El Salvador implements Tax Amnesty for Tax Debt Payments
The Legislative Assembly of El Salvador has approved the Special and Temporary Law that grants facilities for voluntary compliance with tax, customs, and other penalties. This will allow tax debtors to pay their debts over a period of up to nine months, without additional charges, fines, or interest.
Commonly known as “tax amnesty,” this temporary decree, if enacted, will apply to tax debts, customs duties, and traffic violations, whether they are under audit, in the Unit of Audits and Appraisals (UAT), the Tax and Customs Appeals Court (TAIIA), judicial headquarters, or even before the Attorney General’s Office. The period for taxpayers to start settling their debts will be 90 days from the publication of the decree in the Official Gazette.
Payments can be made through various methods, including legal tender, checks made out to the General Treasury Directorate (DGT), public treasury credit notes, and credit or debit cards accepted by the DGT.
Key Exemptions and Benefits of the Law:
Total Exemption:
- Zero or favorable balance declarations.
- Declarations with incorrect balances or under audit in UAT, TAIIA, or judicial headquarters.
- Tax declarations up to July 31st, 2024.
- Unreported or incorrectly reported VAT or Income Tax (ISR) withholdings.
- Fines for unreported ISR withholdings from salaries, with total exemption of the fine.
Partial Exemption:
- Interest charges on traffic fines regulated by the Land Transport, Traffic, and Road Safety Law. The fines themselves will not be exempt.
Administrative Fines:
- Exemption from fines imposed by public administration, such as those from the Court of Accounts of the Republic, excluding those imposed by municipalities.
Final and Collectible Debts:
- Exemption from interest and penalties on liquid, final, and collectible debts for taxes administered by the Treasury. Fines will not be exempt.
Cases with the Attorney General’s Office:
- Exemption from interest and penalties, provided a withdrawal is presented, with no imposition of fines related to omissions or inaccuracies in declarations.
Previous Non-compliance:
- Taxpayers who did not comply with previous amnesties can benefit from this one, provided the tax obligation was due by July 31st, 2024.
This measure aims to facilitate the regularization of tax obligations and encourage voluntary and effective compliance. Interested taxpayers should stay alert for the official publication of the decree to begin the payment process under these new conditions.
Mauricio Orellana
mauricio.orellana@garciabodan.com
Partner
García & Bodán
El Salvador