Self Assesment for VAT in El Salvador

A proposal has been made for a self-assessment system which aims for the government to quickly provide refunds of the 13% VAT to exporters.

Wednesday, March 6, 2013

Elsalvador.com reports that "in light of the government's failure to repay on time the 13% Value Added Tax (VAT) to export companies, the same companies, unionized under the Corporation of Exporters of El Salvador (Coexport ), have decided to create their own proposal in order to quickly get back the funds which belong to them. "

According to calculations made by the exporting companies, the government owes them about $200 million in VAT refunds.

Silvia Cuellar, Coexport's executive director, and Pablo Duran, president of the Union of Small and Medium Enterprises (known as Unión Mipyme in Spanish), said that though the proposal is still under study, the intention is to create a system of "self assessment" with which the Government can expeditiously deliver the money that exporters have paid in advance and can save on the refund procedures.

According to Cuellar, the ideal thing would be for the Government not to charge the companies this money. In this way, the companies would be not be out of pocket nor would the government have to manage a return process.

"In the absence of liquid cash, businesses, and especially small and medium sized ones, have had to resort to borrowing in order to cover their expenses", said Duran.



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In El Salvador the export sector claims that delays of up to nine months are being reported on tax refunds due from the Treasury, which should take no more than 30 days.

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