Key Benefits:
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
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DECREE No. 884.-
THE LEGISLATIVE ASSEMBLY OF THE REPUBLIC OF EL SALVADOR,
WHEREAS:
I.-That in accordance with Article 101 of the Constitution, it is up to the State to promote economic and social development by increasing production and productivity, and in addition, promote the diverse sectors of production and defend the interests of consumers;
II.-That development in the national economy, requires a system of financing of goods that encourages investment and is accessible to businesses and Salvadoran natural persons who request it and especially small and medium-sized enterprises;
III.-That the financial leasing system constitutes, on a global level, an efficient mechanism to favor investment in goods;
IV.-That in accordance with Article 103 of the Constitution, the right to the right is recognized and guaranteed private property on a social basis, so it is appropriate to grant full protection to the right of property to be exercised by landlords as investors in the leased property, a function that is fulfilled by virtue of economic exploitation that they give to the users of the system;
BY TANTO,
in use of their constitutional powers and on the initiative of the President of the Republic, through the Minister of Economy and the Deputies Francisco Roberto Lorenzana Duran, Mauricio Lopez Parker, Noe Orlando Gonzalez, Manuel Enrique Duran, Juan Duch Martinez, Medardo Gonzalez Trejo, Jorge Alberto Villacorta Munoz, Norman Noel Quijano Gonzalez, Juan Miguel Bolanos, Carmen Elena Calderon de Escalon, Walter Rene Araujo Morales, Carlos Antonio Borja Letona, Renato Antonio Perez, Roberto Jose d' Aubuisson Mungia, Julio Antonio Gamero Quintanilla, Gerardo Antonio Suvillaga Garcia, Elmer Charlaix, Guillermo A. Gallegos Navarrete, Mario Alberto Tenorio, Vicente Menjívar, José Mauricio Quinteros Cubias, Osmin López Escalante, Nelson Funes, Hector Nazario Salaverria Mathies, Carlos Mauricio Arias, Jesus Grande, Douglas Alejandro Alas Garcia, William Rizziery Pichinte, Mariela Pena Pinto, Ernesto Angulo, Donato Eugenio Vaquerano Rivas, Carlos Armando Reyes Ramos, Rafael Edgardo Arevalo Perez, Salvador Sanchez Cerén, Ileana Argentina Rogel de Rivera, Blanca Flor America Bonilla, Vilma Celina Garcia de Rivera Monterrosa, Walter Eduardo Duran Martínez, Zoila Quijada, Marta Lilian Coto Vda. de Cuellar, Elvia Violeta Menjívar Escalante, Nelson Napoleon García Rodríguez, José Ebanan Quintanilla Gómez, José María Portillo, René Oswaldo Martínez, Irma Segunda Amaya Echeverría, Miguel Ángel Navarrete Navarrete, Marta Calles de Penado, Carlos Alfredo Castaneda Magana, Juan Angel Alvarado Alvarez, David Rodriguez Rivera, Manuel Oscar Aparicio Flores, Jose Manuel Melgar Henriquez, Humberto Centeno Najarro, Manuel Quintanilla and Silvia Cartagena,
DECCRETA, the following:
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LEASING LAW
TITLE FIRST PROVISIONS
CHAPTER FIRST OBJECT AND SCOPE OF LAW
Application
Art. 1. -This Law will apply to leasing contracts and to the subjects who celebrate them.
In the text of this Law, the financial lessor will be called "the landlord" and the financial tenant will be called " the tenant. "
Civil lease operations will not be subject to this Act.
CHAPTER SECOND FINANCIAL LEASE AGREEMENT AND ITS PARTS
Features
Art. 2. -Financial leasing, the contract by which the lessor grants the use and enjoyment of certain goods, furniture and buildings, for a period of forced compliance with the lessee, forcing the lessee to pay a fee of leasing and other costs established by the lessor. At the end of the stipulated term the tenant will have the option to buy the goods at a pre-defined price, return it or extend the term of the contract for subsequent periods.
For the purposes of this Law, the object of the lease financial services shall be referred to as 'good' or 'property'.
In the lease operation, it is the tenant who chooses the provider and who selects the good. Therefore, the lessor is not responsible for the favorable or unfavorable legal effects of the choice of the good and the supplier, except in cases where the landlord is the supplier.
Of the parties
Art. 3.-In the lease agreement the following parts are constituted:
Supplier: The natural or legal person, Salvadoran or foreign who transfers to the landlord the property of the object of the contract. The supplier may be a person who is habitually or professionally engaged in the sale of goods, or a person who occasionally engages a good or the same landlord.
