IVA Exemption for Projects Guatemala 2026: How to Apply at SAT

VAT exemption for projects is the procedure at SAT that allows NGOs, projects with international cooperation, qualified religious entities and other authorized beneficiaries to make purchases of goods and services without payment of 12% VAT. It’s a mechanism distinct from automatic exemption and requires prior authorization by SAT resolution.

Quick summary VAT exemption: Applies to NGOs, international cooperation, religious entities, donations. Requires prior SAT resolution. Documentation: legal personality, financing agreement, detailed budget. Term: 30-90 business days. Cost: Free. Validity: per project or renewable annual.

What Is VAT Exemption?

VAT exemption is the full or partial dispensation of the 12% Value Added Tax payment for specific operations authorized by SAT under defined legal frameworks. It’s conceptually distinct from other figures:

The key difference between exencion and exoneracion: exencion operates by right (e.g., financial services are exempt), while exoneracion requires application, evaluation and express authorization by SAT resolution. Once authorized, it’s registered in the FEL system and applied automatically to operations of the authorized project.

Learn more about VAT and fiscal credit →

Who Can Apply for Exemption?

The following don’t qualify as beneficiaries: for-profit companies, individuals, private contractors (even if they execute work for an exempt entity — that’s the entity’s exemption, not the contractor’s).

Typical Use Cases

1. Educational NGO with USAID Financing

An NGO dedicated to rural education receives Q5,000,000 from USAID to build 10 schools. Requests VAT exemption on construction materials, transport, equipment — everything for the project. SAT authorizes for the project term (24 months) and the NGO buys without VAT, saving Q600,000 (12%) reinvested in more benefits for beneficiaries.

2. IDB Infrastructure Project

IDB-Government of Guatemala agreement to improve rural roads. The agreement establishes that loan resources don’t carry VAT. SAT issues general exemption resolution for all project purchases, identified with specific code. Each invoice issued to the project is tagged with that code in FEL.

3. International Donation to Hospital

An international foundation donates medical equipment to a non-profit private hospital. For the hospital to receive without paying customs VAT, it must request exemption before customs clearance. SAT and SAT-Customs validate the donation, compliance with the social purpose, and issue authorization for nationalization without taxes.

4. Church Building Temple

A religious entity with current legal personality builds a temple. Requests exemption on construction materials and services under the regime applicable to qualified religious entities. SAT evaluates the scope and issues a resolution limited to the project.

Requirements for the Application

General Documentation

1. Current legal personality of the beneficiary entity (deed, last reform, certification)
2. Legal authorization to operate (MINGOB for NGO, corresponding body for others)
3. Active and current NIT (verify your NIT)
4. Current fiscal solvency (no SAT debts)
5. Detailed project description: objectives, beneficiaries, term, location
6. Detailed budget with items and estimated suppliers

Specific Documentation by Type

For projects with international cooperation:

• Financing agreement signed between cooperant and beneficiary
• Cooperant qualification letter
• Project approval document
• Physical-financial execution plan

For NGO:

• Registration in the Registry of Legal Entities (MINGOB)
• Financial statements of the last fiscal year
• Board of directors minutes approving the project
• Project acceptance letter by counterpart

For donations:

• Formal donation document (deed, agreement)
• List of goods/services donated
• Donor qualification (organization, foundation, embassy)
• Plan of use of the donation

How to Apply for Exemption Step by Step

Step 1: Documentary Preparation (2-4 weeks)

1. Gather all documentation per the exemption type
2. Verify legal personality validity and request recent certifications
3. Confirm with the cooperant that the project qualifies
4. Prepare detailed project budget (goods and services to acquire)
5. Obtain updated fiscal solvency at Agencia Virtual

Step 2: Submit at Agencia Virtual

1. Enter portal.sat.gob.gt/portal/agencia-virtual with CUI/NIT
2. Navigate to “Applications” → “Tax Exemptions”
3. Select “VAT Exemption per Project”
4. Complete the form: entity data, type of exemption requested, project
5. Attach documentation in PDF (legal personality, agreement, budget, qualification)
6. Submit application and save the file number
7. Additional annexes may be required per SAT observations

Step 3: Follow-up and Resolution

1. SAT analyzes the application — 30 to 90 business days depending on complexity
2. May request additional information — you have 10 business days to respond
3. Receive resolution by email:
   • Total approval — with exemption code and validity
   • Partial approval — only some project items
   • Rejection — with reasons to appeal or adjust

Step 4: FEL Activation

1. Register the resolution in the entity’s FEL system
2. Communicate the exemption code to your main suppliers
3. Suppliers tag invoices issued to your entity with the code
4. The FEL system automatically validates each operation against the SAT resolution

