On March 10, 2022, the President of the Republic of El Salvador, appeared on Cadena Nacional, to announce the measures that would be adopted in view of the increase in prices experienced by the national market, due to the economic events that have occurred recently, and the war conflict between Ukraine and Russia.
As a result of the above, in the Official Gazette dated March 13, 2022, Legislative Decrees numbers 307, 308 and 309, all dated March 13, 2022, were published, among others, where the following measures of a fiscal nature were established:
TO SUSPEND FOR A TERM OF THREE MONTHS, counted as of the effective date of Legislative Decree 307, the application of the Special Contribution for the Stabilization of Fares of the Collective and Mass Public Transportation of Passengers Service (COTRANS). This contribution amounts to the amount of TEN CENTS OF DOLLAR per gallon (USD $0.10 per gallon), which is currently charged for each gallon of diesel, low sulfur diesel, and regular or special gasoline sold or transferred by importers or refiners, or at the time of importation when said fuels are for own consumption.
TO SUSPEND FOR A PERIOD OF THREE MONTHS, counted from the effective date of Legislative Decree 308, for a period of three months, counted from the effective date of Legislative Decree 308.
Legislative Decree 308, the application of the charge of SIXTEEN CENTS OF DOLLAR (USD $0.16), which is made for each gallon of gasoline, gasohol or mixture of gasoline with fuels invoiced by any person authorized by the Ministry of Economy to import and commercialize the referred products. Said charge is made in connection with the creation within the General State Fund, of the Special Account for Stabilization and Economic Promotion, called FEFE.
To temporarily modify the Central American Import Tariff only for El Salvador, with regard to the relief (DAI 0%) of several products of the Basic Food Basket, such as corn, rice, flour and sugar, among others; as well as fertilizers and animal feed. These tariff reductions will take effect as from the effective date of Legislative Decree 309 and until March 31, 2023.
In the decrees that establish the temporary exemptions to the taxes levied on gasoline and diesel, the Ministry of Finance is also instructed to make and submit for approval of the corresponding instances, the necessary budgetary adjustments to guarantee the Budgetary Balance in the current fiscal year.
In future publications, each of the measures adopted by the Salvadoran State to mitigate the price increase in the national market will be addressed in more detail.
For additional information, please contact Dr. Diego Martín (dmartin@consortiumlegal.com), Mr. William Escobar (wescobar@consortiumlegal.com) or e-mail (taxelsalvador@consortiumlegal.com).