58740 Guatemala © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. 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ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Guatemala. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Guatemala is ranked 101 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Guatemala - Compared to global good practice economy as well as selected economies: Guatemala's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 101 Starting a Business 162 Dealing with Construction Permits 144 Registering Property 23 Getting Credit 6 Protecting Investors 132 Paying Taxes 116 Trading Across Borders 122 Enforcing Contracts 101 Closing a Business 94 2 Summary of Indicators - Guatemala Starting a Business Procedures (number) 12 Time (days) 37 Cost (% of income per capita) 49.1 Min. capital (% of income per capita) 24.2 Dealing with Construction Permits Procedures (number) 22 Time (days) 178 Cost (% of income per capita) 599.4 Registering Property Procedures (number) 4 Time (days) 23 Cost (% of property value) 1.0 Getting Credit Strength of legal rights index (0-10) 8 Depth of credit information index (0-6) 6 Public registry coverage (% of adults) 16.4 Private bureau coverage (% of adults) 8.8 Protecting Investors Extent of disclosure index (0-10) 3 Extent of director liability index (0-10) 3 Ease of shareholder suits index (0-10) 6 Strength of investor protection index (0-10) 4.0 Paying Taxes Payments (number per year) 24 Time (hours per year) 344 Profit tax (%) 25.9 Labor tax and contributions (%) 14.3 Other taxes (%) 0.7 Total tax rate (% profit) 40.9 Trading Across Borders Documents to export (number) 10 Time to export (days) 17 Cost to export (US$ per container) 1182 Documents to import (number) 10 Time to import (days) 17 Cost to import (US$ per container) 1302 3 Enforcing Contracts Procedures (number) 31 Time (days) 1459 Cost (% of claim) 26.5 Closing a Business Recovery rate (cents on the dollar) 27.5 Time (years) 3.0 Cost (% of estate) 15 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.18 0.16 Doing 0.14 business has become easier (DB 0.12 change score) 0.10 0.08 0.06 0.04 Colombia Guatemala Mexico Costa Rica Honduras El Salvador 6 1. Benchmarking Starting a Business Regulations: Guatemala is ranked 162 overall for Starting a Business. Ranking of Guatemala in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Guatemala compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Guatemala 12 37 49.1 24.2 Comparator Economies Colombia 9 14 14.7 0.0 Costa Rica 12 60 10.5 0.0 El Salvador 8 17 45.0 3.0 Honduras 13 14 47.2 17.5 Mexico 6 9 12.3 9.2 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Guatemala Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 162 162 Procedures (number) 12 12 12 12 Time (days) 34 34 37 37 Cost (% of income per capita) 49.9 53.4 47.8 49.1 Min. capital (% of income per capita) 24.9 26.3 23.5 24.2 3. The following graphs illustrate the Starting a Business sub indicators in Guatemala over the past 4 years: 9 Starting a Business Summary - Guatemala This table summarizes the procedures and costs associated with setting up a business in Guatemala. STANDARDIZED COMPANY Legal Form: Sociedad Anónima (SA) - Corporation City: Guatemala City Registration Requirements: No: Procedure Time to complete Cost to complete 1 Check the proposed company name at the Mercantile Registry of 1 no charge Guatemala 2 Obtain letter from a Guatemalan notary public to open bank account 1 no charge 3 Deposit the subscribed capital in a bank and obtain a receipt 1 no charge 4 A notary public draws the deed of constitution 3 GTQ 6,800 5 The notary buys the fiscal stamps and issues a certified copy of the 1 GTQ 650 deed of incorporation for filing with the commercial register 6 File notarized unique registration form and documents with the 4 GTQ 2,000 Commercial Register (Registro Mercantil) 7 Publication of notice in Diario de Centro América 8 GTQ 526 8 Registration of the appointment of legal representative of the company 1 no charge 10 9 Obtain the definitive registration, tax and social security numbers, and 14 no charge authorization to print invoices 10 Application for trading license 1 GTQ 165 11 * Submit to the Commercial Registry for their authorisation, company 1 GTQ 15 accounting books and books of minutes of shareholder and board of directors meetings 12 * Application for book of salaries authorisation from the Inspection of 1 GTQ 5 the Department of Labour * Takes place simultaneously with another procedure. 11 Starting a Business Details - Guatemala Procedure 1 Check the proposed company name at the Mercantile Registry of Guatemala Time to complete: 1 Cost to complete: no charge Comment: Before initiating the incorporation process, the parties may conduct a company name availibility search in order to avoid submitting a preexisting name. Since June 2006, the Commercial Registry provides the option of carrying out the search via the Internet at no cost. The manual search system at the Registry is still available. Procedure 2 Obtain letter from a Guatemalan notary public to open bank account Time to complete: 1 Cost to complete: no charge Comment: The minimum paid capital requirement of GTQ 5,000 must be deposited in a local bank before the articles of incorporation are signed. For this purpose, a notary public must issue a letter confirming that he or she has been requested to draw up and register the company's deed of constitution. This letter allows for the opening of a temporary bank account while registration is completed. If the company capital is composed of an asset instead of cash, this procedure is not required. Procedure 3 Deposit the subscribed capital in a bank and obtain a receipt Time to complete: 1 Cost to complete: no charge Comment: The Registry does not require filing of the deposit slip or the bank statement. The notary public transcribes the deposit of paid in capital in the articles of incorporation. Procedure 4 A notary public draws the deed of constitution