Reforming The Tax Code.

Original Language Title: REFÓRMASE EL CÓDIGO TRIBUTARIO.

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LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________

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DECREE NO 763

THE LEGISLATIVE ASSEMBLY OF THE REPUBLIC OF EL SALVADOR,

CONSIDERING:

I.-That by Legislative Decree No. 230, dated December 14, 2000, published in Official Journal No. 241, Volume No. 349 of 22 of that same month and year, the Tax Code was issued.

II. This legal body has been implemented and reforms have been introduced that have allowed access to important progress in monitoring compliance with tax obligations and, on the other hand, administrative procedures for the determination of tax debits are more efficient.

III.-That has been detected, that as a product of the In the light of the recent developments in the field of international trade, international trade operations have been facilitated, noting that new and elusive behaviour has emerged, particularly with regard to media operations. electronic, whose current tax controls are insufficient.

IV. through a series of consultations made to the Tax Administration, it has been possible to establish that there is uncertainty about various aspects regulated in the Code, such as the practical application of transfer prices, solvency, (iv) the rules applicable to such cases must be clarified and prescribed.

V.-Also, in order to simplify procedures which do not adapt to reality, it is necessary to make adjustments to the fedatary and audience figures.

VI.-That in this sense, it is necessary to introduction of reforms to the Code, which allow clarity in its content, facilitate its implementation and establish effective and transparent tax controls.

BY TANTO,

in use of its Constitutional and initiative powers Deputy Othon Sigfrido Reyes Morales and Deputy Lorena Guadalupe Peña Mendoza.

DECRETA the following:

REFORMS TO THE TAX CODE

Art. 1.-Reform the heading of Art. 62-A and its second indent, in its order, as follows:

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DETERMINATION OF TRANSFER PRICING"

" Taxpayers, for the purposes of compliance with the obligation set out in the preceding paragraph, determine the market price using the technical procedures and methods contained in this Code and in the guidelines on transfer pricing of the Organization for the Cooperation and Economic Development (OECD). The foregoing also applies to the tax administration, in the exercise of its powers, where appropriate, the determination of corresponding market prices and the respective tax adjustments, according to the rules of this Code. '

Art. 2.-Add the fourth and fifth points to Art. 82, as follows:

" The limitation period is suspended when recourse, process or action by the obligor or tax debtor in the administrative or judicial organs is suspended, until the judgment or judgment has the authority of the res judicata. "

"The causals of interruption of the prescribed limitation period in civil matters are applicable."

Art. 3.-Add the seventh and eighth points to Art. 120, as follows:

" The Tax Administration may exchange information of a fiscal nature with Tax Administrations of foreign jurisdictions. For such purposes, it may conclude agreements for the fulfilment of this purpose, which shall be subject to the procedures for subscription and ratification, in accordance with national law. "

"The provisions of this article constitute a special regime, which shall be applied in preference to any laws or regulations, unless expressly extended the reservation to the Tax Administration."

Art. 4.-Add to Title III, in Chapter I, the Tenth Section that will be integrated with its epigraph, acapites and articles that are understood, as follows:

SECTION TENTH ELECTRONIC EQUIPMENT

Control of Equipment, Computers or Computers

Art. 149-D.-Electronic equipment for the control of payments related to transfers of goods or services, in order to be used in the Salvadoran territory, must be entered in each ticket issued by the identification number authorized by the Tax Administration, in addition to possess identification or distinguishing assigned by the Tax Administration according to the rules that it is issuing.

For the purposes of this section, it will be understood when the expression is used electronic equipment, which refers to equipment, equipment or computer systems; or electronic, such as point-of-sales or POS terminals.

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Taxpayers will only be able to use electronic equipment for the control of payments that comply with the requirements referred to above, and transmit the information to subjects domiciled in El Salvador to carry out the corresponding settlements and payments.

The Tax Administration will issue the administrative rules necessary in relation to this section.

The auditors that in the development of any faculty delegated by the Tax Administration, verify the existence or use of electronic equipment that does not comply with the provisions of this article, will raise the record by stating that circumstance and as a measure The taxpayer will immediately withdraw the equipment.

The taxpayers within five working days and peremptory days, counted from the day after the team's withdrawal, will be able to bring their non-compliance to the General Directorate of Internal Revenue, providing in that time the evidence they consider to be conducive, This time limit will be issued to issue the appropriate resolution, and should proceed with its destruction.

Obligation for Subjects to Negotiate Electronic Equipment

Art. 149-E.-The Banks, Companies or Cooperative Associations of Savings and Credit and their Federations, as well as any subject, that in any contractual modality, makes available electronic equipment to be used in the control of payments in El Salvador, are required to:

a) Ensure that they comply with the provisions of the first paragraph of the previous article; and,

b) Submit to the Tax Administration report by electronic means with the requirements and technical specifications available to it, electronic equipment which in any form The contract has been arranged to be used by taxpayers in El Salvador. This report will be sent for each quarterly period, within the next fifteen working days of the end of each quarter.

The Tax Administration is empowered to publish through the Ministry of Education's website Hacienda or by any other means, list of authorised electronic equipment, users of the electronic equipment and other relevant data for their identification. '

Art. 5.-Replace Art. 167, by the following:

" Art. 167.-In the notification of liquidations of trade, when the taxpayer has distorted in all or part the tax findings or illicit tax attributed by the Tax Administration, it will apply as appropriate to the Article 165 of this Code.

