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El Salvador will improve tax and customs management with IDB support

$30 million credit will improve the efficiency of filing tax returns and promote the use of electronic customs invoices

El Salvador will improve levels of tax collection and customs management standards and strengthen the Vice Ministry of Revenue with a $30 million Inter-American Development Bank (IDB) loan.

The program aims to raise revenues by at least one percent of gross domestic product in five years by reducing the rate of noncompliance with domestic taxes managed by the General Tax Directorate and of customs revenues handled by the General Customs Directorate. This would also enhance the quality of information regarding taxes and the economic conditions of payers available to the public authorities for decision-making purposes.

“The program’s main beneficiaries will be the Salvadoran people –who will observe an improvement in tax administration processes due to the use of new technology– and the Government, which will have more resources at its disposal for investment and social policies,” said Carola Pessino, IDB Project Team Leader.

The new program will help address the insufficiency of El Salvador's tax collection— estimated at 15.2 percent of GDP, compared with 19.4 percent in Latin America, due in part to tax and customs administration shortcomings.

Among its components, the project will improve the management of domestic taxes through the implementation of the Integrated System of Consolidated Tax Information within the Vice Ministry of Revenue, including the promotion of electronic invoicing  in order to raise the quality of the Unified Taxpayers Registry.

The IDB loan is for a 25-year term, with a 5.5-year grace period at a LIBOR-based interest rate.

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The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

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