On September 27, 2018, a transitory regime came into force that left without effect all tax processes corresponding to tax periods and tax years referring to the years 2014 and 2015 of the taxes that the General Directorates of Internal Taxes and Customs administer, whose audits, the process of hearings and openings to evidence or of tax determination, reduction of credit balances, adjustments of tax credit remainders or imposition of fines have not been concluded and which are in process during the 2018 tax year, the year of entry of the decree.
Consequently, from the above, said General Directorates were mandated to issue the corresponding administrative resolutions, in which it is ordered to leave these processes without effect and in turn, to refrain from carrying out subsequent acts, after the entry into force of the said decree.
The previous decree only exempted cases that were under criminal investigation, or where there were requirements from the Attorney General’s Office or the Judiciary.
Last August 27, 2021, the Minister of Finance, filed a petition in the Supreme Court of Justice so that the Constitutional Chamber imposed to conduct a follow-up hearing to a resolution issued by a previous Chamber and that could allow it to reopen tax collection cases of the years 2014 and 2015, which were suspended through Decree 127 mentioned in previous paragraphs.
According to the Minister, the above, would mean that the Ministry could be collecting around US$280 million in revenues that would be incorporated into the State, in case of reopening these currently dismissed processes.
It must be taken into account that, although the Minister makes these projections, it is ultimately the same Directorate that must process these proceedings if the motion is approved. The above, if the Chamber returns the auditing powers to the Ministry to finalize the pending audits and estimate for each one of them, the emoluments to be claimed by the governmental entity.
It is recommended that for those companies that were before a sanctioning process or audits that remained unfinished of the years 2014 and 2015, to keep the pertinent documentation and support themselves with their tax advisors, to review the treatment and the steps to follow in case this proposal is approved by the Legislative Assembly of El Salvador.
In case your company needs consultancy, please contact LatinAlliance at info@latinalliance.co.