El Salvador: Tax on Unused Properties Proposed

A bill aims to tax properties of any value that either do or do not have constructions on them, and which do not have a specific use anywhere in the country, declaring them "luxury goods".

Monday, May 19, 2014

The proposed law states that "... property for recreation, leisure or rest, with or without construction or under construction, regardless of its value or location , such as houses, lots, plots, villas located in beaches, lakes, mountains or the city ... "will be taxed at 1% on the assessed value established for the property.

"The Finance Minister said the levy for properties that did not have a productive function applies only to properties whose value exceeds $350,000, whether they be one or several properties which add up to this amount. However, in Article 1 paragraph c) of the bill ... it is detailed that the tax applies to properties that are described as for recreation or leisure, regardless of their value," according to an article in Elsalvador.com.

"We believe that someone in this country who has a property worth up to $350,000 - I am going to say something many people will not like - is privileged, and when they have properties that add up to $350,000, lodges, summer houses, really, it is not possible that they dont pay anything, they have to contribute something," reflected Carlos Cáceres, Minister of Finance.

More on this topic

Panama: Moratorium on Taxes or Tax Reform?

November 2014

A recently passed tax moratorium law includes several changes related to public finances, the Canal contributions and even exemptions for agricultural, livestock and aquaculture.

The passage of the tax moratorium law brought changes that support the State not only in increase the level of debt to GDP, but also includes tax adjustments and the fact that "...

Government of El Salvador Plans New Taxes

October 2012

If passed the new reform would create taxes for financial transactions, unproductive properties and newspapers.

Elsalvador.com reports that Carlos Caceres, head of the Ministry of Finance stated that "The President (of the Republic) has instructed the Ministry to evaluate a proposal acceptable to him and to society, that is politically acceptable and not damaging to the productive sectors and to the poorest people. "

New Tax Reform in El Salvador

February 2011

The government admitted working on a new tax reform to broaden the income tax and create new taxes.

With regards to new property tax, Finance Minister Carlos Caceres said it would be applied for the 2012 and 2013 fiscal year.

"On tax reform as a whole, the finance minister said they are still working on it, but there isn't anything formal, in any case he indicated that it could jump-start in the first half of this year," noted Elsalvador.com.

El Salvador's Agriculture and the Tax Reform

November 2009

Farmers and growers have voiced their concern over the new taxes they will have to pay.

One of the most worrying topics, they argue, is the application of a 13% value added tax when importing capital goods. Although these amounts are deductible from income taxes, they have negative effects on the companies' cash flow. Additionally, value-added tax will also be applied to several export categories like coffee.

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