Key Aspects of the obligation to maintain inventory control records in El Salvador

Taxpayer obligations regarding inventory control are essential to ensure transparency and accuracy in the recording and valuation of tangible personal property. According to art. 142 of the Tax Code, this obligation applies to taxpayers who transfer tangible personal property, requiring them to maintain clear and detailed records of the movement, valuation, and description of their inventories.

Taxpayers who derive taxable income from manufacturing, processing, transforming, livestock farming, production, extraction, acquisition, or disposal of goods must conduct a physical inventory at the start of the business and the end of each tax year. This inventory must include details such as quantity, unit of measure, item description, references, unit price excluding VAT, and total value. The record must be documented in a statement signed by the taxpayer, their representative or attorney, and the accountant.

Taxpayers with income equal to or greater than 2,753 minimum wages (equivalent to USD 1,004,845.00 based on the current minimum wage) must submit the Physical Inventory Report of Realizable and Current Assets (F-983) to the Directorate General of Internal Taxes within the first two months of the year.

The Inventory Control Record must be maintained continuously as a special and independent record; thus, the closing inventory of one fiscal year serves as the basis for the next.

Art. 142-A of the Tax Code specifies the requirements for the Inventory Control Record, which are as follows:

  1. Header: Identify the title of the record, the taxpayer’s name, period, NIT, and NRC.
    1. Operation Details: Include the transaction number, date, fiscal receipt number, credit or debit notes, invoice, merchandise declaration, supplier name, supplier nationality, product description, and cost book reference.
    2. Unit Movements: Record the number of units entering and leaving, the unit balance, the monetary amount or cost price of the units entering and leaving, and the monetary balance of existing units.
    3. Adjustments: Include discounts, rebates, price increases, and bonuses.
    4. Annual Reconciliation: Compare the inventory’s cost values as of December 31 with those in the record, justifying any discrepancies.
    5. Consumption Record: Detail items withdrawn or consumed, including losses, evaporations, or expansions.

Failure to maintain the Inventory Control Record results in a fine equivalent to 0.5% of the equity or book value, which cannot be less than nine minimum wages (equivalent to USD 3,285 based on the current minimum wage). Non-compliance with one or more requirements will result in a fine for maintaining an Inventory Control Record without meeting the requirements established in art. 142 and 142-A of the Tax Code, with a fine equivalent to 0.5% of the equity or book value, which cannot be less than nine minimum wages.

Another consideration is stipulated in art. 193 of the Tax Code, which presumes inventory discrepancies to be undeclared sales.

Finally, maintaining the Inventory Control Record under the aforementioned rules is crucial for the deductibility of Tax Credit, as stipulated in the fifth paragraph of Article 65 of the Law on Transfer of Tangible Personal Property and Provision of Services. Moreover, for Income Tax purposes, discrepancies in the cost of sales not corresponding to the Inventory Control Record will not be deductible from the obtained income, as per art. 29, number 11) of the Income Tax Law.

For any further inquiries, please contact our partner, Diego Martín (, senior associate William Escobar (, or email (