Time to complete: 3 Cost to complete: GTQ 6,800 Comment: The deed is executed by the founding shareholders and attested by the notary public, and provisional stock certificates are issued. Once the company is duly registered, definitive stock certificates are issued and substituted for the provisional stock certificates. The notary public generally charges a package fee (up to USD 2,000) for the entire process of setting up a company, including the preparation of the provisional stock certificates, the value depends on the authorized capital of the corporation. They will be issued and signed by the company's president and the secretary of the initial board of directors, which is appointed in the deed of incorporation. Procedure 5 The notary buys the fiscal stamps and issues a certified copy of the deed of incorporation for filing with the commercial register Time to complete: 1 12 Cost to complete: GTQ 650 Comment: Only a notary public can buy the fiscal stamps at the Superintendency of Tax Administration. Procedure 6 File notarized unique registration form and documents with the Commercial Register (Registro Mercantil) Time to complete: 4 Cost to complete: GTQ 2,000 Comment: A new fast-track system was introduced in May 2006 and fully implemented in September, requiring only a single registration form (which must be legalized either by a lawyer or notary public) for several applications which used to be filed separately: notice of issuance of stock certificates, notice of appointment of legal representative, commercial registration, application for business license (patente), and tax and social security registration (which can be processed, together with the other formalities, through a single registration form). The fast-track system did not work efficiently and it is not in use any more. The Registro Mercantil now takes approximately 5 business days to analyze the legal documents and providing a provisional registration number. The same documents as the fast-track system are still required : (1) form of the commercial registry (sold for GTQ 2); and (2) the deed of constitution (original and simple photocopy of the certified notarized copy).The Registry analyzes the documents presented, and if they fulfill legal requirements, it issues the public notice of authorization or edict (edicto) and assigns a provisional registration numbe. Once the provisional registration number is assigned by the Commercial Registry, it allows to register the appointment of the legal representative. The Registry then coordinates the publication of the edict, as well as tax registration, the authorization to print invoices, and social security registration. A single fee payment is necessary and includes: - Registration fee: GTQ 275 plus 0.6% of the authorized capital (up to a maximum cost of GTQ 25,000) and plus GTQ 15 (for issuance of the public notice, or edicto). - Edict publication fee: GTQ 525.62 for publication in the Diario de Centro America. - Authorization to print invoices: GTQ 0.5/page (assuming 100 pages). Procedure 7 Publication of notice in Diario de Centro América Time to complete: 8 Cost to complete: GTQ 526 Comment: Once the Commercial Register issues the Provisional Registration Notice for Publication, then the applicant must go to the Official Gazette and pay the publication cost. After publication, the applicant must go back to the Official Gazette to pick up a copy of the publication which he needs to submit to the Commercial Register. Procedure 8 Registration of the appointment of legal representative of the company Time to complete: 1 Cost to complete: no charge Comment: Once the provisional registration number has been assigned, the Commercial Registry calls the applicant or his/her representative (e.g., notary public), in order to record the appointment of the company´s legal representative. Procedure 9 Obtain the definitive registration, tax and social security numbers, and authorization to print invoices Time to complete: 14 13 Cost to complete: no charge Comment: Provisional registration at the Commercial Registry with the tax and social security authorities can be completed in 2­3 days. Following the publication of the edict, a protest period of 8 days applies before the Commercial Registry can finalize the registration. Once registration is completed, tax and social security identification numbers can be obtained. Procedure 10 Application for trading license Time to complete: 1 Cost to complete: GTQ 165 Comment: Procedure 11 Submit to the Commercial Registry for their authorisation, company accounting books and books of minutes of shareholder and board of directors meetings Time to complete: 1 Cost to complete: GTQ 15 Comment: Procedure 12 Application for book of salaries authorisation from the Inspection of the Department of Labour Time to complete: 1 Cost to complete: GTQ 5 Comment: This requirement to obtain authorization of the book of salaries applies to entities employing more than 10 workers. 14 15 1. Benchmarking Dealing with Construction Permits Regulations: Guatemala is ranked 144 overall for Dealing with Construction Permits. Ranking of Guatemala in Dealing with Construction Permits - Compared to good practice and selected economies: 16 The following table shows Dealing with Construction Permits data for Guatemala compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Guatemala 22 178 599.4 Comparator Economies Colombia 10 50 405.9 Costa Rica 23 191 172.2 El Salvador 34 155 171.7 Honduras 17 106 469.3 Mexico 11 105 117.0 17 2. Historical data: Dealing with Construction Permits in Guatemala Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 141 144 Procedures (number) 22 22 22 22 Time (days) 235 215 178 178 Cost (% of income per capita) 617.3 650.8 583.3 599.4 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Guatemala over the past 4 years: 18 Dealing with Construction Permits in Guatemala The table below summarizes the procedures, time, and costs to build a warehouse in Guatemala. BUILDING A WAREHOUSE