|
Agribusiness and Food Processing | Fertile land, diverse crops, growing demand for processed foods. |
Tourism and Hospitality | Rich cultural heritage, natural attractions, increasing tourist arrivals. |
Textiles and Apparel | Skilled workforce, competitive labor costs, proximity to major markets. |
Renewable Energy | Abundant solar, wind, and geothermal resources, government incentives. |
Business Process Outsourcing (BPO) | Bilingual workforce, competitive labor costs, supportive government policies. |
The Guatemalan government might have a long road ahead to build the country, but investors looking to expand their business can take advantage of low overhead costs and international trade.
These opportunities, combined with Guatemala’s improving infrastructure, access to regional markets through trade agreements, and ongoing efforts to enhance the ease of doing business, make it an attractive destination for investors seeking to establish a presence in Central America.
