El Salvador: How to request payment in installments of income tax by the beneficiaries of the fiscal measures to mitigate the effects of the COVID-19 pandemic

Written by:

William Escobar

By means of Legislative Decree No. 598 dated March 20, 2020, published in the Official Gazette number 58, Volume 426 of 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 was created.

 

Regarding the above, we would like to inform you of some important points that will allow you to access the aforementioned tax benefits in due form, as explained below:

 

What are the tax measures?

 

a) Extension of the deadline for payment of income tax, corresponding to the tax year 2019, free of interest and fines, and the authorization of up to a maximum of eight monthly payments, which must begin to be paid in the month of May 2020.

 

b) Extension of the period to make the entire advance payment of Income Tax, corresponding to the monthly periods of March, April and May 2020, and the authorization of up to a maximum of six monthly installments, which shall begin to be paid in the month of June 2020.

 

Who can access this benefit?

 

I. Extension of income tax payment:

a) Taxpayers whose economic activity is tourism, with a tax to be paid less than or equal to USD $25,000.00, who are not enjoying any tax incentive under the Tourism Law; however, for these taxpayers the possibility of applying for the eight installments for the payment of the tax does not apply.

b) Taxpayers with a tax to be paid less than or equal to USD $10,000.00, regardless of the economic activity in which they are engaged.

c) Taxpayers whose economic activity is the generation, transmission, distribution and commercialization of electric energy.

d) Taxpayers whose economic activity is the provision – of at least two – of the following services: subscription television, residential and commercial internet, fixed and mobile telephony.

II. Extension for the whole of the Income Tax Advance

Taxpayers whose economic activity is the provision – of at least two – of the following services: subscription television, residential and commercial internet, fixed and mobile telephony.

 

How to access this benefit?

 

1. Income Tax:

a) Submit the annual income tax return (F-11) within the legal deadline, which is 30 April 2020.

b) Fill in the form to request payment of the tax in instalments, by the taxpayer, legal representative or proxy, duly accredited and informed to the Ministry of Finance.

c) Pay 10% of the total debt as a first installment, in the month of May 2020.

d) After submitting the Income Tax return, corresponding to the fiscal year 2019, you may request Payment in Instalments, for which you must send the request in PDF format using the corresponding form, to the e-mail: dgt@mh.gob.sv, and for inquiries related to payment in instalments you may call the PBX: 2237-3880.

 

Explanatory note:

 

Taxpayers whose economic activity is in the tourism sector, must manage the resolution of the Ministry of Tourism, with the endorsement of the Ministry of Finance, through the Directorate General of Internal Taxes or the Directorate General of Treasury, as appropriate.

It should be noted that these taxpayers engaged in the tourism sector do not have the possibility of applying for up to eight installments for payment of the tax; however, nothing prevents them from availing themselves of the general regime established in Article 74 of the Tax Code, which allows them to apply for payment of the tax in instalments according to the following rules:

 

  1. Requesting payment in instalments from the Directorate General of the
  2. Treasury (DGT), at the time of filing the aforementioned tax return, within the legal period established, and which can currently be requested from the website of the Ministry of Finance.
  3. The DGT may grant up to a maximum of six monthly instalments for the payment of the tax.
  4. The payment of 10% of the tax debt must be made.
  5. For taxpayers whose classification is different from that of Large Taxpayer, the authorization for payment in installments will be granted automatically.

2. Income tax payment on account:

 

a) Submit the monthly declaration of Payment on Account and Income Tax withheld (F-14), within the legal period that expires in the first ten working days of the calendar month being settled.

b) Fill in the form to request the entire advance payment of Income Tax in installments, by the taxpayer, legal representative or attorney-in-fact, duly accredited and informed to the Ministry of Finance.

c) To pay 10% of the total of the advance payment on account for the period owed, which corresponds to the first installment, and which must be paid in the month of July 2020.

d) After submitting your declaration of Payment on Account corresponding to the monthly periods of March, April and May 2020, you can request the whole amount in installments; for which you must send the request in PDF format through the corresponding form, to the e-mail: dgt@mh.gob.sv, and for queries related to such management you can call the PBX: 2237-3880.

 

These formats can be found on the website of the Ministry of Finance, or by clicking on the link below: https://www.mh.gob.sv/pmh/es/Novedades/12912-Solicitudes-de-pago-a-plazo-para-Renta-2019-y-Pago-a-Cuenta-segun-D.L.-598.html

 

For a more detailed analysis of these and other fiscal measures to reduce the impact of COVID-19, you can access our website via the link below: https://consortiumlegal.com/el-salvador-medidas-fiscales-para-mitigar-los-efectos-negativos-de-la-pandemia-por-covid-19/

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

 

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