Business Appeal Against Income Tax Law

Many companies are preparing to file law suits citing unconstitutionality over some of the amendments to the Law on income tax (ISR) which came into force on January 1st , because they believe that the approved taxes are "confiscatory" and makes them less competitive to the point of having to close down their businesses.

According to lawyers, tax experts and financial accounting auditors surveyed by ElSalvador.com, there are several "inequities" that violate the tax principle that "those who earn more pay more."

"Accountant and financial expert Amilcar Quintanilla agrees that the principle that those 'who earn more, pay more' has been violated, as it is demonstrable that a company with annual sales volumes sales of less than $150,000, when 25% tax rate is applied will pay less tax than one who reports revenues in excess of $150,000 and who according to the reform will have to pay 30% on their taxable income", reads the article.

Quintanilla gave as an example the following: If company "A" records revenues of $200,000 and taxable income of $30,000, it will pay 30% income tax, equivalent to $9,000, while company "B", with gross sales of $80,000 and the same taxable income pays 25%, or $7,500.

Source: elsalvador.com

More on this topic

Tax Reform in El Salvador Approved

December 2011

The tax on corporate income will rise from 25% to 30%, while tax on dividends will be reduced.

The legislative body of El Salvador has approved the fiscal reforms promoted by the Executive, with 66 votes in favor and 17 against.

The major changes include increasing income tax for businesses, which will raise to 30%, except for companies with revenue of less than $150,000, who will continue to pay 25%.

El Salvador: Proposed Adjustments to Income Tax

November 2011

The FMLN's proposed reforms include, among other things, raising the limit of exempted income.

Representatives from a faction of the FMLN have presented a series of reforms to income tax law, with which they aim to reduce the burden on those earning less and increase the burden on those earning more.

Honduras: Seeks to Declare New Tax Unconstitutional

July 2011

The Honduran Council of Private Enterprise will file an appeal of unconstitutionality over the decree that imposes a 1% income tax to those who declare losses.

Armando Urtecho, executive director of the Council indicated that Decree 42-2011, violates the constitution, and therefore does not count as an appeal but an action of unconstitutionality.

Income declaration begins in Panama

January 2009

The period for income declarations for 2008 started today and should be quicker due to the advantage of using the Internet and other tools.

According to PA-DIGITAL, "taxpayers who earn more than $150,000 will be able to present their declarations via www.dgi.gob.pa".