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DECREE No. 957 THE LEGISLATURE OF THE REPUBLIC OF EL SALVADOR, CONSIDERING
:
I.- by Legislative Decree No. 134, dated December 18, 1991, published in the Official Gazette No. 242, Volume No. 313, 21 of the same year, the Law on Income Tax was issued.
II.- currently the taxation of income tax for natural persons exclusively employed by the retention mechanism, causes setbacks and administrative costs to taxpayers and the Tax Administration employees due to the processing and verification of more four hundred thousand returns.
III.- to reduce administrative drawbacks mentioned in the previous paragraph, it is necessary to introduce reforms to simplify the mechanism of withholding income tax and the amount to withhold approximates the income tax that must pay.
IV.- That the structure of income tax has generated a distortion in the taxation of subjects responsible for payment; it is therefore necessary to update the tax rates.
V.- That view of the foregoing, it is necessary to reform the current regulatory framework of income tax, so that allows traders to pay taxes and contribute to the support of public spending in response to the demand of the same and in an equitable manner.
THEREFORE,
in exercise of its constitutional powers and initiative of the President of the Republic, through the Minister of Finance and the Members of Ramirios Norma Guevara Fidelia, Lorena Guadalupe Peña Mendoza, Orestes Ortez Fredesman Andrade , Inmar Rolando Reyes and Gilberto Rivera.
DECREES the following:
AMENDMENTS TO THE LAW OF INCOME TAX
Art. 1. reformed paragraph 7) of Article 29 as well.
"Deduction for employees who settled or not the tax.
7) Natural persons whose income earned comes exclusively from wages and amounts equal to or less than US $ 9,100.00, not be obliged to submit liquidation and entitled to a deduction of US $ 1,600.00, which will not be subject to verification . fixed deductions and contributions
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social security will be included in the share retention are affected.
The salaried individuals with incomes over US $ 9,100.00 shall be entitled to deductions under Articles 32 and 33 of this Law, which shall be subject to verification. "
Art. 2. reformed letter b), third paragraph of Article 33, as follows:.
"We also are entitled to these deductions employees whose income obtained exceeds US $ 9,100.00."
Art. 3. hereby replaced Art 37 and section, by the following:.
"Calculation of tax individuals, estates and trusts.
Art. 37. The Income Tax for individuals, estates and trusts domiciled shall be calculated in accordance with the table detailed below, for cases specially provided in this Act, as follows:
NET INCOME TAXABLE% OR MORE ON A FEE FROM TO APPLY EXCESS: FIXED:
I STRETCH EXEMPT $ 0.01 $ 4064.00 $ 4064.01
II TRANCHE $ 9,142.86 $ 4,064.00 10% $ 212.12 $ SECTION III
9,142.87 $ 22,857.14 $ 9,142.86 20% $ 720.00
IV STRETCH FORTH $ 22,857.15 $ 22,857.14 30% $ 3462.86
natural persons, estates or trusts not domiciled calculate their tax by applying the thirty percent (30%) on net or taxable income.
Are excluded from the calculation of tax, those revenues which have been subject to final withholding income tax in the legally established percentages. "
Art. 4. Article 38 hereby replaced by the following:.
"Art. 38.- domiciled individuals whose incomes come solely from wages, salaries and other remuneration and have been subject to retention for the payment of this tax are not required to file a tax return; except those with higher incomes to US $ 60,000.00 per year, and which is not carried them withholding or deductions not corresponding to the tax that would result from applying the provisions of the table in Article 37 of this refers law, in which case, must submit the corresponding tax declaration liquidating or may request the respective return.

