Exporters to Deduct VAT on Purchases from VAT on Sales

In El Salvador exporters will be allowed to deduct from the total to be paid for withholding tax for VAT, the amount that has been paid for the same concept for raw material purchases abroad.

From a statement issued by the Legislative Assembly of El Salvador:

During the plenary session on Thursday, approval was given, with 70 votes, to an amendment to article 76 of the Law on Tax on the Transfer of Movable Property and the Provision of Services (VAT), to achieve a more effective procedure in relation to the regulations for reimbursement or refund of tax credits to exporters without affecting the ability to exercise control that each State has.

The legislative decree states that with this reform, a mechanism will be estalished that will allow for exporters to deduct in their monthly statement, the total retained VAT, which is paid as a tax when purchasing raw materials abroad. However this operation will only take place with from the Ministry of Finance.

source: www.centralamericadata.com