The Legislative Assembly of El Salvador has approved a new tax amnesty that will forgive fines and interests for taxpayers who settle their pending tax debts or tariff charges with the Ministry of Finance.

This initiative, which will be in effect until December 8, 2023, provides debtors with the opportunity to request payment plans for their tax obligations to the Treasury, which can be extended over nine installments. It is important to note that the first installment must represent at least 10% of the total amount owed and can be applied to concepts such as VAT, Income Tax, advances, as well as taxes managed by the General Customs Directorate.

Our associate lawyer, Adalicia Torres, points out that this tax amnesty applies even to taxpayers under criminal investigation due to accusations of tax evasion, as long as they do not have a definitive sentence from the judge. Furthermore, those facing collection proceedings initiated by the General Treasury Directorate (DGT) can also benefit from this measure.

“This amnesty involves forgiving fines, charges, and the interests associated with debts settled with the tax authority, and it applies to taxes managed by both the Internal Revenue General Directorate (DGII) and the General Customs Directorate (DGA),” explains Adalicia Torres.

This encompasses situations such as delays in payments of Income Tax (ISR), VAT, withholdings, or advances that companies must make, as well as pending payments that are in the process of auditing, hearings, and evidence presentation, as well as disputed debts that are in legal processes. In these cases, debtors must “completely waive before the court” their application to be eligible for the amnesty.

It is important to note that if a taxpayer has “firm and enforceable” fines, they can only access a payment plan lasting a maximum of nine months, with a first installment equivalent to 25% of the total amount owed.

In which cases does the tax amnesty apply?

● Taxes administered by the DGII, such as VAT, ISR, withholdings, advances in withholding matters, and audit processes.

● Taxes administered by the DGA, particularly those related to inaccurately declared or undeclared tariffs.

● Filed declarations that were not paid or were filed without payment with balances in favor of the respective taxpayer.

● “Omissions” situations, i.e., when tax obligations have been omitted from declaration.

● Cases in the process of audit, hearing, and evidence presentation.

● Cases where appeals or lawsuits related to tax obligations have been filed.

● Exemption from interest and surcharges in cases where debts are liquid and firm.

● Waiver of fines and exemption from interest and surcharges in situations where sums of VAT, ISR, or VAT or ISR advances have not been withheld or received, or in cases where such amounts have not been declared or a lesser amount has been declared.

● Cases with a notice filed before the Attorney General’s Office.

● Taxpayers facing active criminal proceedings without a definitive judgment from the competent judge.