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As a result, people who are not required to file a return, your tax will be equal to the sum of the deductions made in accordance with Article 155 of the Tax Code in relation to the withholding tables.
Those employees who do not enjoy fixed deductions for hospital services, medicines, professional services, tuition or schooling referred to in this Act may exercise the right to declare, for the purposes of return.
At the request of the Directorate General of Internal Revenue, both the Salvadoran Social Security Institute, as the Superintendent of the Financial System and Pension Fund Administrators are required to exchange information to exercise control payment of withholding by withholding agents. "
Art. 5. To substitute the Art 41, by the following:.
"Art. 41. Legal entities, unions of persons, societies or indeed irregular, domiciled or not, calculate their tax your taxable income by applying the rate of thirty percent (30%); taxpayers who obtain taxable income less than or equal to one hundred fifty thousand dollars (US $ 150,000), which apply the rate of twenty percent (25%) are exempted.
Are excluded from the calculation of tax, those revenues which have been subject to final withholding income tax in the legally established percentages.
Utilities domiciled subjects referred to in this article will be levied an additional tax when distributed according to the provisions of this Act. "
Art. 6. Adiciónanse three new paragraphs to Article 65, as follows:.
"Withholding agents, in order to comply faithfully applying the withholding established in the Decree containing the withholding tables Income Tax shall comply with the obligations that decree regulates, which consist of: || | a) Apply the withholding tables contained in the respective Executive Decree;
B) Deduct the total remuneration of the period the amount of untaxed income;
C) Perform a recomputation to determine the retention of the months of June and December.
Retention Subjects must meet the obligations under the Decree containing the withholding tables, consisting of:
1) Inform each employer or employer the existence of more than one job and the amounts of the respective income from each of them;
2) Inform your employer which of income withholding will apply in the case that income derived from different jobs are of equal amount;
3) Require their former employer the issuance and delivery of a certificate of retention
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accordance with Article 145 of the Tax Code, to be delivered to their new employer.
Failure to comply with the above obligations regulated, which must be understood in the corresponding Executive Decree shall be punished with two minimum monthly wages. "
Art. 7. hereby added in Title VII, Chapter III, whose heading is "INCOME TAX PROFIT DISTRIBUTION" with the content detailed below:
"
CHAPTER III INCOME TAX DISTRIBUTION oF pROFITS
Withholding payment or profit accreditation
Art. 72.- The taxpayers resident utilities paid or credited to its partners, shareholders, partners, trustees, shareholders, investors or beneficiaries are required to withhold a percentage of five percent (5%) of such amounts. Such withholding shall constitute final payment of income tax by the subject to which the withholding was made, whether it is resident or not.
If the aforementioned utilities not be made the respective deductions according to regulations in this chapter, shall be declared separately from other income earned in the year or tax period and pay tax at the rate of five per percent (5%).
Shall mean profits, the surplus resulting from the sum of the taxable, exempt and not subject received or accrued by the taxpayer in the year or tax period income less costs, expenses, deductions and tax regulated articles 37 and 41 of this Act.

It is understood that the utilities have been paid or credited when they are actually received by the taxpayer, whether in cash; securities, in kind, by offsetting claims, losses or by application to accounting transactions that create availability, regardless their name, such as dividends, shares, surplus, results, legal reserves, earnings or income. Retention provided for in this Chapter, by its special character, it prevails over any rule that runs counter; except as specified in Article 158-A of the Tax Code. Retention in special case
Art. 73. The representatives of parent companies, subsidiaries, branches, agencies and other permanent establishments income paid or credited to subjects not domiciled in El Salvador, must withhold five percent (5%) in concept of income tax, according to the provisions of the preceding article.
If the respective deductions according to regulations in this chapter are not made, non-domiciled parties shall comply with the provisions of Article 53, second paragraph, of this Act.
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Withholding capital reduction
Art. 74. taxpayers domiciled in El Salvador must withhold the tax in the amount of five percent (5%) on amounts paid or credited to decreases in capital or assets, which corresponds to capitalizations or part reinvestment of profits. For these purposes, shall be deemed to amounts paid or credited by decreasing capital or assets, capitalized earnings correspond to the amount previously while supplies last.

Loan Retention Art. 74-A.- Legal persons or entities without legal personality domiciled in El Salvador, must withhold five percent (5%) in respect of income tax by the sums of money or goods in kind to hand in loans , mutual, advances or any other form of financing:
a) Its partners, shareholders, partners, shareholders, trustees or beneficiaries and subjects related to them in accordance with Article 25, paragraph the end of this Law.
b) Subjects or constituted located or domiciled abroad in countries, states or territories with low or no taxation or tax havens entities.
C) Its headquarters located or domiciled abroad, or if applicable, a branch, agency or other establishment located or domiciled abroad related to its parent company.
Retention referred to above shall not apply and the provisions of Article 25, paragraph the end of this Law, when the loan, mutual or other form of financing is given in any of the following conditions:.
One. The interest rate has been agreed at market price or higher.
2. The contract has been made between financial institutions regulated by the Superintendency of the Financial System.
3. The contract has been made between public and private entities that are commonly engaged in lending.
4. The contract has been made between the subjects referred to in paragraphs 2 and 3 above.
5. The borrower is the state, municipality, autonomous institution, funds or trusts created by them, and when is a corporation or foundation in law or public utility.
Notwithstanding the preceding paragraph, for the case of 1, if the borrower incurred in arrears in the payment of more than six installments or the time limit for payment of the agreed quotas or is greater than one year shall be deemed for the borrower that the total amount of consideration agreed is taxable income for the borrower and the accrued interest will not be deductible as cost or expense for purposes
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determination of income tax.
Exemption cases.
Art. 74-B.- No withholding or practice shall pay the tax referred to previous articles when:
a) profits have been subject to tax withholding and covered by this Chapter in previous distributions;
B) profits into registered shares or shares in the company itself that pay is capitalized;
C) the profits reinvested by entities without legal personality;
D) The subject receiving profits is the state and its agencies, municipalities or other public entity, federations and cooperative associations and corporations or foundations of public utility which are excluded under Article 6 of this Act.

