As a general rule, during the procedure of definitive importation of goods into Salvadoran territory, the owner of the goods must pay the taxes that are caused, unless these goods are subject to a tax exemption or are not subject to the payment of these taxes.
However, there is an import modality that can be used under specific assumptions, by means of which the payment of taxes can be avoided, as long as the merchandise complies with certain requirements. Therefore, having a specialist in the matter becomes important and necessary for the prevention of unnecessary tax impacts.
- What is the customs regime we are referring to?
In this opportunity we will talk about the Temporary Import with Re-export in the same state regime, which allows the entry into the Salvadoran customs territory of goods for a specific purpose, for a specific period of time and with suspension of import taxes. These goods must be re-exported without having suffered any modification other than normal depreciation as a consequence of their use.
The taxes that are suspended are the following:
- Import Duties (DAI);
- Tax on the Transfer of Movable Goods and the Rendering of Services (VAT), which will not be paid as long as the goods are re-exported within the legally established term.
- What kind of goods can be imported under this modality?
According to Art. 425 of the Regulations of the Central American Uniform Customs Code (RECAUCA), the following goods, among others, may be imported under this regime:
- Tourism: vehicles entering the customs territory for tourism purposes, whether by land, air or sea, for non-profit purposes, owned by tourists from countries outside Central America.
- Educational, religious, and cultural: merchandise used to be exhibited and serve as support to an activity of strengthening and diffusion of arts and those qualified as educational, religious and cultural by the competent authority.
- Scientific: those that serve as technological support or complement of scientific investigations authorized by the competent authority, including the personal implements of scientists.
- Execution of public works: machines, equipment, apparatus, tools and instruments that will be used in the execution of works or rendering of public services that are introduced directly by contractors, covered by special laws or administrative contracts.
- Commercial: those used for the demonstration of products and their characteristics, quality tests, exhibition, advertising, publicity, propaganda, and others, provided they are not commercialized.
- The Directorate General of Customs shall authorize temporary importation when it is possible to identify the goods by means of marks, numbers, stamps, measures, or other special characteristics. However, if the goods are not fully identifiable, the declarant may be ordered to adopt the necessary measures to ensure their identification and the control of their use.
We must be emphatic in that the ownership of the goods destined to the mentioned regime may not be sold while they are covered by such regime, otherwise, the suspended taxes will be caused.
- What is the period of permanence of the goods in El Salvador?
The permanence of the goods under the Temporary Import with Re-export regime in the same state will be, as a rule, for a period of up to six months counted from the acceptance of the goods declaration that covers them. During this period, the goods must be re-exported, otherwise, the suspended taxes will be payable.
- What is the procedure to apply this regime?
There are two ways to apply for this regime, which are detailed below:
- Firstly, the application may be submitted at the Customs office of entry, with the corresponding Goods Declaration and supporting documentation, where the corresponding resolution will be prepared and authorized. The cases in which this facility will be applied will be specifically for imports that do not require guarantee, among which we highlight the following cases: tourism, educational, religious and cultural and scientific.
- For the rest of the goods, the corresponding request must be submitted to the General Customs Directorate, where it will be processed, and the corresponding authorization resolution will be issued. For this type of merchandise, a guarantee must be presented, which may be of a global nature, in order to respond for the total amount of the taxes that could eventually be applicable in the event of non-compliance with the conditions of the regime.
Therefore, this type of temporary import of goods can be used by a wide variety of businesses, if the requirements established by the customs regulations are complied with, thus avoiding unnecessary tax impact.
For any additional questions, please contact Dr. Diego Martin (dmartin@consortiumlegal.com) and/or e-mail taxelsalvador@consortiumlegal.com.