Guatemala: An Overview

Guatemala’s Transformation and Regulatory Shifts

Overview

Guatemala enters 2026 in a period of strategic transition shaped by an intense institutional and political agenda. As Central America’s largest economy, its resilience, proximity to the United States, and long-standing foreign exchange stability continue to make it attractive for foreign direct investment. This pivotal year combines institutional renewals with pre-electoral dynamics that will define the legal and political landscape through 2030. Infrastructure development, deepening US partnerships, and regulatory reforms – particularly in antitrust and anti-money laundering – are reshaping the business environment and increasing the need for sophisticated legal and strategic planning.

A decisive political year: institutional renewals

The country is currently immersed in the process of appointing new leadership across its most vital institutions. This cycle includes the election of a new attorney general, the renewal of the Supreme Court of Justice and the courts of appeals, the Constitutional Court, the comptroller general, the Supreme Electoral Tribunal, and authorities for the national university.

For the legal sector and international investors, these appointments serve as a litmus test for judicial independence and institutional stability. As 2026 is a pre-electoral year, political activity is expected to intensify as parties position themselves for the 2027 presidential, congressional, and municipal elections. Navigating this environment requires sophisticated legal counsel capable of assessing political risk alongside regulatory challenges.

Economic outlook: resilience and stability

Guatemala’s economy remains remarkably resilient, operating with a high degree of independence from its political cycles. For 2026, GDP growth is projected to be between 3.5% and 4.0%, significantly outpacing the projected average for Latin America and the Caribbean, which is expected to settle around 2.3%.

A cornerstone of this attractiveness is the country’s long-standing foreign exchange stability, with the quetzal maintaining its position as one of the most stable currencies in the hemisphere. Furthermore, the Foreign Investment Act continues to provide a robust legal shield for international capital, ensuring non-discrimination and the free repatriation of dividends. This combination of technical monetary stability and a protective legal framework ensures that, regardless of internal transitions, Guatemala remains a premier and safe harbour for foreign direct investment in the region.

Infrastructure and strategic partnerships

Infrastructure development remains a national priority, supported by a strengthened partnership with the United States, including a USD110 million road and rail collaboration and a USD600 million modernisation of Puerto Quetzal, backed by the US Army Corps of Engineers.

Urban mobility initiatives are also progressing. The Metro Riel light rail system, crossing Guatemala City from north to south, has received technical and financial backing from the US government, ensuring compliance with international transparency and sustainability standards. Meanwhile, the Aerometro project has reached visible construction milestones, driving increased activity in international procurement, public–private partnerships, and complex infrastructure financing.

The new regulatory frontier: antitrust and AML

The legal landscape is undergoing a systemic shift with the implementation of the Competition Law (Antitrust). Enacted in 2024, the law is currently in its final transitional phase and will become fully applicable and enforceable by the end of 2026. This has triggered a surge in legal activity as companies audit their commercial practices and pricing strategies to meet the requirements of the new Competition Authority before the enforcement deadline. 2026 is a crucial year for M&As before merger control rules take effect.

Guatemala is advancing a new AML law to align with GAFILAT and COLAFIS standards, strengthen oversight, safeguard international financial transactions, and require enhanced internal compliance frameworks for domestic and foreign businesses.

Modernised corporate tax framework

Guatemala is transforming its tax administration to improve transparency, efficiency, and liquidity through the Tax Refund Facilitation Law (Decree 17-2025), which shortens refund timelines, resolves budget-related delays, and enables VAT taxpayers subject to withholding to recover excess payments.

On 12 January 2026, Guatemala formally joined the OECD/G20 Inclusive Framework on BEPS, committing to international tax transparency standards, including country-by-country reporting and the prevention of treaty abuse. While constitutional requirements mandate legislative approval for incorporation into domestic law, their anticipated administrative implementation raises important questions regarding legality and constitutional compliance.

The expansion of electronic invoicing has strengthened tax oversight through automated, invoice-based audits that prioritise documentary consistency over substantive analysis, while taxpayers may choose between the 25% Net Profit Regime, the 5–7% Simplified Regime, and an expanded Small Taxpayer Regime for 2026.

Energy and social licence

The energy sector continues to be a pillar of growth through the implementation of the Expansion Plan for Generation (PEG-5). This major tender process is designed to guarantee long-term supply by attracting investment in renewable sources and natural gas. For legal practitioners, this represents a significant volume of work in project finance and power purchase agreements. However, these projects must navigate the challenge of social licence; negotiating community consultations (under ILO Convention 169) remains a critical hurdle, shifting the focus toward comprehensive environmental, social, and governance risk management.

Dispute resolution: litigation and enforcement

Guatemala’s litigation system operates under structured procedural rules, though timing remains a practical consideration for commercial parties. Contract disputes have a five-year statute of limitations; tort claims must be brought within one year. The 2022 Insolvency Law marks a substantive modernisation on paper, introducing pre-insolvency proceedings and creditor priority structures that align with international norms. However, the law has not been operationally implemented since its enactment due to the absence of required regulations and registries.

For enforcement, Guatemala recognises foreign judgments through a homologation process requiring apostille authentication, due process compliance, and certified translation. The country’s adherence to the Inter-American Convention on Letters Rogatory facilitates cross-border service and evidence collection. That said, enforcement proceedings remain time-intensive and procedurally formal – factors worth incorporating into litigation strategy from the outset. Courts are transitioning toward electronic filing and virtual hearings following pandemic-era adaptations, which should enhance efficiency over time.

Arbitration

Arbitration has gained meaningful ground in Guatemala, particularly for infrastructure, construction, and energy disputes where technical specialisation and confidentiality offer commercial advantages. Decree 67-95 follows the UNCITRAL Model Law, establishing a modern framework that respects party autonomy over seat selection, procedural rules, and arbitrator appointments. Guatemala’s status as a party to both the New York and Panama Conventions ensures awards are enforceable across 160+ jurisdictions worldwide. CENAC and CRECIG serve as the principal arbitral institutions, administering cases under their respective rules while accommodating ad hoc arbitration for parties seeking direct procedural control.

Courts have generally adopted a pro-arbitration posture, confining their role to jurisdictional disputes and tightly drawn annulment of grounds – procedural defects, excess of authority, or public policy violations. Legislative reforms currently under consideration would further streamline multi-party procedures and curtail judicial interference, reinforcing Guatemala’s credentials as a workable arbitration venue for regional commercial disputes.

Conclusion

While 2026 presents unavoidable institutional and pre-electoral challenges, Guatemala’s combination of macroeconomic stability, infrastructure investment, and regulatory modernisation continues to support its long-term growth trajectory. Investors capable of navigating this transitional period will find a jurisdiction increasingly aligned with international standards and strategically positioned as a business platform for the Americas.