The Financial Operations Tax Law

Original Language Title: LEY DE IMPUESTO A LAS OPERACIONES FINANCIERAS

Read the untranslated law here: http://www.asamblea.gob.sv/eparlamento/indice-legislativo/buscador-de-documentos-legislativos/ley-de-impuesto-a-las-operaciones-financieras/archivo_documento_legislativo



1 Decree No. 764 the Legislative Assembly of the Republic of EL SALVADOR, considering: I.-that the State's duty is to ensure justice, security and the well-being of the community, requiring for such purposes the supportive involvement of citizens showing ability to contribute; in such a way that it is necessary to generate a series of measures to strengthen public finances.
II.-inside of these measures, found those oriented to increase tax revenues in equitable relationship.
III.-that the introduction of a tax that would tax financial transactions by cheque or transfer with a low rate and reasonable exemptions, enables the generation of tax revenue in a systemic way, with lower costs to economic agents, contributing to the balance of the finances of the State by way of public revenue.
IV. the imposition of cash in the financial system, by means of a retention of liquidity on a neutral basis, allowing control of significant operations that are not being reported in other taxes.
Therefore, use of his constitutional powers and initiative of Deputy Othon Sigfrido Reyes Morales and the Deputy Lorraine Guadalupe Pena Mendoza.
DECREES the following: law of tax to the operations financial chapter I of the tax to the check and to the transfers electronic of the tax article 1.-establish a tax that will fall on the amount paid for any check or electronic transfers in the national territory, in currency of legal circulation in the country, according to the regulations contained in this Act.
Entities of the system financial article 2.-for purposes of this law, understand by entities of the financial system, than those established in the law of banks, the cooperative banks and credit unions, the Bank of agricultural development and associations and cooperative societies of credit unions regulated by 2 their respective laws.
Article 3.-constitute facts generators made generators of tax debits on deposit accounts and corresponding transfers or payment orders a: to) payments for goods and services through the use of cheque and debit card, with a value of transaction or operation exceeds US$ 1,000.00;
(b) payments through electronic transfers with a value of transaction or operation exceeds US$ 1,000.00;
(c) transfers in favour of third parties, under any form or technological means, whose value of transaction or operation exceeds US$ 1,000.00;
(d) disbursement of loans or financing of any kind; (and e) transactions between entities of the financial system, based on any type of instruction of its clients or for their own interest.
The previous generators facts are understood that occurred and caused tax when payment, transfer or disbursement is made.
(Transfer of resources abroad will be taxed for this tax, which are included in the literal b)) and (c) of this article.
Exemptions article 4.-are exempt from tax the following operations or financial transactions: to) withdrawal of cash from deposit accounts, both in electronic cash, as in the offices of the institutions of the financial system;
(b) payment of goods and services by check, use of debit card and transfer under any modality or technological means, whose value of transaction or operation is equal to or less than US$ 1,000.00;
(c) payments making cardholders in the credit card system, including the use of the credit card by the cardholder;
(d) the provisional social security payments;
(e) payments, accreditations and transfers made by: 1. the State, the municipalities and the autonomous institutions, including the Banco Central of reservation of El Salvador, the Superintendency of system finance, 3 the Salvadoran Institute of Social Security, the National Institute of pensions of public employees, the Institute of Social Welfare of the armed forces and guarantee Institute of deposits;
2. consular, diplomatic missions and foreign diplomatic personnel accredited in the country, on condition of reciprocity.
3. the international organizations, agencies of development or cooperation of States or foreign countries;
4. the pension funds; and, 5. Users of free zones, deposits of development asset, parks or service centres.
The exemption includes the operations carried out on accounts of the entities identified in the performance of their duties.
(f) the payment of salaries to workers, including labor compensation, by means of transfer or issuance of cheques.
The exemption established in the literal present proceed only when payment of the sums is made by transfer of funds from a special account for deposit of the employer or by checks, which identifies the special employer's account and the holder of the deposit account. In the case of payment by cheque, will identify the name of the employer, its special account and the single document of identity of the employee;
(g) the payment of loans from clients entities of the financial system. Loans originated abroad to be used in the national territory, payments through transfers, money orders, or any other means, will be encumbered with the duty of this chapter;
(h) the disbursement of loans for working capital of micro entrepreneurs, for house purchases or credits of avio to agriculture and livestock. The exemption shall be provided that the sum of the values of the expenditure is equal to or less than US$ 50, 000.00. In the case of personal loans or consumption exemption will proceed when the values of disbursements is equal to or less than US$ 10, 000.00.
In the case of refinancing, renewal or restructuring of loans is exempt values balance cancelled with such operation, taxing the tax only net disbursement.
Disbursements of loans they grant cooperative integration or upstairs, to the user institutions, bodies are also exempt for Fund lending operations of the final debtors of such funds;

