The law decree states that each 94.5 pounds of cement produced will have a 5% tax on the selling price and the amount will be paid to the municipality of Metapan. Likewise, a 5% tax on the sales price will also be applied to production of cement powder known as clinker.
The law, which was approved by the FMLN and PCN parties, includes amendments to two provisions of the Metapán Municipal Tax Act and seeks to bring more resources to the community.
The amendment resulted in adverse reactions from the ARENA party, which argued the measure will impact the construction industry and consumers.
"The cement bag, according to legislative estimates, would increase by $ 0.35," according to the article in Elsalvador.com.
A legal reform will end tax exemptions on cement produced in the provinces of Alajuela, Limón, Heredia and Puntarenas.
A statement from the Legislative Assembly reads:
CEMENT PRODUCTION TAX PAID
The Standing Committee on Financial Affairs has approved the bill number 18164, by which is introduced an amendment to the 6849 Act that relates to the tax of five percent on the cement produced in Cartago, San Jose and Guanacaste.
The Constitutional Court has rejected the appeal made by Holcim which protested against the 5% tax on the sale of cement produced in some provinces.
The Swiss company Holcim Capital won an appeal against the Law on 5% Tax on the sale of the cement produced in three provinces: Cartago, Guanacaste and San Jose, considering it "discriminatory" and harmful to their competitiveness.
The Congress of El Salvador is evaluating implementing a tax which would in principle would apply only to LaGeo, a subsidiary of the Italian company Enel.
Against the backdrop of the dispute between the Government and the Italian company Enel over the capitalization of the geothermal LaGeo, "...an ad-hoc committee of the Legislature which is studying the LaGeo concession, the only cmpany with state permission to exploit subterranean heat sources, has proposed a series of amendments to the Electricity Law, including a tax that would be incurred by the activity of the geothermal company. "
Holcim El Salvador, formerly CESSA, will enlarge its Maya production facility, located in the Metapan region.
Thomas Knoepfel, member of Holcim’s global executive committee, explained they have slowed down investment due to the global crisis.
“He also detailed that such investment is in addition to what they invest every year, which is normally around $8 to $10 million, used to buy new machinery, filters and vehicles”, reported Elsalvador.com.
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