Autonomous public institutions, including the Executive Hydroelectric Commission of the Lempa River, are subject to tax, notwithstanding that laws which are governing have exempted from all kinds of tax.
The exemption provided in this article must be verified by the taxpayer to the Directorate General of Internal Revenue.
Control Registry Utilities
Art. 74-C.- The taxable person shall keep a register of earnings per year or tax period containing the determination of the amount, paid or credited, capitalization or reinvestment and decreases in capital or assets, allowing identify the values ​​for the above items, for each partner, shareholder, partner, shareholder, trustee or beneficiary, which will keep tally with the accounts. The Directorate General of Internal Revenue will issue the corresponding administrative rules, taking into account the nature of the records of the transactions. Failure to comply with this obligation will be sanctioned with the provisions of Article 242, b) and c), number 1) of the Tax Code. "
Art. 8. hereby added in Title VII, Chapter V, the heading is "MINIMUM PAYMENT OF INCOME TAX" and whose content is as follows:
"CHAPTER V
MINIMUM PAYMENT OF INCOME TAX || | taxable persons and taxable

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Art. 76. The annual income tax will have a definite minimum payment, whose operative event consists of obtaining or gross income earned in the year or tax period.
The taxpayers of this obligation materials are regulated in Article 5 of this Law. "*
Taxable declared unconstitutional, tax rate and exclusions
Art. 77. The minimum payment of income tax must be paid on the amount of income earned or gross, with the rate of one percent (1%).
Will not be part of the tax base, those income on which they had made final withholding, income not taxed or excluded, income from wages and salaries and income from activities subject to controlled prices or regulated by the state, and from agricultural and livestock activities.
For the purposes of the preceding paragraph shall be construed as agricultural and livestock activities, the share of animal exploitation and land, provided that that operation does not involve an agroindustrial process. *
Declared unconstitutional exempt minimum payment Subject to final
Art. 78.- will not be subject to a minimum payment of income tax:
a) natural persons who obtain income exclusively from wages and salaries.
B) Users of EPZ and marketing; improvement of asset; those covered by the General Law of Cooperative Associations; international services and those falling under Art. 6 of this Act.
c) The entities and trusts funded by the State of El Salvador, international organizations or foreign governments.
D) Persons exempt from income tax under the provisions of law.
E) The subjects referred to in Article 76 of this Law, during the first three years of starting operations, provided that the activity has been incorporated with new investments, excluding those cases where acquisitions of assets or rights are Pre-existing. The period shall run from its registration in the Register and Special Control of Taxpayers to the Treasury.
F) Subjects who tuvieren tax losses for a taxation year. They may not benefit from the exemption those subjects who tuvieren tax losses after two consecutive years.
G) The taxpayers of a given sector of economic activity that
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exceptional circumstances have been affected in its operations, having declared state of public calamity and disaster by the Legislature, state of emergency decreed, where appropriate, by the President of the Republic, as respective legislation, or for reasons of fortuitous event or force majeure.

H) Taxpayers in the year or tax period, have a lower gross margin percentage value equal to twice the rate of tax imposed by this Chapter. For purposes of applying the literal present, gross profit is defined as the difference between the income earned and the cost of services and sales or gross margin as a percentage of gross profit in relation to the income derived by the taxpayer. The subject will no longer be exempt when in a tax period taxpayers exceed the gross margin established in the present literal.
I) Taxpayers who obtain taxable income up to one hundred fifty thousand dollars (US $ 150,000) in the year or tax period.
For the purposes of the application of the above exemptions, taxpayers must file an affidavit form determined by the Tax Administration; for cases of exceptional economic conditions, acts of God or force majeure, shall be accompanied by the means of documentary evidence proving such extremes. The Tax Administration may exercise its powers to check the contents of that statement. *
Settlement and declared unconstitutional declaration of minimum payment
Art. 79.- The taxpayer shall validate and declare the minimum payment of income tax, in the same statement income tax for the year or period for imposition. * Determination declared unconstitutional
payment income tax
Art. 80.- taxpayers resident in El Salvador will pay income tax according to the application of those of the following formulas resulting in a higher amount:
a) As set out in Articles 37 and 41 of the this Act; or
b) As provided in Article 77 of this Law. * declared unconstitutional and return