City: Guatemala City Registration Requirements: No: Procedure Time to complete Cost to complete 1 Request and obtain a certificate of land ownership for the property where 10 days GTQ 50 the warehouse is to be built 2 * Hire an environmental specialist and prepare an environmental impact 30 days GTQ 40,000 assessment 3 * Request and obtain a favorable resolution by the Infrastructure Department 18 days GTQ 1,700 (Dirección de General de Caminos) based on a road system impact assessment 4 * Submit a brief or simple industrial report 1 day no charge 5 Request and obtain a favorable decision by the Ministry of the 40 days no charge Environment and Natural Resources (Ministerio de Ambiente y Recursos Naturales) based on an environmental impact assessment 6 Request and obtain a construction license 14 days GTQ 70,232 7 Receive an inspection by the Construction Licensing Department 1 day no charge (Departamento de Licencias de Construcción) - I 19 8 Receive inspection by the Construction Licensing Department 1 day no charge (Departamento de Licencias de Construcción) - II 9 Receive inspection by the Construction Licensing Department 1 day no charge (Departamento de Licencias de Construcción) - III 10 Receive inspection by the Construction Licensing Department 1 day no charge (Departamento de Licencias de Construcción) - IV 11 Receive inspection by the Construction Licensing Department 1 day no charge (Departamento de Licencias de Construcción) - V 12 Receive inspection by the Construction Licensing Department 1 day no charge (Departamento de Licencias de Construcción) - VI 13 Receive inspection by the Construction Licensing Department 1 day no charge (Departamento de Licencias de Construcción) - VII 14 Notify the Construction Licensing Department on construction completion 1 day no charge and return the license 15 Receive final inspection and obtain occupancy permit 14 days no charge 16 * Request sewerage connection and receive requirements from EMPAGUA 20 days no charge 17 * Request and obtain a feasibility study by EMPAGUA 70 days no charge 18 * Receive water connection 60 days GTQ 8,800 19 * Request and receive installation of the transformer 30 days no charge 20 * Request electricity connection 1 day GTQ 2,500 21 * Receive inspection and connection by the electric power company 30 days no charge (Empresa Eléctrica de Guatemala) 22 * Obtain a telephone line 1 day GTQ 625 * Takes place simultaneously with another procedure. 20 Dealing with Construction Permits Details - Guatemala Procedure 1 Request and obtain a certificate of land ownership for the property where the warehouse is to be built Time to complete: 10 days Cost to complete: GTQ 50 Agency: General Property Registry (Registro General de la Propiedad) Comment: The certificate is valid for 3 months. Since August 2007 the fee related to obtaining the certificate of land ownership has been increased from 35 GTQ to GTQ 50. Procedure 2 Hire an environmental specialist and prepare an environmental impact assessment Time to complete: 30 days Cost to complete: GTQ 40,000 Agency: Independent specialist Comment: The environmental impact assessment must be prepared by a professional (engineer/architect) authorized to do so. The company owning the project must hire the professional, and the cost will vary depending on the type of assessment to be completed, based on project characteristics. In many cases technical opinions or analyses by several professionals are required. The minimum cost is GTQ 40,000. Projects exceeding 1,000 sqm require an Environmental Impact Assessment. Procedure 3 Request and obtain a favorable resolution by the Infrastructure Department (Dirección de General de Caminos) based on a road system impact assessment Time to complete: 18 days Cost to complete: GTQ 1,700 Agency: Departamento de Planificación y Diseño, Dirección General de Caminos Comment: The road system impact assessment has to be completed by the Planning and Design Unit (Direccion de Planificación y Diseño). Professional personnel in this unit perform the assessment and issue a resolution regarding the aspects that must be emphasized during project execution. The resolution may be issued as "not authorized" until the necessary corrections are submitted, after which the resolution can be changed to "authorized." According to the applicable regulation, the cost may be up to GTQ 1,700 depending on the project's complexity. Procedure 4 Submit a brief or simple industrial report Time to complete: 1 day Cost to complete: no charge Agency: Environment and Industry Unit (Sección de Ambiente e Industria), Construction Licensing Department (Departamento de Licencias de Construcción) Comment: This report contains an affidavit regarding storage use and any industrial process to be carried out in the warehouse. 21 Procedure 5 Request and obtain a favorable decision by the Ministry of the Environment and Natural Resources (Ministerio de Ambiente y Recursos Naturales) based on an environmental impact assessment Time to complete: 40 days Cost to complete: no charge Agency: Ministry of the Environment and Natural Resources (Ministerio de Ambiente y Recursos Naturales) /Municipality of Guatemala Comment: The environmental impact assessment along with application is submitted to the Ministry of the Environment and Natural Resources (Ministerio de Ambiente y Recursos Naturales, MARN) personnel. Then the documents are forwarded to Guatemela Municipality Delegate at the MARN who reviews the proposal. This professional is hired by MARN but paid for by Municipality of Guatemala City. As soon as the documents are submitted to delegate BuildCo would have to publish the information about upcoming project in the local newspaper. After 20 working days of wait, which are given for public to respond upon the project, the delegate proceeds with approval of the impact assessment. The favorable decision, provided everything is correct will be issued 7 working days after that. If the judgment is unfavorable, the company owning the project