Lessor: The natural or legal person who delivers goods in leasing to one or more tenants.
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Tenant: The natural or legal person, national or foreign, who, when entering into a financial lease, obtains the right to the use, enjoyment and economic exploitation of the good, in the respective contractual terms and conditions.
Provider Obligations
Art. 4. -Supplier obligations:
(a) Deliver the object in financial lease to the tenant when the landlord authorizes it;
b) Ensure that the goods to be leased are free of charge, in good operation and without hidden vices;
c) Respond to claims covered by the warranties of the goods on the lease;
d) Comply with consumer protection laws; and
e) Other that are agreed between the parties.
Lessor Obligations
Art. 5. -the Lessor that concludes a lease is obliged to:
a) Pay the supplier in a timely manner the agreed price of the good;
b) Keep the goods leased, free of embargoes during the term of the contract, to ensure the smooth tenure, use and enjoyment of the good by the Tenant;
c) Sanitation by eviction; and
d) Other obligations freely stipulated between the parties and those mentioned in this Law.
The Lessor, upon agreement of the parties, may assign to the Tenant all rights and actions which in this
In
where the Lessor is also a Supplier, the obligations under the Article 4 of this Law will also apply to it.
Tenant obligations
Art. 6. -Tenant is obliged, during the term of the lease, to:
a) Pay the rent or royalties within the period stipulated in the contract;
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b) Take the risks and benefits associated with the purely physical and economic nature of the good;
c) Respond, civil and criminally, for the use of the well-leased;
d) Respect the right of property of the goods and enforce it in front of third parties. Therefore, in the event of bankruptcy, competition of creditors, or forced restructuring of obligations, the financial leasing assets that the Tenant will exploit, will not form part of its mass of goods and will be excluded from it for the effects of the law; and
e) The other obligations freely stipulated between the parties and those mentioned in this law.
Contract formalization
Art. 7. -The lease must be written in writing, either in public deed or in an authenticated private document. In order for such a contract to be enforceable before a third party, it must be registered in the Register of Commerce, with the costs and rights caused by the registration, on behalf of the Tenant, unless otherwise stated. The rate or right of enrollment will be twenty-three cents per thousand to a maximum limit of two thousand three hundred dollars.
Bans
Art. 8. -Tenants may not transfer or transmit the goods covered by the lease, nor shall they improve real guarantees on them by contractual obligations, or include them within the mass of goods at events of insolvency, bankruptcy, dissolution, liquidation or rearrangement of obligations. The Lessor may obtain compensation for any damages caused to it by such acts or actions of third parties, without prejudice to the criminal penalties to be imposed.
Contract terms and deadlines
Art. 9. -The contractual term is a right of the Lessor, which cannot be modified without the right to mediate its acceptance and the full compensation of the damages caused to it by such modification. For all legal purposes, it is presumed that the Lessor suffers, due to the modification of the contractual period, damages for the value of the sums of money that he has received from having maintained in force the contract, which will be able contractually estimated.
The tenant's obligation to pay the rent or royalties derived from any lease, is unconditional and therefore becomes enforceable at any event, whether the Tenant is or not In the interests of the exploitation of the good, the risks of the exploitation of the good are completely and exclusively
This will not apply when the causes of the non-use or exploitation of the well-leased property are attributable to the Lessor.
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Insurance
Art. 10. -The parties may agree to the insurable risks, in accordance with the nature of the goods. All insured and uninsured risks are borne by the Tenant.
The beneficiary of the insurance policy shall be the Lessor; and the Tenant shall be liable for any deductible or amount that the settlement does not cover. Any surplus that will result from a settlement, after covering all costs and expenses of the Lessor as well as the obligations of the contract, will be reintegrated into the Tenant.
Tributes
Art. 11. -All taxes, taxes, fees, fines, penalties, infractions or penalties that tax the holding, possession, exploitation or circulation of the goods given in lease will be covered by the Tenant.
TITLE SECOND LEASING OPERATIONS
CHAPTER ONLY OPERATIONS
Additional Operations
Art. 12. -The Lessor may additionally perform sales and retroleasing operations, which shall not be considered as leasing operations and shall be governed by the provisions of the tax legislation.
Principles and accounting rules
Art. 13. For accounting purposes, the leasing operations in El Salvador shall take into account the provisions established by the Supervisory Board of the Public Accounting and Audit Profession.
