The Mechanism of VAT Neutrality in Guatemala: Understanding the Recognition and Determination Procedure

• VAT neutrality is the absence of adverse economic effects derived from taxation
• The mechanism for VAT neutrality is the recognition of credit and determination procedure of the obligation
• The interpretation of VAT rules should allow for deduction of tax paid if material requirements are met, even if formal requirements are omitted
• National regulations cannot prevent the exercise of the right to deduct VAT based on formal requirements alone
• National regulations that prohibit the exercise of the right to deduct VAT without considering relevant circumstances and good faith of the taxable person go beyond what is necessary to ensure correct collection of VAT and prevent tax fraud
• The right to deduct VAT is obtained from fulfilling material requirements and should not be subject to formal requirements to maintain tax neutrality.

Source: consortiumlegal.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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