must make the necessary corrections for the project to be approved. Previous to reform this procedure would take 60 days and now can be completed in 40 days. There is no fee associated with obtaining the approval. Procedure 6 Request and obtain a construction license Time to complete: 14 days Cost to complete: GTQ 70,232 Agency: Central Territorial Directorate under the Municipality of Guatemala City Comment: The Municipality of Guatemala City introduced as of January 7, 2009 a new Land Management Plan (Plan de Ordenamiento Territorial- "POT"), and new building control regulations that also regulate the construction permit issuance. According to the new POT of Guatemala City the land use classifications were changed based on the principles of sustainability, certainty, and better quality of life. In the old system the land was divided into industrial, residential, and commercial zones, whereas, the new zoning regimes are established according to general use of land which among others introduced mixed use of zoning regimes. This tool was developed in consultation with both private and public sector and widely publicized. It also introduces a more sophisticated risk based system of approval of construction permit. Before the application had only one process of approval, whereby the application would be classified as complete, and compliant with all requirements. This led to issuance of construction permit. However, if incomplete it would need to be corrected. Under the new implementing regulations of POT this mechanisms is based on three stages: Simplified Procedure (Precedimiento Directo); Approval of Land Management Council (Junta de Ordenamiento Territorial); Approval of Land Management Council and Neighbours' Consent. Each phase is triggered if previous phase is not complied with. BuildCo's case would fall into the 'Simplified Procedure' scheme and does not require subsequent procedure with Land Management Council and neighbours. Under this scheme if all requirements established in the regulations are satisfactory and complied with, the application would be approved in 10 working days. As of 28 February, 2009 out of 580 applications for a new construction permit to the Central Territorial Directorate under the Municipality of Guatemala City (Direccion Central Territorial) 40% of cases went under simplified procedure and approved within this time-limit. This procedure is administered under a newly operationalized single window principle. Additionally, the application forms have been substantially simplified and reduced in 22 volume from 27 pages to mere 3 pages. BuildCo must submit the corresponding form with all the requested specifics together with all the requirements in the previous procedures, photocopies of the identification cards of its legal agent and the professional responsible for the construction, and a photocopy of the latest Single Real Estate Tax (Impuesto Unico sobre Inmueble) receipt and any other required receipts. An architect or engineer must be responsible for the construction work, signing the submitted form and the plans. The cost of the license is the estimated based on warehouse value at 4.5%. There is no time limit. This procedure depends on the time taken by the company applying for the license to complete all the requirements. If any requirements are still pending and there is no action on the record after 60 days, the process is deemed canceled and is sent to the general files, after which the company must start another application. If BuildCo starts the procedures for the license application with all requirements in order and duly authorized (approved decisions and resolutions), the license may be delivered after a minimum of 4 working days. According to law, required deposits are as follows: - Article 183: The recipient of a construction license must make a guarantee deposit of GTQ 5 (for buildings up to a cost of GTQ 5,000) or 0.01% of the cost of the building (if the cost exceeds GTQ 5,000). For our case it would be GTQ 380.2. This amount shall be refunded when the building has been completed and the license has been returned after the approval of the Construction Licensing Department. Provided there were no violations upon which the authority would retain the deposit. - Article 184: If, after a year from the date of license expiration, the interested party does not claim the deposit, it will automatically be incorporated into the municipal treasury Procedure 7 Receive an inspection by the Construction Licensing Department (Departamento de Licencias de Construcción) - I Time to complete: 1 day Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) Comment: The Construction Licensing Department has technical/professional personnel in charge of inspecting how the building is being constructed. Inspections are monthly. There is no average duration for an inspection; each depends on what is considered in the inspection. Inspections of buildings under construction are unannounced. They focus mainly on verifying that the authorized areas are constructed in accordance with submitted plans, as well as other aspects deemed important pursuant to licensing conditions. Procedure 8 Receive inspection by the Construction Licensing Department (Departamento de Licencias de Construcción) - II Time to complete: 1 day Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) Comment: 23 Procedure 9 Receive inspection by the Construction Licensing Department (Departamento de Licencias de Construcción) - III Time to complete: 1 day Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) Comment: Procedure 10 Receive inspection by the Construction Licensing Department (Departamento de Licencias de Construcción) - IV Time to complete: 1 day Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) Comment: Procedure 11 Receive inspection by the Construction Licensing Department (Departamento de Licencias de Construcción) - V Time to complete: 1 day Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) Comment: Procedure 12 