TITLE III Tax PROVISIONS
Income Tax Deductions
Art. 14. For the Tenants, for the purposes of the Income Tax, it shall be deductible from the income obtained, the value of the fees, dues or income caused to his office by virtue of the lease agreements in force, on goods destined directly to the production of income taxed with the tax.
If the income that is obtained with the use of the well leased, are in part taxed and in part exempt, only the portion corresponding to the income will be deductible taxed.
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Depreciation
Art. 15.-For the Lessor it is deductible from the income obtained, the depreciation of the property of his property, taken advantage of by these for the generation of the taxed income.
In the case of buildings, the depreciation of the good must be made, by the Lessor, in the period of duration of the real estate leasing contract, which for such purposes may not be less than seven years. If the duration of the contract is less than seven years, the provisions of Article 30 of the Income Tax Act shall apply.
Once the purchase option of the immovable property has been exercised, the acquirer shall be entitled to the deduction. established in Article 30 of the Income Tax Act by the last agreed fee or fee when exercising the option to purchase.
In the case of movable property, the Tenant, when acquiring ownership of such assets, shall be entitled to the deduction of the value subject to depreciation in the terms laid down in Article 30 of the Tax Law on the Rent.
International Lease
Art. 16.-Subjects engaged in international leasing shall be governed by the provisions of the Tax Code and the respective tax laws. The acts that such entities perform shall be subject to the regulations that these law bodies establish.
THOSE WHO IMPORT MACHINERY AND EQUIPMENT LEASED UNDER THE LEASING MODE, FOR THE EXECUTION OF WORKS OF THE STATE THE MACHINERY AND EQUIPMENT SHALL BE REGISTERED WITH THE GENERAL MANAGEMENT OF THE CUSTOMS OFFICE OF THE MINISTRY OF FINANCE BY MEANS OF AN INVITATION TO TENDER TO THE COUNTRY FOR THE EXECUTION OF SUCH WORKS, INDICATING THE CHARACTERISTICS OF THE WORKS PERIOD OF TIME TO STAY IN THE COUNTRY. (1)
FOR THE PURPOSES OF THE REGISTRATION OF SUCH MACHINERY AND EQUIPMENT SHALL PAY THE FISCUS OF THE REPUBLIC 4.95% OF THE TOTAL AGREED VALUE OF THE FINANCIAL LEASE OF SUCH MACHINERY AND EQUIPMENT, RIGHTS TO BE LIQUIDATED AT THE ADDRESS GENERAL OF CUSTOMS INCOME AND PAY TO THE GENERAL TREASURY MANAGEMENT, AS APPROPRIATE. (1)
AT THE TIME OF ITS ADMISSION TO THE COUNTRY, THEY WILL HAVE TO PAY 5% CORRESPONDING TO THE TOTAL OF THE SAID 4.95% AND THE PAYMENT OF THE REMAINING 95% OF THE 4.95% OF THE TOTAL VALUE OF THE LEASE, MUST BE MADE TO THE GENERAL MANAGEMENT OF TREASURY, IN THE BANKS AND OTHER FINANCIAL INSTITUTIONS AUTHORIZED BY THE MINISTRY OF FINANCE, THE FIRST TEN WORKING DAYS OF EACH MONTH IN EQUAL AND SUCCESSIVE INSTALMENTS, WHICH SHALL BE DISTRIBUTED PROPORTIONALLY FOR EACH MONTH OF THE YEAR, WITHOUT ANY CASE MAY BE DEFERRED FOR ONE YEAR FOR THE OTHER. THE PAYMENT OF SUCH FEES SHALL BE REPORTED BY THE IMPORTER ATTACHING A CERTIFIED COPY THEREOF TO THE GENERAL MANAGEMENT OF THE CUSTOMS INCOME SO THAT THE SAID ADDRESS BEARS THE RECORD OF THE TOTAL VALUE THAT WAS ORIGINALLY SETTLED BEFORE IT AND CAN CHECK IF THAT SUM HAS BEEN FULLY
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PAID AT THE TIME OF DEPARTURE OF THE COUNTRY ' S MACHINERY AND EQUIPMENT. IT WILL BE NECESSARY FOR THE MACHINERY AND EQUIPMENT TO LEAVE THE COUNTRY WITH THE PAYMENT OF THE TOTAL SUM SETTLED. (1)
THE VALUE INITIALLY PAID TO THE COUNTRY ' S INCOME SHALL BE RECORDED BY THE GENERAL MANAGEMENT OF THE CUSTOMS INCOME AS A PARTIAL SETTLEMENT AND UPON COMPLETION OF THE ENTIRE PAYMENT SHALL RECORD THE FINAL SETTLEMENT. (1)
THE ENTRY AND EXIT OF THE COUNTRY OF THE MACHINERY AND EQUIPMENT IN REFERENCE SHALL BE SUBJECT TO VERIFICATION BY ITS IMPORTERS WHEN THE TAX ADMINISTRATION SO REQUIRES. (1)
