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21 March 2020

Legislative Body approves and discusses Tax Measures

The National Assembly of Deputies approved Law No. 134 of March 20, 2020 (Law No. 134 of 2020), by means of which Law 99 of October 11, 2019 (Law No. 99 of 2019) (known as Tax Amnesty) was amended. Similarly, various deputies have presented various draft laws aimed to mitigate in some way the economic effects caused by the health emergency caused by the COVID-19 pandemic.


Exemption from the Principle of Tax Legality

Despite not being the main objective of Law No. 134 of 2020, the Executive Body took advantage of the existence of this legislative initiative to introduce some articles that allow the entry into force of some regulations of the Tax Code (Law No. 76 of 2019) and it is specially important to mention the following:

  • That the Executive Body may suspend, wholly or partially, the application of taxes of any type or species, deferring their payment on a transitory basis throughout the national territory or in certain regions, in cases of a legally declared state of emergency (article 9 of the Tax Code); and
  • That the President of the Republic, with the intervention of the Minister of Economy and Finance, through the executive decree grant extensions or installments and deadlines for the payment of overdue or undue obligations, when compliance by taxpayers is prevented by exceptional circumstances of force majeure or fortuitous event, affecting the economy of a district, province or the entire country.

From the rules described above, it is clear that the decision of the National Government has opted to request to the Legislative Body for legislative authorization to allow the Executive Body, through the Ministry of Economy and Finance, to issue executive decrees defining the conditions, deadlines and other specifications of the tax measures to be adopted to address this crisis.

Such measures include the possibility of postponing, extending or make flexible the payment of obligations to taxpayers, granting extensions for the filing of income tax returns or other taxes, as a result of the effects of the coronavirus pandemic or the legal and administrative measures issued by the National Government to limit the spread of the COVID-19 virus.

It is expected that the Ministry of Economy and Finance will soon issue the aforementioned executive decrees.

Tax Amnesty

Law No. 134 of 20 March 2020, provides for an extension of the tax amnesty period established in Law 99 of 11 October 2019, which granted a substantial elimination or reduction of interest and surcharges on tax obligations caused or settled prior to 30 June 2019 (from 100% remission at the beginning of the amnesty, to 85% in the last phase of the tax amnesty).

Initially, the Tax Amnesty period was scheduled to end on February 29, 2020 and by this Law No. 134 of 2020 the deadline is extended to June 30, 2020. In the extension now granted to the Tax Amnesty, up to 85% of the interest, fines and surcharges for tax debts will be forgiven, if the payments are made, through a total payment or even partial payment, until June 30, 2020.


The following is a brief comparison of the most relevant points between Law 99 of 2019 and Law 134 of 2020: 

Law 99 of October 11, 2019

Draft Bill 251

Amnesty period granted until February 29, 2020.

Extends the amnesty period until June 30, 2020.

Compliance deadline for payment arrangement granted until June 30, 2020.

Extends the payment period for signed and unsigned payment arrangements to December 31, 2020.

Formal notice of the taxpayer in acceptance of the amnesty.

Payment will be made automatically when paying outstanding balances. Declared ex officio.

The late filing of improvements built during the validity of the amnesty, i.e. until February 29, 2020, will not cause a fine.

The possibility of presenting the improvements made without the application of fines for late presentation is extended until December 31, 2020.

Law No. 134 establishes several clarifications with respect to the filing of tax returns corresponding to periods prior to June 30, 2019, which must receive the benefits of the Tax Amnesty Law, even if partial payments have been made under Law No. 99 of 2019.

Taxpayers and officials who are in default of payment of taxes -as we have said, caused or settled until June 30, 2019- will be allowed the option to make full payment of the tax debt or enter into a payment arrangement on these taxes.


Opportunity to file tax returns and information forms

Furthermore, Law No. 134 of March 20, 2020, extends until June 30, 2020, the deadline for filing tax returns and information forms that should have been submitted to the General Directorate of Revenue before February 29, 2020, and exempts or relieves the application of the corresponding fines. These include:

  • Report of donations received.
  • Non-Reporting Taxpayer Report (ONG)-F27.
  • Payroll report 03-F3.
  • Retirement, pension and other benefit fund reports F-40.
  • Insurance Company reports – medical expense certificates by insured F-41.
  • Certification of Interest on Non-Preferred Residential Mortgage Loans F-42.
  • Reports on purchases and imports of goods and services F-43.
  • Credit card sales report (VTD) F-44.
  • Transfer Price reports F-930.
  • Affidavit of personal income (F 1).
  • Affidavit of income for legal entities (F 2).
  • Affidavit of income for the Free Zone (F 18).


Tax Measures to Approach Coronavirus

Measures that have a direct fiscal, economic and financial impact have been presented and discussed in the National Assembly of Deputies in order to mitigate the adverse economic effects generated by the pandemic and/or as a result of the declaration of a state of emergency decreed by the National Government.

Specifically, we refer on this occasion to Draft Law No. 287 of March 16, 2020, which seeks to suspend for 90 days, extendable, at public administration level, the following obligations and terms:

  1. On the tax obligations of payment, retention and collection of taxes, rates, special contributions and surcharges (national and municipal);
  2. The terms of appeals for reconsideration and appeal in the tax government channel before the General Revenue Office (including the executing courts), the Administrative Tax Court and the Social Security Fund (including the executing courts) are suspended;
  3. On the payment, retention and collection of worker-employer contributions to the Social Security Fund;
  4. The collection and payment of the public water service provided by the State.


Furthermore, this project seeks to suspend the following obligations and terms between individuals (private sector) for the same period of 90 days, which can be extended, such as:

  1. All mortgage, commercial and agricultural loans granted by banking and financial institutions, both public and private;
  2. All commercial loans granted to the transportation sector by banking and financial institutions, both public and private;
  3. Neither shall the surcharge of the Special Interest Compensation Fund (FECI) be charged and retained for all commercial loans exceeding the term established in Law 4 of May 17, 1994.
  4. Private school and school transportation fees; and,
  5. Collections and payments for public electricity service and residential and mobile telephony of fixed contracts, provided by private companies.
  6. Collection of fees for the lease of offices, commercial premises and rooms between individuals and between any government institution of the State and individuals.


It should be noted that this project emphasizes that while the measures of suspension of obligations and terms due to the CoViD-19 disease last up to 6 months after their completion, the banking and financial institutions will not be able to increase interest rates on mortgage loans, commercial loans, commercial loans to the transportation sector, or to the agricultural sector.

Project 287 of 2020 will be retroactive to March 1, 2020. Currently, the Project in question has been approved in first debate in the Economy and Finance Commission of the National Assembly of Deputies.

On the other hand, it is important to mention that several legislative initiatives have been presented whose main objective is to foresee the viability, magnitude and duration of the proposed measures in order to safeguard the national economy and the welfare of the citizens. We will be evaluating them as they progress through the agenda of the Legislative Body.