Receive inspection by the Construction Licensing Department (Departamento de Licencias de Construcción) - VI Time to complete: 1 day Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) Comment: Procedure 13 Receive inspection by the Construction Licensing Department (Departamento de Licencias de Construcción) - VII Time to complete: 1 day Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) 24 Comment: Procedure 14 Notify the Construction Licensing Department on construction completion and return the license Time to complete: 1 day Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) Comment: The license must be returned to the Construction Licensing Department, which performs the last inspection. If the construction work conforms to approved specifications, the occupancy permit is issued. When the license is returned, the municipality notifies the cadastre office about the construction and its cost. Within 7­14 days, the municipality visits the site to verify that the building complies with approved specifications. Procedure 15 Receive final inspection and obtain occupancy permit Time to complete: 14 days Cost to complete: no charge Agency: Construction Licensing Department (Departamento de Licencias de Construcción) Comment: According to Article 78, on completion of the construction work, the interested parties shall request final inspection from the Construction Licensing Department. This inspection shall be performed by the supervisor in charge, who shall record the result on an inspection card. If the building does not comply with approved specifications, the card must state the reasons and the appropriate remedies. If all aspects are in order and the card expressly states so, after the return of the respective license, the interested parties may request the building occupancy permit from the head of the office by completing the form stated in Annex 1 of the Regulation. If no objections are raised during the inspection (meaning that every part of the construction is authorized as complying with the plans submitted to the Construction Licensing Department, the professional in charge of the inspection may immediately go back to the office and issue the occupancy permit to be delivered to the company. After that BuildCo will be given back its deposit of 0,01% of warehouse value that was paid at the stage of building permit approval. Procedure 16 Request sewerage connection and receive requirements from EMPAGUA Time to complete: 20 days Cost to complete: no charge Agency: Municipality (EMPAGUA) Comment: BuildCo must fill out the application and receive the requirements at office of the Water and Sewerage Authority (Empresa Municipal de Agua, EMPAGUA). There they will be notified of the fee to be paid as a deposit to cover the completion of the procedure and a service feasibility study that must be carried out by EMPAGUA. EMPAGUA will start the feasibility study within about 15 days. In 2007 the Municipality of Guatemala unified the application forms and relevant requirements for EMPAGUA, Department of Urban Construction Control (Departamento 25 de Control de Construcción Urbana) and Infrastructure Directorate (Dirección de Infraestructura). Other change is that approvals from all these entities is given simultaneously. However, has not had any practical impact. Procedure 17 Request and obtain a feasibility study by EMPAGUA Time to complete: 70 days Cost to complete: no charge Agency: Municipality/EMPAGUA Comment: According to regulatory changes this procedure should be done in 27 working days. The EMPAGUA must issue a resolution regarding feasibility or nonfeasibility and the steps to be taken by BuildCo for EMPAGUA to make the necessary hook-up connections. On completion of the feasibility study, EMPAGUA notifies the applicant of the amount to be paid to the municipality for the feasibility study and the connections to be made. The cost may vary depending on the work to be done and the estimated required potable water supply and sewage volume to be drained from the project. The inspections performed by EMPAGUA experts may vary depending on the number of inspections needed to determine service feasibility. The human resources of EMPAGUA are overstretched which creates a backlog of projects and approval still takes on average 60-70 days. Procedure 18 Receive water connection Time to complete: 60 days Cost to complete: GTQ 8,800 Agency: Municipality/EMPAGUA Comment: Procedure 19 Request and receive installation of the transformer Time to complete: 30 days Cost to complete: no charge Agency: Certified Civil Works Company Comment: The transformer has to be installed by certified companies. In Guatemala, there are only about 10. Procedure 20 Request electricity connection Time to complete: 1 day Cost to complete: GTQ 2,500 Agency: Empresa Eléctrica de Guatemala Comment: An application must be submitted to the Electric Power Company of Guatemala (Empresa Eléctrica de Guatemala). 26 Procedure 21 Receive inspection and connection by the electric power company (Empresa Eléctrica de Guatemala) Time to complete: 30 days Cost to complete: no charge Agency: Empresa Eléctrica de Guatemala Comment: The Empresa Eléctrica de Guatemala visits the site before approving the electrical power hook-up. Procedure 22 Obtain a telephone line Time to complete: 1 day Cost to complete: GTQ 625 Agency: Any of the 4 private telephone companies Comment: 27 28 1. Benchmarking Registering Property Regulations: Guatemala is ranked 23 overall for Registering Property. Ranking of Guatemala in Registering Property - Compared to good practice and selected economies: 29 The following table shows Registering Property data for Guatemala compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Guatemala 4 23 1.0 Comparator Economies Colombia 7 20 2.0 Costa Rica 6 21 3.4 El Salvador 5 31 3.8 Honduras 7 23 5.5 Mexico 5 74 5.2 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 30 2. Historical data: Registering Property in Guatemala Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 