4 i) transfers between deposit accounts of a same incumbent on institutions of the financial system. In addition, those made by entities in the financial system with the Banco Central de Reserva of El Salvador; or in the case of cooperatives associations of credit unions in the Central box or mechanisms of centralisation of funds established by their Federation;
(j) the establishment of the reserve of liquidity from the financial system entities, as well as the requirement of liquid assets and any act of disposal or operation on them;
(k) the payment of the services of supply of water and electricity which are carried out by means of cheques, bank transfers, credit cards or debit;
(l) the operations of investment and emission is carried out in the primary market of the stock exchange, as well as buying and selling primary that is realized on the exchange of products and services. This exemption includes the titles issued by the State and municipal and autonomous public entities.
Transactions carried out by the stock exchange brokers houses, depository of values, bags in the exercise of their functions of intermediation in the stock market and jobs in the intermediation of products of services.
For the purposes of this Act, the tax generated by the payment of cheques or transfers that investors and issuers to bag houses of brokers, depository of values, as well as bag posts in the intermediation of products and services, will be not retained by the institutions of the financial system. The subjects mentioned in this paragraph are required to withhold the tax, according to the provisions of this law;
(m) the transfers abroad related to imports of goods and services related to the productive activity and remittances by repatriation of capital and profits;
(n) transfers from abroad, credited to the account of the beneficiary or recipient, such as family remittances, payments for goods or services exported;
(n) the payments of insurance premiums worth of transaction or operation is equal to or less than US$ 1, 000.00. Transfers by compensation and sale of salvage from insurance premiums whose monthly fee is equal to or less than US$ 1,000.00; (and, or) payments that make fuel service stations for the purchase of said product.
Article 5.-are taxpayers taxable persons of the tax which regulates the present law, the following: 5 a) deposit money holders;
(b) those who ordered or disposal payments or transfers by any means or technological means, through the financial institutions and non-financial entities; and, c) entities of the financial system performing disbursements of loans of any kind and operations for their own interest.
Agents of retention article 6.-are responsible for payment of the tax, as withholding agents: to) entities in the financial system;

(b) entities that execute payment orders or transfers by any means or technological means;
(c) the houses of stockbrokers, in the case of operations of securities operations of third parties;
(d) the posts of bag, in the case of operations of brokerage products and services; (and e) which designated by the tax administration, by means of resolution.
The withholding agent is responsible for solidarity for the payment of the tax.
Agent retention that had made improper payments or in excess of the tax administration, may request the return or accreditation, using the procedure set out in the tax code.
Obligations of the agent of retention article 7.-the agents of retention are required: to) retain the tax regulated by this law;
(b) record the transactions that are subject to retention and deliver to the taxpayer, the document stating the withheld tax individually or accumulated, when required by this. The issuance of the record shall be made by monthly period;
(c) make the return of the retentions made improperly or excessively taxpayers, even when they are the product of a fraudulent transaction at the expense of the client; and, (d) submit affidavit for monthly tax period, via electronic form provided by the tax administration. The affidavit shall include the payment of tax 6 and shall be carried out within the period of the first ten working days of completion of the monthly tax period.
Taxable and aliquot article 8.-the tax base is determined by applying the rate of 0.25% equivalent to 2.5 per thousand, about the amount of transactions or taxable operations.
In the case of operations of repurchase agreements and interbank, whose period is equal or less than 45 days, to apply retention will be in annualized form, according to the period that lasts the operation. In the case of operations of reporting for investors and issuers, retention agent will be the brokerage Casa de Bolsa.
Process of withholding tax article 9-retention agents should load the aliquot in the deposit of the taxable account, at time causing the tax without affecting the amount of the debit. In any case it will be pay tax.
In cases of payment order or transfer where there is a deposit account, the tax must find agent retention, in addition to the value of the operation.
Chapter II retention of tax for the CONTROL of the LIQUIDITY article 10.-the subjects referred to in article 6 of this law shall be a withholding tax to control the liquidity of 0.25% or the equivalent of 2.5 per thousand, about US$ 5,000.00 excess originated from the operations of deposits, payments and cash withdrawals individual or accumulated in the month.
The previous generators facts are understood that occurred and caused tax when deposit, payment or cash withdrawal is made.
The obligations set out in article 7 of this law shall apply. They are also exempt from the withholding tax for liquidity control subjects and entities referred to in article 4, literal e) of this law, associations cooperatives, their federations and confederations.
Accounts for the management of reserves of cash and liquid assets of the entities in the financial system requirement, shall be exempt from this check.
They are taxable in nature of taxpayers, making deposits, payments or withdrawals in cash.
Retention agents be returned to taxpayers record of individual or cumulative, retained tax according to the requirements and procedures that establish the tax administration. Such record shall be of non-transferable.

