El Salvador: SMEs Reject Minimum Wage Increase

The 10% increase projected by the government will add to the increased taxes and extortion payments that they are required to pay to criminal gangs.

Thursday, April 25, 2013

"... The National Council of Small Business of El Salvador (CONAPES) is urging the deputies of the Legislative Assembly to take into account the financial difficulties which the sector has faced in the last two years," noted an article in Elsalvador.com.

According to Ernesto Vilanova, CONAPES' director, "the situation in which we find ourselves means we are unable to increase salaries."He explained that in 2011, revenues from micro and small enterprises were 40% less than in 2010, and due to this downward trend the union is calling on legislators to take into account their situation.

With respect to new taxes, there is the payment for gross annual sales of between $150 thousand and $500 thousand a year, the employer has to pay 1% on gross income or 30% of taxable income.

More on this topic

New Taxes Approved in El Salvador

August 2014

As part of the tax reform promoted by the government a tax has been approved on financial transactions and changes have been made to income tax.

From a statement by the Legislative Assembly of El Salvador:

Companies with more than $150,000 in sales a year will pay a minimum tax rate with the new tax reforms.

70% of MiyPEs in El Salvador Suffer From Extortion

September 2013

A study by the union of micro and small businesses reveals that 70% of them are victims of extortion, of which 65% do not file any complaints for fear of retaliation.

The study which included the participation of over 425 representatives of MSE's was conducted jointly by the National Council of Small Business in El Salvador (CONAPES) the MiyPEs Union and the Society of Businessmen and Industrialists of El Salvador (SCIS).

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.

Tax Reform in El Salvador Approved

December 2011

The tax on corporate income will rise from 25% to 30%, while tax on dividends will be reduced.

The legislative body of El Salvador has approved the fiscal reforms promoted by the Executive, with 66 votes in favor and 17 against.

The major changes include increasing income tax for businesses, which will raise to 30%, except for companies with revenue of less than $150,000, who will continue to pay 25%.

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