By: Norma Villalobos

Employing Legislative Decree No. 229 dated December 7, 2021, which was published in the Official Gazette No. 233, Volume No. 433 of the same date, the Legislative Assembly approved “Transitory Provisions that declare as non-taxable income and consequently excluded from the respective withholding, the Christmas bonuses referred to in the Work Code and the Law on Additional Cash Compensation, up to a limit of ONE THOUSAND UNITED STATES DOLLARS”.

In this sense, according to the Decree for the current year 2021, the income from Christmas bonuses and the Law on Additional Cash Compensation, up to an amount equal to and not greater than ONE THOUSAND UNITED STATES DOLLARS, are declared not taxable for Income Tax purposes, and therefore will not be subject to withholding of the referred tax.

Christmas bonuses that exceed the amount declared non-taxable, will be subject to withholding and payment of the corresponding income tax, deducting the amount in reference.

The Legislative Decree is already in force and is a law of the Republic of El Salvador, therefore its application must be immediate.

Read the full decree in the Official Gazete: