Reform Is The Law Of Tax Incentives For The Promotion Of Renewable Energy Sources In Electricity Generation.


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1 Decree N ° 148 the Legislative Assembly of the Republic of EL SALVADOR, considering: I.-that the article 101, second paragraph, of the Constitution of the Republic, establishes that the State shall promote economic and social development of the country through increased production, productivity and the rational use of resources; also and with the same purpose, it will promote the various sectors of production.
II. that by means of Legislative Decree N ° 462, dated November 8, 2007, published in the official journal N ° 238, Tome N ° 377, of 20 December of the same year, was issued the law of tax incentives for the promotion of renewable energies in electricity generation.
III.-that is necessary to encourage the use of renewable energy sources, to effect of decreasing dependence on the purchase of fossil fuels, reduce environmental pollution in the country, reduce the emission of greenhouse gases and significantly improve the national balance of payments.
IV.-that the technological development has opened possibilities for the use of various renewable energy sources which are not currently covered by the law, being necessary to promote the use of renewable sources in the generation of electrical energy and, at the same time, allow investments that enable the sustainable development of large-scale projects that use this type of energy resources available in the country which are currently excluded from the benefits of the law.
V due as set out in the previous recitals, it is imperative to reform the Act, in order to include new energy sources and extend the coverage of incentives to larger projects.
Therefore, in use of his constitutional powers and at the initiative of the President of the Republic, by the Minister of economy, and with the support of members and the members Lorraine Guadalupe Pena Mendoza, Ana Vilma Albanez de Escobar, Jose Serafin Orantes Rodriguez, Santiago Flores Alfaro, Jackeline Noemi Rivera Avalos, Margarita Escobar, Rodolfo Antonio Martínez, José Javier Palomo Nieto , Karla Elena Hernandez Molina, Calixto Mejía Hernández, martyr Arnoldo Marin, Damian Alegria, Ana Marina Alvarenga Barahona, Rolando Alvarenga Argueta, Dina Yamileth Argueta Avelar, Rodrigo Castro Figueroa, Crissia Ávila Avilés, Ana Lucia Martinez Baires, Rosa Armida barrier, Luis Alberto Batres Garay, Marta Evelyn Batres Araujo, Yohalmo Edmundo Cabrera Chacón, Manuel Orlando Cabrera Candray, José Vidal Delgado Carrillo, Alexandrian Silvia Suhan Chavez Garcia , Norma Cristina Cornejo Amaya, Valentín Arístides Corpeño, Felissa Guadalupe crystals Miranda, Rosa Alma Cruz Marinero, Rene Alfredo Portillo block 2 Lucia Carmen Ayala de León, José Edgar Escolán Batarse, Jorge Adalberto Josué Godoy Cardoza, Ricardo Ernesto Godoy Peñate, Norma Fidelia Guevara de Ramirios, Estela Yanet Hernández Rodríguez, Ana Mercedes Larrave de Ayala, Audelia Guadalupe López de Kleutgens, Hortensia Margarita López Quintana , Mario Marroquin Mejia, Rolando Mata Fuentes, María Otilia Matamoros Hernandez, Misael Mejía Mejía, José Santos Melara Yanes, Ana Victoria Mendoza of Zechariah, Julio Cesar Miranda Quezada, Jose Mario Mirasol crystals, Jose Alfredo voyeur Ruiz, Luis Ernesto Muyshondt García Prieto, Ana Maria Gertrudis Ortiz Lemus, Silvia Estela Ostorga de Escobar, Carlos Alberto Palma Zaldaña, Lisseth Arely Palma Figueroa, Nelson de Jesus Quintanilla Gomez , Carlos Armando Reyes Ramos, Sonia Margarita Rodriguez Sigüenza, Alberto Armando Romero Rodríguez, Carlos Alberto Garcia, Marcos Francisco Salazar Umaña, Rosales Patricia Maria Salazar, Jaime Orlando Sandoval, Karina Ivette Sosa, Victor Hugo Suazo Alvarez, Carlos Alfonso Tejada Ponce, Jaime Gilberto Valdés Hernández, Patricia Elena Valdivieso of Gallardo, Juan Alberto Valiente Alvarez, Eugenio Donato Vaquerano Rivas, Mauricio Ernesto Vargas Valdez, Ricardo Andres Velasquez Parker , John Tennant Wright Sun.
DECREES the following: reforms to the law of incentives prosecutors for the promotion of LAS energies renewable in LA generation of electricity article 1.-Article 1, replace by the following: "Art 1.-this law aims to promote investment in projects based on the use of renewable sources of energy, through the use of resources such as the hydraulic" geothermal, wind, solar, marine, biogas and biomass; as well as any other source which in future is identified as renewable for the generation of electric power."
Article 2.-Article 3, be replaced by the following: ' article 3.-the natural or legal persons that from the entry into force of this Act are holders of new investments in projects of installation of plants for the generation of electric power or expansion projects of power plants already exist, using renewable energy sources " (, pursuant to article 1 of this law, shall enjoy the following benefits and tax incentives exclusively in relation to costs and expenses of the investment for these projects: to) during the first ten years will enjoy total exemption from payment of customs duties for import of machinery, equipment, materials and supplies intended solely for work of pre-investment and investment in the construction and expansion of power plants for generation works electric power, including the construction or enlargement of the substation, the line of transmission or subtransmission, necessary to transport energy from the power generation to transmission and/or distribution electrical networks.
Exemption from payment of import customs duties, must be requested to the Ministry of finance, at least fifteen days before the import of machinery, equipment, materials and supplies needed and intended exclusively for develop the renewable energy projects, in accordance with the documentation of the project endorsed on the certificate issued by the 3 General Superintendence of electricity and telecommunications in the text of this Act can be called SIGET.
Except the benefit contained in the literal present, the acquisition of the following goods: furniture and home appliances, as well as vehicles for transport of persons individually or collectively.
(b) the income derived directly from power generation based on renewable source, enjoy total exemption from the payment of income tax for a period of five years in the case of projects greater than 10 megawatts (MW); and ten years in the case of projects of 10 or fewer megawatts (MW); in both cases, from the fiscal year in which obtain income from power generation based on renewable source.
(c) total exemption from the payment of all kinds of tax revenues directly from the sale of the "certificates of emissions reduced", hereinafter CER, in the framework of the mechanism for a clean (CDM) of the Kyoto Protocol development, or similar carbon markets, obtained by the projects qualified and benefit in accordance with this law.
To enjoy the benefits referred to in the previous paragraph, the beneficiary must comply with the following conditions: i. that the projects are properly registered and certified in accordance with the modalities and procedures of the mechanism for a development (CDM) of the Kyoto Protocol clean, or similar carbon markets.
II. that the owners of the projects qualified according to this law, add in your tax return income a detail of the issued CER and revenues proceeds from its sale, stating the name of the acquirers.
III. present certified copies of the contract of purchase of certified emission reductions (acronym in English ERPA) evidencing sale price and the amount of such reductions sold.
IV. present evidence on the part of the Ministry of environment and natural resources, the issued amount of CER.
In the case of the geothermal plants can be deducted from the income tax for a maximum period of ten years, costs, and expenses linked to activities related to the process of total reinjection of geothermal resource. This deduction shall not exceed twenty per cent of the gross revenue generated in the previous year and will be carried out by means of annual fees that do not exceed 25 percent of the income obtained in each financial year until its total depreciation.
For the purposes of the deduction of the corresponding tax credits contained in article 65 of the law of tax the transfer of collateral and the provision of services, regarding projects of installation or extension of plants for the generation of electricity, using renewable energy sources, the deduction will be that referred to in this rule 4 for the workings of pre-investment and investment efforts in the construction of the necessary and part of the process of degeneration of electricity, including those made in real estate, either by adhesion or destination.