In addition to the notification act, all the circumstances in which the due diligence was carried out shall be recorded. In the case of notification by escutela or edict, it shall be expressed that the corresponding copy of the corresponding entry or edict is added to the file. "

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Art. 6.-Intercalase between the third and fourth points of Art. 175, a paragraph as follows:

" The computation of the term of the expiration regulated in this provision shall be interrupted from the date of notification of the order of designation of auditors for up to three years. "

Art. 7.-Reform in Art. 181, only the first part of the first paragraph, as follows:

" Art. 181.-The Fedatary shall make visits to the taxpayer as an acquirer of goods or service providers, for the purpose of verifying compliance with the obligations to issue and deliver invoices or equivalent documents and if they comply the legal requirements, as well as the obligation to register in the Register of Taxpayers of the Tax on the Transfer of Furniture and to the Service of Services, which is carried by the Tax Administration. In the case of verifying non-compliance with these obligations, it shall identify the quality of the Fedatary, deliver the order that enables it to carry out the verification and to lift the verification report for the verified infringements. which must contain the following minimum requirements: "

Art. 8.-Add a final point to Art. 219, as follows:

"The regulated solvency and authorization requirements also apply to customs tax obligations."

Art. 9.-Substitute the fifth paragraph of Art. 260 and add a new paragraph, as follows:

" Without prejudice to the powers of taxation and determination of tax, the end of the probative term shall be determined, corresponds, based on the evidence and applicable legal provisions. "

"The audit report by the Fedatary shall constitute an infringement report for the initiation of the procedure laid down in this Article."

Art. 10.-Add a second paragraph to Art. 277, as follows:

" The jurisdiction governed by the foregoing paragraph shall be the responsibility of the General Directorate of Internal Revenue, which shall carry out the disclosure annually, according to the administrative rules that it issues. The disclosure may be made on the website of the Ministry of Finance in a shorter period. "

Art. 11.-Incorporate Art. 277-A, between Articles 277 and 278, as follows:

Advertising of tax and penalty settlement resolutions

Art. 277-A. The Directorate-General for Internal Revenue will release extracts from the tax and fines assessment resolutions, as well as the judgments issued by the Court of Appeals for Internal and Customs Taxes and the rulings of the Court of Justice. Administrative disputes on this matter. In the same way, they will proceed in those cases that are notified or referred to the Office of the Prosecutor General of the Republic. These cases will include the names of the passive subjects, the given value, and the names

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of the undersigned officials.

The disclosure of the extract of the notices, resolutions and Judgments shall be carried out annually in two national circulation newspapers. The disclosure may also be made on the Ministry of Finance's website in a shorter period. "

Art. 12.-Add to Title VI, Chapter I, Art. 280-B, as follows:

Art. 280-B.-The regulations contained in the fifth indent of Article 82 are incorporated for the purpose of facilitating the application of the rules and do not constitute new grounds for interruption of the prescription. "

Transitories

Art. 13.-Subject to the validity of this decree, or use electronic equipment referred to in Article 149-D, they shall:

(a) comply with the rules issued by the Tax Administration within one hundred and eighty days. counted from the day following its issuance; and,

b) Submit to the Tax Administration report by electronic means with the technical requirements and specifications available to it, equipment, apparatus, computerized systems or use electronic means within the period of 60 working days from the date of

Tax Administration shall issue the administrative rules for the control of electronic equipment, within a period of sixty working days from the time of the present Decree.

Derogatorias

Art. 14.-Derogase the second paragraph of Article 186.

Vigency

Art. 15.-This Decree shall enter into force eight days after its publication in the Official Journal.

GIVEN IN THE BLUE HALL OF THE LEGISLATIVE PALACE: San Salvador, at thirty-one day of the month of July of the year two thousand fourteen.

OTHON SIGFRIDO REYES MORALES, PRESIDENT.

ENRIQUE ALBERTO LUIS VALDEZ SOTO, GUILLERMO ANTONIO GALLEGOS NAVARRETE, FIRST VICE PRESIDENT. SECOND VICE-PRESIDENT.

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JOSÉ FRANCISCO MERINO LÓPEZ, LORENA GUADALUPE PEÑA MENDOZA, THIRD VICE PRESIDENT. FOURTH VICE-PRESIDENT.

CARLOS ARMANDO REYES RAMOS, FIFTH VICE PRESIDENT.

GUILLERMO FRANCISCO MATA BENNETT, MANUEL VICENTE MENJÍVAR ESQUIVEL, FIRST SECRETARY. SECOND SECRETARY.

SANDRA MARLENE SALGADO GARCÍA, JOSÉ RAFAEL MACHUCA ZELAYA, THIRD SECRETARY. FOURTH SECRETARY.

IRMA LOURDES PALACIOS VÁSQUEZ, ERNESTO ANTONIO ANGULO MILLA, FIFTH SECRETARY. SIXTH SECRETARY.

FRANCISCO JOSE ZABLAH SAFIE, JOSE SERAFIN ORANTES RODRIGUEZ, SEVENTH SECRETARY. EIGHTH SECRETARY.

CASA PRESIDENTIAL: San Salvador, at thirty-one day of the month of July of the year two thousand fourteen.

PUBESQUIESE,

Salvador Sánchez Cerén, President of the Republic.

Juan Ramón Carlos Enrique Cáceres Chávez Minister of Hacienda

D. O. No. 142 Took No. 404 Date: July 31, 2014

FN/pch 02-09-2014

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