El Salvador has become signatory No. 86 of the Convention on Mutual Administrative Assistance in Tax Matters which was developed by the Organisation for Economic Cooperation and Development (OECD) and the European Council.
Ministry Caceres pointed out that the main purpose of the country’s participation in the Convention is to position El Salvador internationally as a country in compliance with the transparency standards in tax matters, and to also show that it is determined to accomplish greater economic and social growth and development with justice and fairness.
It is important to highlight that this convention has become an essential part of the efforts of international cooperation since the G-20 placed the transparency efforts in the international financial scenario in 2009.
OECD will contribute with fiscal administrative support among the authorities regarding the exchange of information, simultaneous fiscal inspection activities and assistance with the collection of fiscal debts. It will also guarantee the compliance of national laws and respect for taxpayer’s rights when protecting the confidentiality of the exchanged information.
The participation of El Salvador in such efforts is encouraging news for companies already operating or looking to do business in the country, considering that for many companies tax compliance is a major burden and a major expense factor.
Many countries tend to increase taxes, request more audits or increase the administrative requirements to generate fines and penalties with interest payments in order to sustain their income base. In addition, there is a lack of uniformity between jurisdictions so the load can quickly become overwhelming.
This is why it is important for companies to count on a local expert in all countries where they operate, helping them to prepare their tax statements, ensure that reports are complete and relevant deadlines are met, and that the transparency of the company can be perceived. To be in compliance – and this is relevant for both the private and public companies– can help companies to avoid penalties and significant interests.
Each company has responsibilities to fulfil and these are different in every country, so it is convenient to have a partner who is aware of local laws and can take action to make changes without affecting the company operations.
Francisco Galindo Velez, Salvadorian ambassador in France, was the signatory of the Convention on behalf of El Salvador. He signed in the presence of the Internal Revenue Ministry, Carlos Caceres and William Danvers, Deputy Secretary-General of OECD. Other signatories include the following countries: Argentina, Australia, Brazil, Canada, Costa Rica, France, Germany, Italy, Japan, Mexico, The Netherlands, Portugal, South Africa, Spain, United Kingdom and the United States.