Tax benefits described in this article will only be given to activities

for the projects of installation or extension of electric power generation plants, benefited by this law, that involve new investment.
For the purposes of this law, it means new investments, those that represent an acquisition to any title, additional assets that allow the installation of a generating plant of electric power in the country, or enlargement of an existing generating unit.
This enlargement, may consist of the acquisition of assets for the optimization, repowering and rehabilitation of previously existing power plants; in this case, you apply only the tax benefit, if it is possible to identify and verify, that the additional generation of electricity has been with the new investment, so it must have the respective teams or measurement mechanisms.
The SIGET should verify that measuring equipment to be installed or measurement mechanisms identified by the applicant are sufficient to comply with the provisions of the preceding paragraph, at the time of evaluating the application for certification of the project. It is also empowered to carry out activities of verification and control with respect to such equipment or mechanisms subsequent to the rating of the project.
The natural or legal persons who benefit from any of the exemptions granted by this law, shall use accounting systems that enable the identification of revenues, costs and expenses related to the new investment subject to the tax benefits established in this law."
Article 3.-Article 11, be replaced by the following: 'article 11.-to make use of the benefits granted by this law, the interested party shall submit written request to the SIGET, complying with the requirements of the Act, its regulations and other regulations issued by SIGET.
Within fifteen working days of the filing of the application, the SIGET may request additional clarifications to the person concerned, which must be delivered within a maximum period of 15 working days.
The SIGET must resolve the relevant within forty-five days, counted from the working day following the presentation of the application or the submission of additional clarifications, as appropriate.
In case that there are reasons of Fund to deny certification, the SIGET shall have the same period, to issue a reasoned decision denying the request, which shall be notified to the person concerned, who may bring the appeal set out in article 17 of this law.

5 article 4.-replace article 12 by the following.
"Art 12.-Pro certification pursuant to the preceding article, the party concerned shall request tax benefits to the Ministry of finance, which have no outstanding tax liabilities based on the certification issued by SIGET containing technical opinion on the goods, supplies and services that enjoy tax incentives and verifying that the titular subjects of investments qualify the enjoyment of benefits and tax incentives contained in this law, by means of the corresponding executive agreement, within a maximum of 45 business day period from the working day following the presentation of the request, which shall be published by the Ministry in the official journal.
In the event that there are reasons of Fund to deny the qualification, the Ministry of finance will have the same deadline to issue a reasoned decision denying the request, which shall be notified to the person concerned."
Article 5.-the transitional provisions tax benefits granted prior to these reforms, will maintain its validity, on the terms stated above in the respective agreements executives covering them, in accordance with the provisions in force at the date of their issuance.
In the case of projects based on the use of renewable energy sources that have been awarded under free competition processes, prior to the date of entry into force of this Decree, and that to this date have not submitted its application for the respective certification to the SIGET, the tax incentives for the promotion of the renewable energies Act shall apply in the generation of electricity effect at the time of the award; except that the provisions of this Decree are more favourable to the person concerned, who must indicate in his application, if you opt for new legislation or existing regulation at the moment in which the project was awarded.
Article 6.-the reforms contained in this Decree, shall apply to new investments in the terms defined by the same to enjoy the incentives and benefits established by these reforms, the interested party must initiate the procedures of certification and qualification mentioned in articles 11 and 12 of the Act.
Article 7.-this Decree shall enter into force eight days after its publication in the official journal.
GIVEN in the blue room of the Legislative Palace: San Salvador, on the fifteenth day of the month of October of two thousand fifteen.

Presidential House: San Salvador, twenty-eight days of the month of October in the year two thousand and fifteen.
PUBLISHED, Salvador Sanchez Ceren, President of the Republic.
Tharsis Salomon Lopez Guzman, Minister of economy.
D. O. N ° 200 volume N ° 409 date: 30 October 2015 FN/pch 30-11-2015 legislative index