On March 12, 2024, the Organic Law to Confront Internal Armed Conflict, Social, and Economic Crisis, was published in Official Gazette Supplement No. 516. which proposes tax reforms outlined below:
- The VAT is permanently increased from 12% to 13%, with the possibility for the President of the Republic to modify this rate up to 15% prior to favourable opinion from the public finance regulatory body.
- A 5% VAT rate is established for construction materials.
- Temporary Security Contribution – TSC
The Temporary Security Contribution (TSC) is established for corporations and permanent establishments that have earned taxable income during the fiscal year 2022, excluding banks, savings and credit cooperatives, micro, and small businesses.
The taxable base for calculating the TSC will be the profits subject to income tax for the fiscal year 2022, to which a rate of 3.25% will be applied. This contribution must be declared and paid by March 31, 2024, and 2025.
In case of non-payment of the TSC taxpayers will be sanctioned with a fine equivalent to 3% of the generated obligation for each month or fraction thereof, regardless of the corresponding surcharge and interest.
The payment of the TSC will not be deductible from income tax, nor will it be subject to payment facilities.
- Temporary Contribution on Profits for Banks and Savings and Credit Cooperatives
This contribution is aimed at banks and savings and credit cooperatives that have had taxable profits during the fiscal year 2023. The taxable profits will serve as the basis for applying the rate, as outlined in the following table:
Group | Taxed profit | Fee |
Group 1 | Less than a USD 5’000.000,00 | 5% |
Group 2 | More than USD 5’000.000,00 to USD 10’000.000,00 | 10% |
Group 3 | More than USD 10’000.000,00 to USD 50’000.000,00 | 15% |
Group 4 | More than USD 50’000.000,00 to USD 100’000.000,00 | 20% |
Group 5 | More than USD 100’000.000,00 | 25% |
The declaration and payment of this contribution must be made by May 31, 2024.
The payment of the contribution on profits for banks and savings and credit cooperatives will not be deductible from income tax, nor will it be subject to payment facilities.
- Foreign Currency Exit Tax
The percentage to apply is increased from 3.50% to 5%.
The President of the Republic may modify the ISD rate through executive decree, it cannot exceed 5%, as stipulated in Article 162 of the Tax Equity Reform Law.
© TobarZVS
This publication contains information of general interest and does not constitute legal opinion on specific issues. Any analysis will require legal advice from the Firm.
