The Legislative Assembly of El Salvador has approved a new tax amnesty that will forgive fines and interest for taxpayers who settle their outstanding 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 spread 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 for accusations of tax evasion, as long as they do not have a definitive sentence from the judge. Additionally, those facing collection proceedings initiated by the General Treasury Directorate (DGT) can also benefit from this measure.

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

This includes 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 audit, hearing, and evidence opening, and disputed debts that are in legal processes. In these cases, debtors must "completely waive their request before the court" to be eligible for amnesty.

It is important to note that if a taxpayer has "firm and enforceable" fines, they can only access a payment plan with a maximum duration 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 corresponding taxpayer.
  • "Omissions," i.e., when fiscal obligations have been left unreported.
  • Cases in the process of audit, hearing, and evidence opening.
  • Cases in which appeals or lawsuits related to tax obligations have been filed.
  • Waiver of payment of interest and surcharges in cases where debts are liquid and enforceable.
  • Dispensation 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 these amounts have not been declared or a lesser amount has been declared.
  • Cases with a notice filed with the Attorney General's Office.
  • Taxpayers facing active criminal proceedings without a definitive judgment from the competent judge.

-Written by the Torres Legal Team.