7. the withholding tax by effectively aware liquidity control, will be creditable against any tax administered by the tax administration within a period of two years, counted from the date of the respective retention. For purposes of accreditation, the statements shall be submitted in electronic media.
The taxpayer who does not credit or offset tax and surplus of the same, according to the provisions of the preceding paragraph, will lose the right to do so in subsequent exercises.
Retention agents should retain the aliquot to the subject that make the deposit payment or cash withdrawal. In any case it will be pay tax.
Chapter III provisions General and validity standards applicable article 11.-in not contemplated in this law, shall apply the provisions of the tax code and tax laws.
The tax administration will issue regulations that will facilitate the implementation of this law, establishing therein including the way how it should deduct the dues, rules of rounding, controls, and the necessary backup documents. For these purposes, you can rely on the Central Reserve Bank of El Salvador and the Superintendence of the financial system.
Accreditation article 12.-the amounts that are paid in application of taxes established by this law, are not deductible as costs or expenses from the income tax. Also, the tax that is the first chapter of this law, shall not be creditable against any tax obligation.
Article 13.-the entry into force this law shall enter into force, on September 1, 2014, following publication in the official journal.
GIVEN in the blue room of the Legislative Palace: San Salvador, at thirty-one days of the month of July in the year two thousand fourteen.
OTHON SIGFRIDO REYES MORALES, PRESIDENT.

8 ENRIQUE ALBERTO LUIS VALDEZ SOTO, GUILLERMO ANTONIO GALLEGOS NAVARRETE, SENIOR VICE PRESIDENT. SECOND VICE PRESIDENT.
JOSE FRANCISCO MERINO LÓPEZ, LORRAINE GUADALUPE PENA MENDOZA, THIRD VICE PRESIDENT. FOURTH VICE PRESIDENT.
CARLOS ARMANDO REYES RAMOS, FIFTH VICE PRESIDENT.
WILLIAM FRANCISCO MATA BENNETT, MANUEL VICENTE MENJIVAR ESQUIVEL, FIRST SECRETARY. SECOND SECRETARY.
SANDRA MARLENE SALGADO GARCÍA, JOSÉ RAFAEL MACHUCA ZELAYA, THIRD SECRETARY. FOURTH SECRETARY.
IRMA PALACIOS LOURDES VASQUEZ, ERNESTO ANTONIO ANGLE MILE, FIFTH SECRETARY. SIXTH SECRETARY.
FRANCISCO JOSE ZABLAH SAFIE, JOSE SERAFIN RODRIGUEZ ORANTES, SEVENTH SECRETARY. EIGHTH SECRETARY.
Presidential House: San Salvador, to the thirty-one days of the month of July in the year two thousand fourteen.
PUBLISHED, Salvador Sanchez Ceren, President of the Republic.
Juan Ramon Carlos Enrique Caceres Chavez, Minister of finance.
D. o. No. 142 volume no. 404 date: 31 July 2014 FN/pch 02-09-2014 legislative index