Thursday, 24 March 2022 23:21

Assembly approves reduction of part of VAT on fuels

Written by Evelyn Alas

With 81 votes, deputies approved to reduce part of the Value Added Tax (VAT) percentage that salvadorans pay for the purchase of fuel. The proposal was sent by the President of the Republic, Nayib Bukele, through the Minister of Finance, Alejandro Zelaya.

Special gasoline will have a 4.75% VAT discount (with respect to the 13% normally paid), minus the US$0.28 tax exempted from the Fondo de Estabilización para el Fomento Económico (FEFE) and the Tax on Contribución al Transporte (COTRANS), the gallon will be US$4.31.

Regular gasoline will have a 5% VAT discount (with respect to the 13% normally paid), minus the other two exemptions, leaving it at US$4.15 per gallon. Finally, diesel will have to reflect a 1.75% VAT reduction in addition to the previous 10%, to reach US$4.14 per gallon.

These prices are for reference only. They will be in force from march 23 to april 5. Service stations may apply some differences when selling the product, but all of them are obliged to deduct the taxes that the Central Government has instructed.

This initiative will contribute to keep the price of fuels stable, with respect to the last increases reported. Likewise, food and other products will also maintain their cost to the final consumer.

According to the Treasury Minister, this will result in a return to the prices that were in effect until sunday. The modification will cost the State an amount of around US$8 million, which will protect the pockets of salvadoran families in the face of the effects of the world crisis. The piece is a transitory decree that will come into effect immediately after its publication in the official gazette and will remain in force for 15 days.