Leasing Law: A new era of the financial business in Guatemala?
On March 2, 2021, the Leasing Law was published in Guatemala, according to decree 2-2021. The purpose of this Law is to establish the general rules that regulate leasing operations, as well as the rights and obligations of the parties involved in this operation. The financial environment of Guatemala drives different convulsive reactions, coming from the different economic sectors, and the opinions are both divided and polemic as to the real benefit that the regulation of such financial activity intends to create.
Particularly, certain political sectors and the commission in charge of the gestation of the law initiative, enact a law whose purpose is to regulate a financial practice of regular and continuous use, a practice whose support until now has been only the ordinary legislation on contractual matters (civil and commercial) and whose closest nexus has been the ordinary leasing. These sectors have identified this recurring event as the right moment to intervene and provide better regulation to the figure known in the financial world as “leasing”.
The absence of dynamic and clear rules on the subject in question has an impact on the effectiveness and efficiency of the figure, seen from the point of view of legal certainty vs. operating cost. Today, on the eve of the entry into force of said law, the leasing figure in general is reinforced in several areas, from the recovery of goods in case of default to the tax treatment of the figure. An unnamed and legally atypical figure becomes a figure regulated by a body of rules that will have to evolve as its practice evolves.
From a technical-financial point of view, the fact of having an explicit regulation on leasing implies having mechanisms that add to legal certainty, operational security, and efficiency in the recovery of real guarantees regarding the use of such figure, thus contributing to reduce financial costs and improve competitiveness in terms of the conditions offered on the various financial products available to the Guatemalan population. This translates into better conditions for small and medium-sized entrepreneurs, who are the main drivers of employment.
Although every law is born with intrinsic imperfections, the constant movement of social behavior and market practices in constant evolution, will guide the need to create sporadic modifications or extensions to reinforce a figure that is called to motivate a change in the traditional financial system of our country. It remains to be seen how much it will be able to motivate a social and economic improvement in the country.
Andrés Cofiño Guzmán
García & Bodán