If the proposal goes ahead, from January 2011 the minimum amount subject to tax on income will be reduced from $316.67 to $209.52.
"According to the Treasury's draft document, employees earning between $209.52 and $316.67 (who are not currently required to pay tax on their income) will have withholdings applied to their pay from 2011. The proposal also suggests getting rid of income tax returns, under the assumption that employees will be taxed exact amounts," writes Daniel Choto for Elsalvador.com.
With the publication in the official daily newspaper, a 1% increase on income tax (ISR) comes into force.
The amendment to the income tax law adopted by Congress applies only to companies with revenues in excess of $529 thousand (10 million lempiras). The increase will be applicable for the fiscal year beginning in 2011.
The FMLN's proposed reforms include, among other things, raising the limit of exempted income.
Representatives from a faction of the FMLN have presented a series of reforms to income tax law, with which they aim to reduce the burden on those earning less and increase the burden on those earning more.
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