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.
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.
Faced with the health crisis affecting the Salvadoran economy, businessmen from the industrial sector asked the government to postpone income tax declarations until June 2020.
Another of the specific requests of the Salvadoran Association of Industrialists (ASI), is the prompt refund to exporters of Value Added Tax, through Treasury Notes.
On average, companies in the region pay 45.8% tax on profits, while companies in OECD countries pay 41%.
From the study Evolution of the fiscal situation in Central America, by the Federation of Chambers of Commerce of the Central American Isthmus (FECAMCO):
FECAMCO has carried out a study with the objective of showing the fiscal situation in Central American countries and raising awareness in governments about the efficient use of taxes that are collected from the payment of citizens to guarantee solvency of the states.
Work is being done on a draft amendment to the Law on Tax Incentives for Renewable Energy Development to include new sources of renewable energy and expand the coverage of incentives for large projects.
From a statement issued by the Legislature:
Agreement to amend Fiscal Incentives Act for the Development of Renewable Energy in Electricity Generation
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.
Taxing the income of companies that publish and sell books will speed up the deterioration of a market already affected by new technologies and lower consumption of books.
The tax package that the government intends to implement includes publishers, who will have to start paying income tax if the tax reform thrives in the Legislature. If this is the scenario, book prices will rise and in house publications will be further reduced, anticipate industry representatives.
The Government is proposing amending the Press Law to tax the income of the companies that own printed newspapers, keeping tax exemptions on paper and ink.
Establishing a concept of fairness and justice between taxing employers and not censorship is, according to Finance Minister Carlos Cáceres, the purpose of the proposed new tax for the companies that own printed newspapers, which until now have been exempt from income tax (ISR).
The asymmetry of investment flows makes the application of the concept of world income inevitably generates more revenue to the states of powerful economies than those of small ones.
In his opinion piece in Elfinancierocr.com, Manrique Blen points to the difficulties that countries with small economies face when they sign double taxation treaties, as, depending on the characteristics of the signed agreements, they can stop receiving tax revenues that they could have received had they not joined the treaty.
A law has been approved that repeals articles 2 and 3 of Act 120 of 2013 and restores the effect of Article 694 of the Tax Code relating to the principle of taxation of the income.
From a statement by the National Assembly:
With 45 votes in favor, 2 against and 0 abstentions, the plenary of the National Assembly approved on its third reading Bill 694, which repeals Articles 2 and 3 of Act 120 of 2013 and restores the effect of Article 694 of the Tax Code regarding the principle of taxation of income.
At the request of producer cooperatives Congress is considering eliminating the tax for the sector.
What has been suggested is reforming a decree which "designates a 1.5% retention of Income Tax (ISR by its initials in Spanish) on cooperatives for their agricultural activities, which according to these entities affects them, because they generate illiquidity and this prevents coffee farming being a sustainable activity," noted an article in Laprensagrafica.com.
The Supreme Court has ruled that the collection of a 1% tax over revenue as minimum payment for income tax is unconstitutional.
The ruling came months after the submission of a claim of unconstitutionality "through a legal team set up by the National Association of Private Enterprise (ANEP), along with union representatives and other affected MSMEs," reported Laprensagrafica.com .
The treasury has imposed radical changes on the draft law reforming the free zone regime, setting limits on tax breaks.
Laprensagrafica.com reports that "Executives from two major companies in the synthetic textiles sector were surprised yesterday, after the Ministry of Finance (MoF) last week presented to Members of the treasury his own statement of amendments to the Law on Free Zones.
The head of the ministry of Finance confirmed that there are still more than $30 million worth of outstanding income tax returns for the fiscal year 2011.
Carlos Caceres, the Finance Minister said that it is expected that this month refunds of amounts less than $500 will be made, which amounts to around $15 million.
"In mid-April, the Foreign Office minister said in May payments would be made representing the delivery of funds to Salvadorans with a return less than $200 who had filed their returns in January and February. Taxpayers, via social networks on elsalvador.com, criticized the default", published Elsalvador.com
The government of El Salvador is studying a proposal to change taxes for owners of gas stations, in light of the sector’s negative reaction to the latest tax reforms.
The current proposal is to exempt them from the tax of 1% of total sales tax in exchange for paying 30% of profits.
"Current law provides that companies must make two calculations: 1% of total sales and 30% of their profits, and must pay whichever amount is greater.
The option is open to individuals or corporations who want to declare their fiscal activities for 2011.
"The Ministry of Finance (MoF) is offering taxpayers a new way to declare income tax (ISR in Spanish), which is via the internet and only requires details of the person or company who wishes to access it. Users who can make use of this tool are self employed individuals or those providing professional services, as well as businesses", La Prensa Grafica reported in its online edition.