Crediting Art. 81. When income tax determined according to the previous article, will be credited with the amount of payment and deductions you are entitled to the taxpayer. If the settlement is
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liquid tax to the State, it must be paid within the statutory period established by this Act; If there is a balance in favor of the taxpayer shall apply the regulations in the Tax Code. "* declared unconstitutional
Art. 9. reformed Article 92, second paragraph, item 1) and the third paragraph, as follows:.
"1) Natural persons domiciled with above-free basis in Article 37 of taxable income this Act within a year or period of imposition. "
"Excepted from the provisions of the preceding paragraphs, salaried individuals regulated in Article 38 of this Law." Waivers

Art. 10. Since the enactment of this Act, the following provisions are repealed:
a) Articles 4, paragraph 13); 26 and the second paragraphs of Articles 34, 35 and 36 of this Act.
Law Enforcement in time.
Art. 11. The provisions of this Decree shall be governed by the following rules:
a) The provisions of this Decree shall apply from the financial year or tax period of 2012.
b) The profits paid or credited from this decree, generated in previous years or periods prior taxation year 2011, will be exempt from income tax on the distribution of profits established in Title VII, Chapter III of the Law on income tax.
C) The exemptions provided for in laws issued prior to the effective date of this Decree, may be relied on Income Tax to Profit Distribution. In the laws issued after the effective date of this Decree, shall be admissible only those exemptions which make specific mention of the tax. However, those exemptions that have been granted by a competent authority to distributable profits for the partner or shareholder for a given period, against the tax take effect until the end of that period. Effective

Art. 12.- This Decree shall enter into force on 1 January 2012, following publication in the Official Journal.
GIVEN IN THE BLUE ROOM OF THE LEGISLATIVE PALACE: San Salvador, on the fourteenth day of December in the year two thousand eleven.


10 OTHON Sigfrido Reyes Morales, president. CIRO
ZEPEDA PEÑA CRUZ, GUILLERMO ANTONIO NAVARRETE GALLEGOS, FIRST VICE. SECOND VICE PRESIDENT.
MERINO JOSE FRANCISCO LOPEZ, ALBERTO ROMERO ARMANDO RODRIGUEZ, THIRD VICE. FOURTH VICE.

FRANCISCO ROBERTO DURAN LORENZANA, FIFTH VICE.
PEÑA LORENA GUADALUPE MENDOZA, CESAR GARCIA HUMBERTO AGUILERA, First Secretary. Second Secretary.
ELIZARDO LOVO GONZÁLEZ, JOSÉ ROBERTO MUNGUÍA d'Aubuisson, Third Secretary. Fourth secretary.
LOURDES IRMA VASQUEZ PALACIOS, FIFTH Secretariat. SIXTH Secretariat.
MARIO ALBERTO GUERRERO TENORIO, SEVENTH SECRETARY.
PRESIDENTIAL HOUSE: San Salvador, on the fifteenth day of the month December of the year two thousand eleven.
Published, Carlos Mauricio Funes Cartagena
, President of the Republic.
Juan Ramon Caceres Carlos Enrique Chavez, Minister of Finance.


OJ No. 235 11 Tomo # 393 Date: December 15, 2011.
ROM / IELP 05-01-2012 UNCONSTITUTIONALITY
:
* THE CONSTITUTIONAL CHAMBER OF THE SUPREME COURT JUSTICE, BY MEANS OF JUDGMENT No. 18-2012 RE PUBLISHED IN THE OFFICIAL GAZETTE No. 216, VOLUME 401, OF 19 NOVEMBER 2013, DECLARES ARTS unconstitutional. 76, 77, 78, 79, 80 and 81, because these provisions FORMING A UNIT AND SYSTEMATIC REGULATION OF THE DEFINITIVE MINIMUM PAYMENT OF INCOME TAX AND DETERMINED AS TAXABLE INCOME FROM EAST TO INCOME GROSS OR OBTAINED WITHOUT POSSIBILITY OF DEDUCTION COSTS AND EXPENSES NECESSARY FOR PRODUCTION AND CONSERVATION OF ITS SOURCE, SUCH PROVISIONS VIOLATED THE TAX EQUITY IN YOUR PROTEST THE PRINCIPLE OF ECONOMIC CAPACITY ESTABLISHED IN ART. 131 ORD. 6th CN. JQ

10.12.13 LEGISLATIVE INDEX