El Salvador Withdraws Municipal Tax

Noting that the right to property was violated, the tax that the Mayoral Office of San Salvador charged private companies using a calculation based on their assets has been declared unconstitutional.

The ruling in question eliminates Article 1.021.1 from the rate of Excise Taxes set by the Municipality of San Salvador, San Salvador department, which stated that the municipal tax collection must be calculated based on the assets of companies.

Laprensagrafica.com explains that "...The Court found that corporate assets do not reflect the actual economic capacity of taxpayers. Therefore, any tax calculated in that way violates the principle of ownership. In fact, jurisprudence on this issue already exists: in April 2015 the Constitutional Court ruled that the payment of 1% of net assets as the tax amount for income tax (ISR) violated constitutional principles of tax equity".

"... Although this resolution will only benefit the claimant, because it is a request for defense, the Court reported that the municipality of San Salvador should refrain from imposing such charges on other taxpayers in the municipality. "

Source: laprensagrafica.com