2 December, 2019
LatinAlliance El Salvador, Lawyers and Notaries, informs clients and friends of the following relevant news in the Salvadoran legal field:
AMENDMENT TO THE LABOR CODE
The reform to article 29 of the Labor Code was recently approved by the Legislative Assembly of El Salvador; in the sense of adding the 13th ordinal) as follows:
“13) Deliver within a period not exceeding fifteen days of receipt, the gratuities such as tips that the client gives voluntarily by any mechanism, indirectly to the worker. Said delivery will be supervised by the General Directorate of Labor of the Ministry of Labor and Social Welfare, periodically or when there is a complaint, by means of a registry that the employer will be obliged to keep.
AMENDMENTS TO THE INCOME TAX LAW
The Legislative Assembly of El Salvador approved the amendment to article 4 of the Income Tax Law, which regulates Income not taxable by this tax, and consequently they are excluded from the computation of the income obtained; in the sense of adding numeral 16) in said article; as follows:
“16) The income that the workers referred to in the Labor Code and the Law on Additional Compensation in Cash receive as a Christmas bonus, up to an amount not exceeding two monthly minimum wages in the commerce and services sector, therefore, said income will not be subject to withholding of this tax.
Those bonuses that exceed the amount referred to in the previous paragraph, will be subject to withholding and payment of said tax, deducting the two aforementioned minimum wages.
AMENDMENTS TO THE TAX CODE
The Legislative Assembly approved to reform the second paragraph of article 155 of the Tax Code as follows:
"Obtaining economic compensation in cash, as a Christmas bonus, paid in the month of December of each year, to employees and workers under a labor dependency relationship, as well as to officials of the public, municipal and institutional sectors. autonomous, will not be subject to withholding for purposes of payment of Income Tax, by their respective Withholding Agents. The economic compensation in cash or Christmas bonus, which will not be subject to withholding, will be those amounts that do not exceed the minimum amount established in the Income Tax Law.
These reforms have already entered into force and are mandatory in the Republic of El Salvador.
For more information, write to us:
Mario Costa- Head of Corporate El Salvador
mcosta@latinalliance.co
Norma Villalobos – Labor Law Coordinator
nvillalobos@latinalliance.co
Michelle Sutter- Regional Director of Corporate
msutter@latinalliance.co