Guatemala approves tax exemption on fuels to alleviate economic impact
The Congress of Guatemala has given the green light to Decree 22-2026, a national emergency measure that establishes the temporary exemption of the Tax on the Distribution of Crude Oil and Derived Fuels (IDP) and the Value Added Tax (VAT). The regulation, approved with the support of 148 legislators, seeks to mitigate the rise in prices of gasoline, diesel, and gas oil in the face of the international energy sector crisis.
If enacted by the Executive, the provision will remain in effect until December 31, 2026. Unlike previous initiatives that sought to set price caps, this scheme allows the final cost to the consumer to fluctuate according to international market conditions, while guaranteeing a direct reduction through the elimination of the aforementioned taxes.
Impact on the consumer’s pocket and oversight
The direct discount per gallon is broken down as follows:
- Superior Gasoline: Reduction of Q9.41 per gallon.
- Regular Gasoline: Reduction of Q9.10 per gallon.
- Diesel and gas oil: Reduction of Q6.34 per gallon.
Surveillance to ensure that this benefit effectively reaches the final consumer will be in charge of the Directorate of Attention and Consumer Assistance (DIACO) and the Superintendency of Tax Administration (SAT).
Fiscal cost and sustainability
The Ministry of Public Finance estimates a fiscal cost of Q3,318.4 million. However, legislative authorities have assured that the decree guarantees the flow of funds destined for municipalities and the Road Maintenance Executing Unit (Covial), ensuring that infrastructure maintenance and construction are not affected. According to explanations provided in the plenary session, the fiscal sacrifice will be offset by recent increases in the country’s tax collection.
We are aware that there is no perfect measure in the short term, but we reiterate to the population that we are committed to complying and responding effectively to protect families and provide relief to their pockets in the face of rising fuel prices.
Secretariat of Social Communication of the Presidency of Guatemala
Legislative context and future outlook
This new regulation adds to the debate over Decree 21-2026, which proposed maximum prices but has faced procedural obstacles and objections from opposition sectors. President Bernardo Arévalo will have to analyze both proposals, while the Executive branch evaluates the most effective strategy to contain the energy inflation that has caused various mobilizations and blockades by transporters and merchants in recent weeks.
The Government has indicated that its technical teams are working on the analysis of the decree to determine the next steps, maintaining the focus on protecting the family economy in the face of the complex international price landscape.
