Taxes: E-Commerce in the Authorities' Sights

Within the framework of the fiscal adjustment being discussed in El Salvador in order to sign an agreement with the IMF, local authorities intend to apply VAT, ISR and other specific taxes to companies that sell their products and services online.

Wednesday, May 19, 2021

At the beginning of March, the Ministry of Finance informed that El Salvador is in talks with the International Monetary Fund (IMF) to obtain a loan of approximately $1.3 billion.

The objective of accessing this loan is to leverage the budget gaps for the years 2021, 2022 and 2023, authorities reported weeks ago.

In this context of the need for financing, the Government is analyzing possible measures within the fiscal adjustment, among which the collection of taxes on transactions in the digital environment stands out.

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Alejandro Zelaya, Minister of Finance, said that the Salvadoran Government "... continues to look for 'points where there has been tax evasion in the past', and close the gaps to improve tax collection."

According to Zelaya "... more than taxing it (e-commerce) is to apply what already exists (...) They are obliged to pay VAT, income tax, to pay specific taxes as everyone else does." reviews that the Ministry of Finance also proposed to the IMF to reactivate transfer pricing, a tax declared unconstitutional by the Supreme Court of Justice (CSJ) in 2014.

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