24 23 Procedures (number) 5 5 4 4 Time (days) 30 30 27 23 Cost (% of property value) 1.0 1.1 1.0 1.0 3. The following graphs illustrate the Registering Property sub indicators in Guatemala over the past 4 years: 31 Registering Property in Guatemala This topic examines the steps, time, and cost involved in registering property in Guatemala. STANDARDIZED PROPERTY Property Value: 1,033,647.13 City: Guatemala City Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain an property certificate ("Certificacion del 3-5 days (depending USD 7 (expenses, historial de la finca") and the cadastral value on length of the real depending on length of the certificate ("Valor de matricula") estate file or if it is real estate file) + USD 20 digitalized) (legal fees) (simultaneous with procedure 2) 2 Lawyer/notary prepares the sale agreement and 2 days USD 62.50 + (USD800 - notarizes it, along with the public deed USD1000) (notary fees) + USD 65 (tax stamps, copies, and others) 3 Public deed is delivered to the Property Registry for 7 days QTG 160 + 0.15% of its recording transaction value (registration fees) 4 Notify the Municipality and/or DICABI of the 10 days no cost transaction 32 Registering Property Details - Guatemala Procedure 1 Obtain an property certificate ("Certificacion del historial de la finca") and the cadastral value certificate ("Valor de matricula") Time to complete: 3-5 days (depending on length of the real estate file or if it is digitalized) (simultaneous with procedure 2) Cost to complete: USD 7 (expenses, depending on length of the real estate file) + USD 20 (legal fees) Agency: Property Registry (Registro General de la Propiedad de Guatemala) (www.registro-propiedad.org.gt) Comment: The seller obtains a certificate at the Property Registry in which the buyer can verify that the property is free from mortgages and encumbrances, and to verify that the property is owned by the seller. In order to obtain the certificate the buyer needs to know the registry numbers where the property is registered. Usually this information is provided by the seller. It is usually the lawyer who verifies the books at the registry and obtains this information. This updated certificate of the property will be used later by the lawyer/notary to prepare the public deed. The seller must obtain the cadastral value of the property from DICABI (Dirección de Catastro y Avalúo de Bienes Inmuebles). DICABI is a national institution containing information based on a "personal registry type" on all the regional registries in the country. In any case, it is very important also to obtain property's value information at DICABI as the price in the contract for VAT purposes must be set at least equal to the value registered at DICABI. Both certificates can be requested at the Land registry. Notaries can request them by email and then pick them up. Procedure 2 Lawyer/notary prepares the sale agreement and notarizes it, along with the public deed Time to complete: 2 days Cost to complete: USD 62.50 + (USD800 - USD1000) (notary fees) + USD 65 (tax stamps, copies, and others) Comment: If the seller is a registered VAT Taxpayer, the tax must be paid with an invoice, in which the tax is charged. The lawyer/notary (In Guatemala, the lawyer is also the notary public) prepares the sale agreement and notarizes it by preparing the public deed. There is a scale in the Notary Bill that regulates the fees, but nowadays since the market has driven prices for notary services down, one will likely pay between $800 and $1000 for such a transaction. The notary will be in charge of buying the state stamps for VAT payment if necessary (12% of transaction value), and adhere the stamps to the Public Deed; it is safer to the buyer to process VAT payment directly in cash. Payments of registration fees (Q.160.00 plus Q 1.5 for each Q 1,000 of transaction value) are made to the notary, who will then pay the property registry. The documentation shall include: -Property Title issued by the Real Estate Office (advisable) -Actualized Certificate of the property issued by the Property Registry (Obtained in step 1) -Photocopy of the ID of seller and buyer (pasport or local ID). In case the seller/buyer is a Company, photocopy of the appointment in which the Company gives sufficient faculties to proceed with the transfer of property. In some cases, a Board of Director resolution may be required -Invoice issued by the seller or Form in which the Tax Authorities certified that the 33 consumption tax (VAT that is 12% of the value of the transaction) is paid; Nevertheless, the sale agreement must be formalized with the public deed -Cadastral value (Obtained in step 2) Procedure 3 Public deed is delivered to the Property Registry for its recording Time to complete: 7 days Cost to complete: QTG 160 + 0.15% of transaction value (registration fees) Agency: Property Registry (Registro General de la Propiedad de Guatemala) (www.registro-propiedad.org.gt) Comment: The public deed is delivered to the Property Registry for its recording under the name of the buyer. It is also advisable to obtain a certificate at the Property Registry to verify that the change of ownership is properly recorded. The internal procedures conducted by the Property Registry are as follows: 1. Departamento de Reparto ­all incoming cases are assigned to the officials (operadores), whose salaries are based on a percentage of the fees. Since 2005, an electronic system is fully implemented to assign cases based on current workload (1 business day). 2. The official registers the property electronically; and issues the case file (expediente) 3. Departamento de Revision (legal assessors) reviews and approves the transaction 4. Accounting department verifies the payment of fees 5. Departamento de Firma Electronica: Registrar or auxiliary registrars (14 full-time and 5 part-time) sign the registration certificate. As of Decree 42-2006, electronic signatures from auxiliary registrars are legally valid. Each one is assigned a unique number by which they can electronically sign, facilitating the registration process. 