We inform you of the fiscal measures that have been taken to directly or indirectly reduce the negative effects of COVID-19, as detailed below:

I. SPECIAL AND TRANSITIONAL LAW ON THE PAYMENT OF INCOME TAX AND THE SPECIAL CONTRIBUTION TO THE PROMOTION OF TOURISM

The Legislative Assembly approved on March 20, 2020, the Special and Transitory Law on the Income Tax payment modality applicable to Small Taxpayers, Tourism, Electric Energy, Television, Internet and Telephone Services, and on the Special Contribution for the Promotion of Tourism.

Said decree entered into force on the day of its publication in the Official Gazette number 58, Volume 426 of March 20, 2020.

The beneficiaries are small businesses in general, small and medium-sized enterprises engaged in tourism, as well as companies engaged in the transmission, marketing and distribution of electricity, providers of subscription television services, residential internet or fixed and mobile telephone services, as detailed below:

  1. COMPANIES DEDICATED TO TOURISM

EXEMPTION FOR THREE MONTHS from the payment of the Special Contribution for the Promotion of Tourism established in Article 16 of the Tourism Law.

EXTENSION OF THE TERM FOR PAYING INCOME TAX, corresponding to the tax year 2019, exempt from interest, surcharges and fines, until May 31, 2020, for taxpayers who are engaged in the tourism sector, whose tax liability is equal to or less than $25,000.00.

Important notes:

The payment extension benefit will apply to taxpayers who are not enjoying any tax incentive, total or partial, conferred based on the Tourism Law, and must have the endorsement of the General Directorate of Internal Taxes or the General Directorate of Treasury.

The beneficiaries are small businesses in general, small and medium-sized enterprises engaged in tourism, as well as companies engaged in the transmission, marketing and distribution of electricity, providers of subscription television services, residential internet or fixed and mobile telephone services, as detailed below:

  1. SMALL CONTRIBUTORS

EXTENDS IN THE TERM FOR PAYING INCOME TAX, corresponding to the tax year 2019, to taxpayers whose TAX PAYABLE is equal to or less than USD $10,000.00, exempt from the payment of interest, surcharges and fines.

Important note:

Authorization for payment in installments must be requested from the General Directorate of the Treasury, which will grant up to a maximum of eight monthly installments. The first installment, equivalent to ten percent of the liquidated tax, must be paid in May 2020.

  1. SERVICES SECTOR (ELECTRICITY, TELEVISION SERVICES, INTERNET AND TELEPHONY)

EXTENSION OF THE TERM FOR PAYING INCOME TAX, corresponding to the tax year 2019, to the following companies:

  1. a) Generators, transmitters, distributors and marketers of electrical energy.
  2. b) Companies that provide at least two of the following services Subscription television; residential and commercial internet; and, fixed and mobile telephony.

Important note:

Authorization for payment in installments must be requested from the General Directorate of the Treasury, which will grant up to a maximum of eight monthly installments. The first installment, equivalent to ten percent of the liquidated tax, must be paid in May 2020.

EXTENSION OF THE TIME LIMIT FOR COMPLETION OF THE ANTICIPAL INCOME TAX, corresponding to the monthly periods of March, April and May 2020, for companies providing at least two of the following services: Subscription television; residential and commercial internet; and, fixed and mobile telephony

Important note:

Authorization for payment in installments must be requested from the Directorate General of the Treasury, which will grant up to a maximum of six monthly installments. The first installment, equivalent to ten percent of the total corresponding amount, must be paid in July 2020.

  1. THE OBLIGATION TO FILE AN INCOME TAX RETURN IS MAINTAINED

These benefits do not exempt from the formal obligation to file the annual income tax return and monthly declaration of payment on account and withholding taxes, within the legal period established for each of them; since only an extension is established with respect to the payment of the tax, and there is no extension of any kind with respect to this formal obligation.

II. SUSPENSION OF DEADLINES IN ADMINISTRATIVE AND JUDICIAL MATTERS

By means of Decree 599 dated March 20, 2020, which came into effect on the day of its publication in the Official Gazette number 58, Volume 426 of March 20, 2020, Art. 9 of the Decree of State of National Pandemic Emergency by COVID-19 was amended, suspending the terms and procedural deadlines, in administrative procedures and judicial proceedings, whatever the matter and the instance in which they are.

This suspension was decreed for 30 days from the effective date of Decree 593 establishing the National State of Emergency of the Pandemic by VOVID-19, which began on March 14, 2020.

III. EXEMPTIONS IN CUSTOMS MATTERS

  1. LAW ON THE FACILITATION OF ONLINE PURCHASES

By means of Legislative Decree 605 dated March 20, 2020, which went into effect on the day of its publication in the Official Gazette number 58, Volume 426 of March 20, 2020, the Online Purchase Facilitation Law was created, which regulates the EXEMPTION OF DEFINITIVE IMPORTS MADE ONLINE, from the United States of America, up to USD $200.00, with respect to the Import Tariffs and non-tariff import requirements.

Important notes:

  1. a) These online imports must be carried out on a non-commercial basis, by natural persons, and under the modalities of rapid delivery or Courier, postal consignments, small family consignments, and airfreight consignment managers.
  2. b) It does not apply to the import of medicines under medical prescription and medical supplies for human or veterinary use; nor to the chemical precursors established in the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances; firearms, ammunition, explosives and related materials.

  1. DONATIONS MADE BY FREE ZONES

By Legislative Decree number 603 of March 20, 2020, which entered into force on the day of its publication in the Official Gazette number 58, Volume 426 of March 20, 2020, IMPORTS made by beneficiaries of the Law on Industrial Free Zones and Marketing were declared exempt, to BE DONATED to the Government of the Republic, Municipal Councils and public and private non-profit institutions of a humanitarian, educational or other community service nature, for the benefit of the people affected by the COVID-19 national emergency.

Such donations may also be given to relief organizations, or organizations that provide public assistance, such as: Red Cross, Green Cross, Rescue Command and any other entity of a similar nature, provided that the donations are distributed among the affected population.

Important notes:

  1. a) The Ministry of Economy (MINEC) must issue the donation certificate in favor of the benefited entity and the proof will be the declaration of goods under the exemption regime.

(b) The qualification of MINEC and exemption approved by the Legislative Assembly, referred to in Article 27, paragraph 2 of the Law on Industrial and Commercial Free Zones, is not required.

IV. TARIFF REDUCTIONS

By means of Legislative Decree number 604, dated 20 March 2020, which entered into force on the day of its publication in the Official Gazette number 58, Volume 426 of 20 March 2020, as an urgent and temporary measure, in order to ensure the supply of essential foodstuffs, medicines for respiratory diseases and hygiene products to the population, among others, the Central American Import Tariff was modified, only with respect to El Salvador, establishing a tariff of zero percent (0%) for these essential products.

Important notes:

(a) Ibuprofen is excluded from these tariff benefits.

  1. b) The import of such goods shall be carried out upon authorization by MINEC, for which the corresponding Executive Agreements of the Secretariat of State shall be issued.
  2. c) The modification of the Central American Import Tariff will be temporary, and its effects will end when the State of National Emergency of the COVID-19 Pandemic ceases.

For any additional questions, please contact Dr. Diego Martín (dmartin@consortiumlegal.com) and/or Mr. William Escobar (wescobar@consortiumlegal.com).