El Salvador: Textile Companies Oppose 5% Tax

The Chamber of Textile, Clothing Companies and Free Zones states that if the new law on Free Zone included the tax, it would drive away millions of dollars in investments.

Thursday, February 14, 2013

Elmundo.com.sv reports that "The Chamber of Textile, Clothing Companies and Free Zones of El Salvador (Camtex) on Wednesday opposed changes made by the Finance Minister Carlos Cáceres to the proposed amendments to the Law on Free Zones, agreed with the sector since October 2011."

Jose Antonio Escobar, president of Camtex warned that if the payment of 5% on income in the form of dividends, and other modifications, were approved it would drive away investment. 'There are two companies that will be investing $25 million if the law is passed as agreed. If not, there will be $25 million less'.

When consulted, the finance minister denied that the reforms could mean the light of capital. "They do not come here because maquilas are here, because the value of labor is cheap." Regarding the payment of 5%, he reminded them that this tax is charged in all Central American countries except El Salvador. "They can not have those benefits", said the minister.



More on this topic

El Salvador: Energy Costs Limit Textile Companies

August 2013

Energy costs reach up to 60% in textile and clothing companies, making them less competitive.

According to the Chamber of the Textile, Clothing and Free Zone Companies of El Salvador (CAMTEX), the cost of energy is one of the obstacles that is preventing this sector from increasing its productivity.

Optimism In Salvadoran Textile Sector

March 2013

Textile businessmen say the new free zones law has caught the interest of investors and will strengthen the productive chain.

Elsalvador.com reported that "despite a series of reforms promoted under the table by the Finance Minister Carlos Cáceres, which put companies operating under the Free Zone scheme on alert, the approval of the regulations as they had been agreed between the public and private sector a year ago, "is a tremendous tool (...), a tremendous engine which will make this sector take off," said the president of the Chamber of the Textile, Clothing Companies and Free Zones in El Salvador (Camtex), Jose Antonio Escobar ".

New Changes to Free Zones Act

September 2012

Organizations and unions of Salvadoran maquila workers have proposed the creation of an insurance policy guaranteeing payment of 100% of salaries in the event of closure of business operations.

The bill envisaged by organizations and unions also proposes sanctions such as loss of tax benefits for a period of three months for those companies who commit very serious offenses.

Textile Industry Hopes for Free Trade Area Reforms

November 2011

New investments in the sector are pending the approval of El Salvador's new tax-free zone law.

According to the Salvadoran chamber of textile manufacturers (CAMTEX in Spanish), the reforms being considered by the government comply with all the demands made by the World Trade Organization (WTO).

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