Cost and Time

Daily Operation with the Exemption

How to Make Exempted Purchases

1. Communicate to the supplier before the purchase that you’re in an exempt regime and your code
2. The supplier issues FEL Electronic Invoice with 12% VAT (standard)
3. The supplier attaches the SAT exemption certificate in the FEL system
4. The invoice total is automatically adjusted in the exempted operation
5. You pay only the base (without VAT)
6. The supplier claims the VAT with SAT as fiscal credit using the certificate

Operations Not Covered by the Exemption

If you buy something not contemplated in the resolution (unforeseen expense, item outside the authorized budget), you must pay normal VAT. Items NOT included:

• Personal expenses of project staff
• Consumer goods unrelated to the project
• Services outside the authorized scope
• Goods/services for the entity’s commercial use (if you combine commercial operations with project)

Penalties for Improper Use

If SAT detects exemption was improperly applied:

1. Payment of omitted VAT (12%) with default interest
2. 100-200% fine of omitted VAT (Tax Code)
3. Possible revocation of future exemptions for the entity
4. Fraud classification if omission is deliberate (Penal Code Art. 358)
5. Fiscal solvency block affecting other entity procedures

NGOs and exempt entities must have strict internal controls: each purchase must be backed by the project scope and SAT resolution. Internal audit recommended at least annually.

Special Cases

Exemption Renewal

When the project continues beyond the original term or when authorization is annual:

1. Request renewal 60 days before expiration
2. Update documentation: prior period execution, next budget
3. Demonstrate compliance with the authorized project
4. SAT evaluates and issues new resolution or extension

Project Scope Change

If during execution you need to add items not contemplated:

1. Submit modification before SAT with justification
2. Attach cooperant approval if applicable
3. SAT issues modifying resolution expanding or adjusting the scope

Exemption Audit

SAT can audit exemption use to verify:

• Concordance between purchases and authorized project
• Supporting documentation for each operation
• Compliance with project objectives
• Absence of improper use

The entity must keep all documentation 4 years and maintain detailed internal records.

Frequently Asked Questions

“I’m a private contractor for an exempt NGO. Do I charge without VAT?”

No. The exemption is the NGO’s, not the contractor’s. You issue FEL Electronic Invoice with normal 12% VAT. Your client (NGO) attaches its exemption certificate in FEL, and the system processes the operation. You claim the VAT as fiscal credit against your returns because the operation was taxed on your side.

“My project lasted longer than planned. Did the exemption expire?”

Yes. Exemptions have defined term. If you need to execute after expiration, you must request renewal or new authorization before continuing to buy with exemption. Purchases made after expiration without renewal are normally taxed operations.

“We receive equipment donation from abroad. How do I get exempt from customs VAT?”

For nationalization of donated goods, the application includes SAT and SAT-Customs. You need: donation document, donor qualification, beneficiary certification, goods description. It’s processed before customs clearance. Without prior authorization, goods pay customs VAT normally upon entry.

“An embassy wants to donate to our NGO. Is the process different?”

Some embassies have framework agreements with Guatemala that facilitate exemption. First verify if the embassy has an established mechanism. Generally the process is similar but documentation includes the embassy’s official letter and verification of diplomatic reciprocity.

“My NGO has several projects. Do I process a single exemption?”

Generally each project requires separate authorization with its own agreement, budget and scope. Some NGOs with multiple projects consolidated with a single cooperant can negotiate framework resolution. Consult SAT 1550 or your CPA for your specific case.

Practical Tips

1. Start the procedure early — 60-90 days before the first project purchases. The process isn’t immediate and buying without prior authorization loses the opportunity to save the VAT.
2. Detail the budget well — include all foreseeable items. Subsequent modifications require new procedure.
3. Stay current with SAT — current fiscal solvency is essential requirement. A minor debt can block the entire procedure.
4. Train the administrative team — whoever manages purchases must know the exemption scope to not compromise operations.
5. Keep everything 4 years — invoices, FEL certificates, SAT resolution, payment receipts, project documentation.
6. Reports to the cooperant — international cooperants require financial reports. Ensure the exempted VAT saving is correctly reflected.
7. Call 1550 or consult CPA specialized in international cooperation for complex cases.

Official Links

• SAT — Agencia Virtual
• SAT — Main Portal
• MINGOB — Registry of Legal Entities
• SAT Information Line: 1550

Related SAT Procedures

• IVA Tax Credit Refund — recovery of paid VAT (when no exemption)
• Electronic Invoicing FEL — where exemption is applied
• CUI-NIT Lookup — verify your registration
• Annual ISR Tax Return — independent income declaration
• Changing Tax Regime — if your entity evolves