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Individuals and legal entities with outstanding municipal tax debts could settle their accounts without paying fines or late-payment interest, thanks to new legislation approved by the Legislative Assembly’s Finance Committee. The measure aims to facilitate the regularization of outstanding obligations and boost revenue for the country’s 44 municipalities.
The initiative—titled the “Special Transitional Law Granting Facilities for the Voluntary Compliance with Substantive and Formal Municipal Tax Obligations”—establishes an exceptional, temporary regime allowing taxpayers to settle debts under more favorable conditions. The benefit consists of a waiver of accumulated fines and interest, provided taxpayers avail themselves of the established mechanism.
As noted during the review of the proposal, the measure addresses a reality faced by many taxpayers: in numerous instances, accumulated interest and penalties have surpassed the original debt amount. This situation hinders individuals and businesses from settling their obligations and limits the recovery of funds by municipal governments.
The regulation will remain in effect for 120 consecutive days (four months) starting from its publication in the Official Gazette. During this period, taxpayers may request options to settle outstanding taxes through payment plans lasting up to 12, 18, or 24 months, depending on the specific case.
However, the benefit will not apply to those who have undergone tax audits, are subject to active judicial collection proceedings with pending appeals or are involved in balance reconciliation processes due to disputes regarding the debt. The goal is to encourage voluntary payment of outstanding obligations without involving cases already at other administrative or judicial stages.
Mayors from various municipalities participated in the legislative discussion, highlighting the measure’s potential impact on both taxpayers and municipal finances. The Mayor of San Salvador Centro, Mario Durán, explained that the benefit is primarily aimed at formally constituted companies and business entities that, for various reasons, have been unable to pay their municipal taxes.
Durán noted that a lack of municipal tax clearance can prevent companies from carrying out important procedures, such as applying for bank loans or conducting real estate transactions. Consequently, he believed that waiving fines and interest would facilitate the regularization of their obligations and allow municipalities to recover revenue. As an example, he pointed out that the capital city’s municipality has accumulated approximately US$136 million in interest, while outstanding taxes amount to nearly US$59 million.
The mayors also highlighted that recovering these funds would allow for the financing of projects benefiting the population, including improvements to municipal markets, pothole repairs, street lighting, and other local services. Furthermore, they emphasized that taxpayers who take advantage of the scheme would be able to obtain municipal tax clearance certificates, avoid the accumulation of new surcharges, and access various payment options to meet their obligations. The proposal must still complete the legislative process to become law and enter into force.
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