A constitutional challenge had been filed regarding to Article 60 of Guatemala’s Tax Update Law (Decree 10 of 2012) and its regulatory implementation in Articles 53 and 54 of Government Agreement 213 of 2013. These provisions establish a special valuation regime for import and export transactions between related parties, particularly for commodities and other listed goods, based on quoted international reference prices determined at a specific point in time. The regime applies within the broader transfer pricing framework set out in Articles 58 and 59 and addresses situations involving cross border transactions and the use of intermediaries, especially where such intermediaries lack real and effective economic presence.
The tax authorities defended the provisions by arguing that Article 60 constitutes a specific statutory valuation rule lawfully enacted by Congress and designed to complement, rather than replace, the general arm’s length methods. They maintained that the executive branch acted within its regulatory powers in issuing Articles 53 and 54, which merely operationalize the law by clarifying technical aspects such as the valuation date, the determination of relevant international prices, and the criteria for assessing whether an intermediary has real and effective presence. According to the authorities, the challenged rules do not alter the taxable base and do not infringe constitutional principles of legality, legal certainty, equality, or ability to pay.
In the complaint the applicant argued that Article 60 introduced an additional valuation method incompatible with the arm’s length principle and international transfer pricing standards, thereby undermining legal certainty and tax justice. The applicant further claimed that Articles 53 and 54 exceeded the scope of the enabling statute by adding requirements and mechanisms not provided for by Congress, in violation of the principle of normative hierarchy. The applicant also contended that the method could lead to arbitrary or confiscatory taxation by disconnecting taxable values from the taxpayer’s actual economic reality.
Judgment
The Corte de Constitucionalidad dismissed the action in its entirety.
The Court held that the applicant failed to demonstrate a concrete constitutional contradiction through proper comparative analysis. On the merits, it found that Article 60 lawfully establishes a specific valuation method for imports and exports that can coexist with the general transfer pricing rules without violating constitutional principles. It further concluded that Articles 53 and 54 represent a valid exercise of regulatory power, as they develop and clarify the statute without altering its essence or the taxable base.
From a transfer pricing perspective, the Court implicitly accepted the constitutionality of what is commonly referred to as the sixth method, understood as a special commodity pricing rule embedded within, rather than substituting for, the arm’s length system.
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