The Welfare and Social Security Commission Congress issued a favorable opinion with modifications to the initiative 6709which proposes changes to the Law of the Single Tax on Real Estate (IUSI).
The proposal seeks to reduce the tax burden for taxpayers through new exemptions and adjustments to the current system, which has opened the debate about its impact on municipal finances.
Exemptions contemplated in the initiative
The ruling includes several measures that would benefit different sectors:
- Temporary exemption from the IUSI for the first home while it is in the payment process.
- Total exemption for those who have paid the tax during 20 consecutive years.
- Exemption for people over 60 years of agefocused on protecting family assets.
These provisions seek to alleviate the economic burden on households and promote access to housing.
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Municipalities, the most affected
Analysts agree that the main impact of the reform would fall on the municipalitieswhich depend largely on the collection of the IUSI.
Currently, income is distributed as follows:
- He 2 per thousand It is allocated entirely to the communes.
- In the sections of 6 and 9 per thousandhe 75% corresponds to municipalities and the 25% to the State.
Furthermore, the law establishes that at least the 70% of these resources should be invested in basic services and infrastructurewhich could be compromised if collection decreases.
Collection exceeds Q1,800 million annually
According to the IUSI Collection Income Reportpublished on the portal of the Ministry of Public Finance (Minfin)the collection of this tax reached Q1 thousand 853.7 million in the 22 departments of the country in 2025.
The departments with the highest income were:
- Guatemala: Q1 thousand 432.5 million
- Escuintla: Q91.8 million
- Sacatepéquez: Q73.3 million
At the municipal level, they highlight the Guatemala CityMixco and Villa Nueva as the main recipients of these funds.
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IUSI collection in main municipalities
| Municipality | 2025 (Q) in millions | 2024 (Q) in millions |
| Guatemala City | 752,263,873.74 | 721,652,422.26 |
| Mixco | 167,680,446.63 | 156,605,859.09 |
| New Villa | 142,692,798.20 | 132,929,412.97 |
Ice: simplification, but with risks for equity
Habibi Quiñonez Oliva, director of Institutional Relations and Strategy, of the Institute for Economic Competitiveness (ICE) considers that the initiative introduces a relevant change by proposing a possible fixed rate of 3 per thousandwhich would simplify the tax calculation.
“With this new reform, the rate is a simpler calculation. It is important to highlight that for many Guatemalans it will decrease from 6 and 9 per thousand to 3.”
Habibi Quiñonez Oliva, of the Institute for Economic Competitiveness (ICE)
According to the analysis, this modification, in summary:
- Reduces administrative complexity for both taxpayers and municipalities.
- Reduces the tax burden for those who currently pay tax rates 6 and 9 per thousand.
- Introduce a system proportionalbut not necessarily equitableby eliminating progressivity.
However, the institute warns that the elimination of scales can generate differentiated effects: while some taxpayers will pay lessothers that currently are exempt could start paying taxesdepending on how the new ranges are defined.
About the exemptionsthe institute points out that they have direct effects on the market:
- The exemption for first home It could encourage the purchase of real estate and boost the sector.
- The limit of 20 years of payment introduces a cumulative benefit that reduces the tax burden in the long term.
However, it warns of a central risk: the possible reduction of municipal incomewhich could put financial pressure on local governments.
“A potential risk with exemptions is possible municipal pressure due to reduced revenue.”
Habibi Quiñonez Oliva, from the Institute for Economic Competitiveness (ICE)
Likewise, it points out that, although the reform can encourage real estate investment, its impact will depend on other factors such as interest rates, land availability and market dynamics.
Construction: impact on infrastructure and services
From the Guatemalan Chamber of Construction (CGC) the evaluation is more cautious.
José Andrés Ardón, Executive Director, comments that the sector recognizes that alleviating the tax burden is a positive measure, but questions the lack of a comprehensive analysis of its effects.
Among the main concerns stand out:
- A substantial decrease in municipal incomewhich would limit investment in infrastructure.
- The possibility of communes passing the cost on to citizens through increases in basic services, fees or permits.
- The risk of affecting the sustainability of growing urban projects.
“These concerns raise a key question about how the services demanded by citizens will be sustained. In this scenario, it is likely that municipalities will transfer the cost to other items, such as basic services – water, garbage, lighting and decoration – or even traffic fines or other permits that require municipal approval,” said Ardón.
Therefore, it emphasizes that any modification to the law must be based on a comprehensive evaluation that guarantees real benefits for the population without compromising the provision of services.
The CGC warns that the impact would be “double-edged”:
- short termthe exemption from the IUSI for homes on credit could make the purchase of a home more accessible.
- In the medium and long termthe reduction in municipal income could stop investments in water, drainage, streets and services, essential for real estate development.
“The country is in a stage of urban growth, and drastically cutting these resources without defining how services will be financed is equivalent to shifting immediate relief towards a higher social cost in the future.”
José Andrés Ardón, Executive Director, Guatemalan Chamber of Construction (CGC)
It also points out possible distortionssuch as the transfer of properties to people over 60 years of age to avoid paying the tax, in addition to the limitations derived from a outdated cadastre.
They propose a fund to compensate income
Furthermore, the CGC considers that the initiative needs adjustments. Although it supports a reform of the IUSI, it suggests that it must simultaneously guarantee a fairer tax burden for the population and the financial sustainability of the municipalities.
In this sense, the Chamber warns that the initiative, to which the Congress has already given a favorable opinion, does not contemplate clear mechanisms to compensate the loss of municipal revenue.
Therefore, it suggests incorporating measures such as resource substitution schemesthe updating of fiscal values and greater participation of the State in the financing of public infrastructure.
As an alternative, it proposes the creation of a compensation fund financed with resources from the ISolidarity tax (ISO)which collects around Q3.7 billion annually, with the aim of mitigating the impact on municipal finances.
This mechanism would seek to sustain municipal revenues in the event of a possible fall in the IUSI.
Municipalities analyze the proposal
Deputies indicated that they sought to integrate mayors into technical tables; However, no response was obtained from the National Association of Municipalities (Anam). Free press He also made inquiries through different means, but as of the date of publication of this article, no response had been received.
For its part, when consulted by this means, the Press Unit of the Municipality of Guatemala pointed out that the Single Property Tax (IUSI) constitutes a fundamental source of financing for urban development, as it is directly translated into works and services such as streets, drainage, public lighting and the provision of drinking water.
In that sense, he warned that any modification proposal must be analyzed with responsibility and a long-term vision, since a reduction in this income would imply a fiscal adjustment and a lower capacity of the municipalities to meet the needs of the neighbors.
Meanwhile, the Municipality of Villa Nueva indicated that it is in the process of analyzing the proposed reform.
