Christmas bonuses under $ 415.20 don't pay rent

El Salvador’s Congress approved the exemption of income tax to taxpayers who receive a Christmas bonus under $ 415.20, which is equivalent to two minimum wages on the trade and services sector.

Monday, December 6, 2010


©image:

According to Article 1 of that mentioned decree "Notwithstanding the provisions of the Income Tax Law and the Tax Code, for the current year are exempted from withholding and payment of income tax, all incomes received by way of Christmas bonus to workers covered by the Labor Code and the Additional Cash up Compensation Act to an amount not to exceed two times the minimum wage on trade and service sector.

State and private employees to be included in that range will receive the full bonus. This measure is part of a tax reform “package” adopted by the Salvadoran Congress on Thursday, December 2th, 2010.

If Christmas bonus is paid by the company before the referred decree enters in force, Tax Code may be applied, meaning to say that thee is no obligation for the company to deduct from the employees income tax when paid according to the minimum amounts (paid for Christmas bonus) established by article 198 of the Labor Code. Christmas bonus paid over those minimums will be subject to deduction. In this case, it is not about an exception but about “not obligating” the company to deduct income tax from the employee. The obligation for the employee to include this income in the yearly income tax statement remains.

It is still pending the decision to be taken by President Funes, who can confirm, observe or veto the decree.

More on this topic

El Salvador Passes Increased Bonuses for Private Employees

June 2013

The regulation increases the size of the "aguinaldo" (extra salary at the end of the year), depending on the number of worked years.

Those who have been working in a company for between 1 and 3 years will receive 15 days worth of 'aguinaldo' (end of year salary payment), those with between 3 and 10 years will receive 19 days worth of aguinaldo, and those who have worked for more than 10 years, will receive 21 days worth of aguinaldo.

Guatemala: "Bond 14" Wage Increase Sales

July 2011

Payment of the bonus raises expectations of better sales in cars and electronic equipment.

Jose Cofino, marketing manager at Volkswagen, said it expects a 30% increase in sales during July, while according to Cofiño Stahl, distributor for Toyota, "July is one of the best months," because the “14” bonus helps people pay the deposit, which in past years resulted in sales increases of 20%.

Guatemala January 2012 Tax Calendar

January 2012

Memorandum on "Minimum Wages 2012", and repayment schedule for payment of tax obligations for December 2011.

January 2012 Tax Calendar

The deadlines reported in this month correspond to obligations for December 2011.

Friday the 13th Schedule of VAT (January to December 2011) 1119

Guatemala: Memo and March 2011 Tax Calendar

March 2011

Items to be taken into account to carry out an annual transaction study between related companies.

Currently, several countries have existing legislation on transfer prices. The legislation regulates the elements that should be available to carry out an annual survey of transactions between related companies, as well as indicators serving as basis for determining if transfer pricing between related parties are within legal parameters.

 close (x)

Receive more news about Taxes

Suscribe FOR FREE to CentralAmericaDATA EXPRESS.
The most important news of Central America, every day.

Type in your e-mail address:

* Al suscribirse, estará aceptando los terminos y condiciones


Soluciones Integrales, S.A.

Organization that operates in Panama.
Phone: (507) 278-0482 - (507) 278-0483

Company Profile

Stock Indexes

(Dec 2)
Dow Jones
-0.11%
S&P 500
0.04%
Nasdaq
0.09%

Commodities

(Dec 2)
Brent Crude Oil
55.15
Coffee "C"
145.85
Gold
1,178
Silver
16.735