IN THE CASE PROVIDED FOR IN THE PRECEDING FIVE SUBPARAGRAPHS, THE PROVISIONS OF ARTICLE 158 OF THE TAX CODE SHALL NOT APPLY. (1)
THE DEDUCTION OF THE CORRESPONDING COSTS OR EXPENSES IN RESPECT OF INCOME TAX BY THE TENANTS WILL BE SUBJECT TO THE PAYMENT OF THE CORRESPONDING RIGHTS SET OUT IN THIS ARTICLE AND TO THE FULFILLMENT OF THE THE GENERAL DEDUCTION REQUIREMENTS STIPULATED BY THE TAX LAWS; EXCEPT AS REGARDS THE WITHHOLDING TAX ON INCOME. (1)
Real Estate Lease
Art. 17. -In real estate leasing transactions, the Real Estate Transfer Tax will be caused only at the time of the acquisition of the good by the Lessor, constituting in any case the tax base, the real value or commercial property at the time of such acquisition.
When the Tenant exercises the option of purchase of the immovable property, no tax on the Transfer of Real Estate will be caused.
In the subsequent transfers that occur, once the property has been acquired by the Tenant, the Tax will be Transfer of Real Estate for each transfer that is made.
TITLE FOURTH SPECIAL PROVISIONS
Executive Force
Art. 18. -In the event of non-compliance by the Tenant, the leasing contracts will have executive force and will be dealt with by the executive procedure established in the Law on Commercial Procedures.
the application, the Lessor must attach to it, a certification issued by the Accountant of the company in which the debtor balance is recorded.
the Lessor may request the practice of the kidnapping of the leased equipment as the precautionary measure, which shall be decreed within three working days of the submission of such application.
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In case the Lessor chooses to dispose of the well-held property, he/she will be required to provide bail equivalent to the value of the well-contracted, which will be returned to him in a timely manner.
Inembargability
Art. 19. -Any controversy over the claim to incorporate into the mass of the bankruptcy or liquidation of a Tenant, goods in lease, must be resolved by recognizing the exclusive right of ownership of the Lessor and denying all pretence to incorporate such goods into the mass of the tenant's bankruptcy or liquidation. For its part, the Lessor in case of bankruptcy will not be able to incorporate into its mass of goods those awarded on lease.
TITLE FIFTH APPLICATION
Application for extra-payment
Art. 20. -In all cases not provided for in this law, the commercial, civil, tax, registration, cadastral, consumer protection, and environmental standards shall apply in respect of the environment in which they do not object to this Law.
TITLE SIXTH FINAL PROVISIONS
Preferred Application
Art. 21. -This Law, because of its special character, will prevail over any other than the contrarian.
Vigence
Art. 22. -This Decree will enter into force sixty days after its publication in the Official Journal.
GIVEN IN THE LEGISLATIVE PALACE: San Salvador, at the twentieth day of June of the year two thousand two.
Ciro Cruz Zepeda Peña, President.
Walter Rene Araujo Morales, Julio Antonio Gamero Quintanilla, First Vice President. Second Vice-President. René Napoleon Aguiluz Carranza,
Third Vice President. Carmen Elena Calderón de Escalón, José Rafael Machuca Zelaya, First Secretary. Second Secretary.
Alfonso Aristides Alvarenga, William Rizziery Pichinte, Third Secretary. Fourth Secretary.
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Ruben Orellana Mendoza, Fifth Secretary.
CASA PRESIDENTIAL: San Salvador, at the twenty-seventh day of June of the year two thousand two.
PUBESQUIESE,
Carlos Quintanilla Schmidt, President of the Republic in Functions.
Miguel Lacayo, Minister of Economy.
D. O. No. 126 Took Nº 356 Date: July 9, 2002.
adar.
REFORM:
(1) D.L. Nº 647, MARCH 17, 2005; D.O. NO 55, T. 366, MARCH 18, 2005.
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