Financial Regulation Updates in El Salvador: Fines and Penalties for Non-Compliance

El Salvador’s financial authorities have introduced new regulations regarding electronic invoicing (fE-Invoicing) as part of its Central Tax Collection (CTC) model. The Ministry of Finance (Ministerio de Hacienda), or MH, has implemented a pre-clearance process for taxpayers to use before issuing and receiving electronic invoices.

Key Regulations

Mandatory Infrastructure

The mandatory infrastructure for fE-Invoicing is now set up, with local JSON being the required format for all transactions. This ensures consistency and standardization across all transactions.

Targeted Taxpayers

The regulations apply to Group 1 taxpayers, which began in July 2023, and Group 2, which started in October 2023. Taxpayers will be notified through internal communications from MH.

New Requirements

Electronic Signatures

The use of electronic signatures has become mandatory for fE-Invoicing, ensuring the authenticity and integrity of transactions.

Record Keeping

Taxpayers must maintain a record of all fE-Invoices for at least 10 years. Archiving abroad is allowed under specific conditions.

Consequences of Non-Compliance

Failure to comply with these regulations may result in fines and penalties for non-compliance. As El Salvador continues to modernize its tax system, taxpayers are advised to adapt to the new requirements to avoid any potential consequences.

Take Action Today

To ensure compliance and avoid potential fines and penalties, taxpayers should:

• Review their current invoicing processes and procedures
• Implement the mandatory infrastructure for fE-Invoicing
• Use electronic signatures for all transactions
• Maintain a record of all fE-Invoices for at least 10 years

By taking these steps, taxpayers can ensure compliance with the new regulations and avoid any potential consequences.