6. Departamento de Archivo ­updates the information in the system 7. Certificate is signed. Procedure 4 Notify the Municipality and/or DICABI of the transaction Time to complete: 10 days Cost to complete: no cost Agency: Municipality and/or DICABI (Dirección de Catastro y Avalúo de Bienes Inmuebles) Comment: Notification to the Municipality and/or DICABI of the transaction. Sometimes this information is not updated, so in order to register the transaction it is mandatory to update prior information. This step is important to update the cadastral value of the property for the purpose of tax collection. There is a small fine if this procedure is not fulfilled, but it has no effect on the validity of the title obtained in the previous step. In 2009, the land registry has started informing electronically the municipalities of the transaction, and plans to implement a similar proces with the DICABI in the future. In the future it will also be necessary to obtain cadastral certificates of the property in order to comply with the recently approved Decreto No. 41-2005 (Ley de Registro de Información Catastral). The cadastral certificate is a document issued by the Registrar of the Cadastral Information which contains the cadastral information of a determined piece of land. 34 35 1. Benchmarking Getting Credit Regulations: Guatemala is ranked 6 overall for Getting Credit. Ranking of Guatemala in Getting Credit - Compared to good practice and selected economies: 36 The following table shows Getting Credit data for Guatemala compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Guatemala 8 6 16.4 8.8 Comparator Economies Colombia 5 5 0.0 63.1 Costa Rica 5 5 23.3 64.8 El Salvador 5 6 21.8 95.0 Honduras 6 6 22.7 100.0 Mexico 5 6 0.0 71.6 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 37 2. Historical data: Getting Credit in Guatemala Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 6 6 Strength of legal rights index (0-10) 3 7 8 8 Depth of credit information index (0-6) 5 5 6 6 Private bureau coverage (% of adults) 13.1 19.7 28.4 8.8 Public registry coverage (% of adults) 20.7 16.1 16.9 16.4 3. The following graphs illustrate the Getting Credit sub indicators in Guatemala over the past 4 years: 38 Getting Credit in Guatemala The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Guatemala. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 6 bureau registry Are data on both firms and individuals distributed? Yes Yes 1 Are both positive and negative data distributed? Yes Yes 1 Does the registry distribute credit information from retailers, trade Yes No 1 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? Yes Yes 1 Is data on all loans below 1% of income per capita distributed? Yes Yes 1 Is it guaranteed by law that borrowers can inspect their data in the No Yes 1 largest credit registry? Coverage 8.8 16.4 Number of individuals 710,543 1,315,370 Number of firms 2,010 9,607 39 Strength of legal rights index (0-10) 8 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, Yes without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without Yes requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, Yes proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the Yes grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? Yes Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? No Does the law authorize parties to agree on out of court enforcement? Yes 40 41 1. Benchmarking Protecting Investors Regulations: Guatemala is ranked 132 overall for Protecting Investors. Ranking of Guatemala in Protecting Investors - Compared to good practice and selected economies: 42 The following table shows Protecting Investors data for Guatemala compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Guatemala 4.0 Comparator Economies Colombia 8.3 Costa Rica 3.0 El Salvador 4.3 Honduras 3.0 Mexico 6.0 43 2. Historical data: Protecting Investors in Guatemala Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 131 132 Strength of investor protection index (0-10) 4.0 4.0 4.0 4.0 3. The following graph illustrates the Protecting Investors index in Guatemala compared to best practice and selected Economies: 9.7 8.3 6.0 4.3 4.0 3.0 3.0 o r ic a do nd a as bi ex al r om va a ta m M du al os l te Sa ol Ze on a C ua C ic H El ew G R N Note: The higher the score, the greater the investor protection. 44 Protecting Investors in Guatemala The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Guatemala. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 3 0 What corporate body provides legally sufficient approval for the transaction? 0 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 1 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 2 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 0 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 3 1 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 45 0 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 6 4 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 1 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 0 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 0 Whether the level of proof required for civil suits is lower than that of criminal cases? 