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.
During the plenary session on Wednesday approval was given, with 44 votes, to amendments to the Law on Income Tax, which aims to establish a minimum payment of one percent (1%) on net assets, for companies that have more than U.S. $150,000 in sales a year, and who declare taxes lower than that percentage.
The government has agreed to modify the terms of the tax reform proposal to take into account criticisms made by the private sector.
Salvadoran private companies have outlined to officials the adverse effects that the country would face if the proposed new tax measures were applied, receiving signals of openness to a discussion from the Government, who for the first time since 2009 and 2010 has agreed to negotiate tax reforms with entrepreneurs.
The opposition in the Assembly is calling for government approval of the bill on fiscal responsibility before approving the issuance of debt of $1.15 billion and a proposed tax package.
The lawmakers argued that there is a need to thoroughly scrutinize the text of the proposed reforms, as there is uncertainty over the destination the government will chose for the proceeds as well as strategies to revive the national economy in order for the state to ensures there is liquidity rather continuing to generate more debt for the country.
If approval is not given to the amendments to the Law on Public-Private Partnerships and the Money and Asset Laundering Act, the second disbursement will not be realised.
This was explained by Salvadoran President Mauricio Funes. "Donors are free to stipulate any conditions deemed appropriate. Everything that is the responsibility of the Executive has already been done," he said.
Congress has unanimously endorsed the National General Budget for 2014 with an increase of $174 million compared to 2013.
From a press release issued by the Legislative Assembly of El Salvador:
The National Assembly has unanimously passed the General Budget of the Nation and the corresponding Wages Act for Fiscal Year 2014. The decision indicates that it be "primarily oriented towards social areas so that El Salvador can have a population that is healthy, educated and productive with skills and opportunities to fully develop their potential and become the social basis of national development ".
The intervention by the Central American Court of Justice in disputes between state bodies has been declared unconstitutional in El Salvador.
This was established by a ruling signed by the judges of the Constitutional Chamber of the Supreme Court explaining that "the jurisdiction of this Court is not compatible with the Constitution."
The draft budget for 2014 is 3.9% higher than what that the Salvadoran Congress approved for 2013.
From a press release issued by the Presidency of El Salvador:
The Cabinet today approved the draft 2014 General Budget of the Nation in the amount of $4.679 billion during a meeting at the Presidential House headed by the President, Mauricio Funes.
Private sector operators see in the Law of Public-Private Partnerships serious deficiencies which would prevent the bill from obtaining the desired results.
"The law, as it has been approved, will not achieve the expected results, we believe that it is not a good law, it has serious deficiencies that will make it very difficult to obtain the expected results," said Javier Castro, director of Department of Legal Studies (DEL) of the Salvadoran Foundation for Economic and Social Development (FUSADES).
Salvadoran Congress has passed a law that will allow public institutions to form partnerships with private companies for infrastructure and public services projects.
From a press release issued by the Legislative Assembly of El Salvador:
In order to establish the regulatory framework for the development of projects for the provision of infrastructure and public services of general interest effectively and efficiently, the Legislative Assembly in Plenary approved with 84 votes in favor, the "Special Law on Public Private Partnerships"(PPP).
Salvadoran Congress has stipulated that the minimum investment amount for a private public partnership should be 10 million dollars.
From a press release of the Legislative Assembly of El Salvador:
The Special Committee on Finance and Budget, began review on Monday of the Bill on Public-Private Partnerships (PPP), which is to establish the regulatory framework for the development of projects for the provision of infrastructure and public services of general interest, in an effective and efficient format.
The Legislature approved with 84 votes a government issuance of bonds for $800 million in order to pay for Eurobonds acquired in 2003.
A press release of the Legislative Assembly of El Salvador reads:
With the votes of 84 MPs from all parliamentary groups, the full Legislature authorized the Executive Branch in the field of Finance, to issue securities for eight hundred million dollars, in order to meet the demand for early redemption of the El Salvador’s Eurobond issue, maturing in 2023.
Representatives of employers in El Salvador say the bill submitted to the Legislature does not provide legal certainty to investors.
The draft Law on Public Private Partnerships (PPP) is unsatisfactory to businesses and analysts, and they fear that if passed in its present form, there would be enormous discretion used when carrying out its regulatory functions which would not ensure legal certainty for investors .
The Salvadoran Presidential Secretariat has presented a draft Law on Public-Private Partnerships to the Legislative Assembly.
A press release from the President of El Salvador states that:
“The Technical Secretariat of the Presidency presented this week a draft Law on Public-Private Partnerships (PPPs) as a tool to enhance public and private investment, generating growth and economic development in El Salvador.
The Assembly still hasn’t approved funding for $260 million awarded by the institution.
Projects such as the so-called Comunidades Solidarias Urbanas (Urban Caring Communities) have not been able to begin development due to the delay in the approval and ratification of loans which the Inter-American Development Bank has committed to the Central American country.
Experts from various countries have been discussing the how to make the law successful in terms of attracting foreign investment.
Flexiblity, clarity and the inclusion of detailed processes are the characteristics that should define the new public-private partnership law whose draft version is currently being re-discussed in the country.
So say experts from countries that have passed similar laws, which have proved very useful in attracting more foreign investment and setting the regulations under which those companies become established in the country.