1 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 4.0 46 47 1. Benchmarking Paying Taxes Regulations: Guatemala is ranked 116 overall for Paying Taxes. Ranking of Guatemala in Paying Taxes - Compared to good practice and selected economies: 48 The following table shows Paying Taxes data for Guatemala compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Guatemala 24 344 40.9 Comparator Economies Colombia 20 208 78.7 Costa Rica 42 272 55.0 El Salvador 53 320 35.0 Honduras 47 224 48.3 Mexico 6 404 50.5 * The following economies are also good practice economies for : Payments (number per year): Qatar 49 2. Historical data: Paying Taxes in Guatemala Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 108 116 Total tax rate (% profit) 41.1 40.9 40.9 40.9 Payments (number per year) 38 38 24 24 Time (hours per year) 344 344 344 344 3. The following graphs illustrate the Paying Taxes sub indicators in Guatemala over the past 4 years: 50 Paying Taxes in Guatemala The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Guatemala, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Value added tax (VAT) 1 online 156 12.0% value added filing and land sale Advertising tax 1 0.5% advertising 0.00 expenses Tax on interest 1 10.0% interest 0.30 income Property tax 4 0.9% property 0.50 value Social security 12 144 12.7% gross salaries 14.30 contributions Extraordinary and 4 1.0% turnover 17.70 temporary tax -IETAAP Corporate income tax 1 online 44 31% or 5% taxable 25.90 filing profits or gross income Totals 24 344 40.9 51 52 1. Benchmarking Trading Across Borders Regulations: Guatemala is ranked 122 overall for Trading Across Borders. Ranking of Guatemala in Trading Across Borders - Compared to good practice and selected economies: 53 The following table shows Trading Across Borders data for Guatemala compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Guatemala 10 17 1182 10 17 1302 Comparator Economies Colombia 6 14 1770 8 13 1700 Costa Rica 6 13 1190 7 15 1190 El Salvador 8 14 845 8 10 845 Honduras 6 19 1193 10 23 1205 Mexico 5 12 1420 4 12 1880 * The following economies are also good practice economies for : Time to export (days): Estonia 54 2. Historical data: Trading Across Borders in Guatemala Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 120 122 Cost to export (US$ per container) 1052 1182 1182 1182 Cost to import (US$ per container) 1177 1302 1302 1302 Documents to export (number) 11 10 10 10 Documents to import (number) 11 10 10 10 Time to export (days) 17 17 17 17 Time to import (days) 17 17 17 17 3. The following graphs illustrate the Trading Across Borders sub indicators in Guatemala over the past 4 years: 55 56 Trading Across Borders in Guatemala These tables list the procedures necessary to import and export a standardized cargo of goods in Guatemala. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 10 267 Customs clearance and technical control 2 175 Ports and terminal handling 2 240 Inland transportation and handling 3 500 Totals 17 1182 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 10 317 Customs clearance and technical control 2 175 Ports and terminal handling 3 260 Inland transportation and handling 2 550 Totals 17 1302 57 Documents for Export and Import Export Bill of lading Certificate of origin Commercial invoice Customs export declaration Export license Foreign exchange authorization Inspection report Packing list Technical standard/health certificate Terminal handling receipts Import Bill of lading Certificate of origin Commercial invoice Customs import declaration Foreign exchange authorization Import license Inspection report Packing list Technical standard/health certificate Terminal handling receipts 58 59 1. Benchmarking Enforcing Contracts Regulations: Guatemala is ranked 101 overall for Enforcing Contracts. Ranking of Guatemala in Enforcing Contracts - Compared to good practice and selected economies: 60 The following table shows Enforcing Contracts data for Guatemala compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Guatemala 31 1459 26.5 Comparator Economies Colombia 34 1346 47.9 Costa Rica 40 852 24.3 El Salvador 30 786 19.2 Honduras 45 900 35.2 Mexico 38 415 32.0 61 2. Historical data: Enforcing Contracts in Guatemala Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 102 101 Procedures (number) 31 31 31 31 Time (days) 1459 1459 1459 1459 Cost (% of claim) 26.5 26.5 26.5 26.5 3. The following graphs illustrate the Enforcing Contracts sub indicators in Guatemala over the past 4 years: 62 Enforcing Contracts in Guatemala This topic looks at the efficiency of contract enforcement in Guatemala. Nature of Procedure (2010) Indicator Procedures (number) 31 Time (days) 1459 Filing and service 66.0 Trial and judgment 796.0 Enforcement of judgment 597.0 Cost (% of claim)* 26.50 Attorney cost (% of claim) 15.0 Court cost (% of claim) 6.5 Enforcement Cost (% of claim) 5.0 63 Court information: Guatemala City Justice of the ("Juzgado de Paz") Peace * Claim assumed to be equivalent to 200% of income per capita. 64 65 1. Benchmarking Closing Business Regulations: Guatemala is ranked 94 overall for Closing a Business. Ranking of Guatemala in Closing Business - Compared to good practice and selected economies: 66 The following table shows Closing Business data for Guatemala compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Guatemala 27.5 3.0 15 Comparator Economies Colombia 62.4 3.0 1 Costa Rica 21.2 3.5 15 El Salvador 29.2 4.0 9 Honduras 19.9 3.8 15 Mexico 66.7 1.8 18 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 67 2. Historical data: Closing Business in Guatemala Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 94 94 Time (years) 3.0 3.0 3.0 3.0 Cost (% of estate) 15 15 15 15 Recovery rate (cents on the dollar) 28.1 28.2 28.2 27.5 3. The following graphs illustrate the Closing Business sub indicators in Guatemala over the past 4 years: 68 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 69 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Colombia Colombia eased construction permitting by improving the electronic verification of prebuilding certificates. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Mexico Mexico launched an online one-stop shop for initiating business registration. Mexico improved construction permitting by merging and streamlining procedures related to zoning and utilities. Mexico increased taxes on companies by raising several tax rates, including the corporate income tax and the rate on cash deposits. At the same time, the administrative burden was reduced slightly with more options for online payment and increased use of accounting software. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. 70 Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 71 72