Tax Amnesty 2023 (DL 875): Penalty Exemption and Up to 8 Installments
What Legislative Decree No. 875 Establishes
Legislative Decree No. 875 introduces a tax amnesty that allows taxpayers to regularize pending obligations with two key benefits: forgiveness of penalties and interest, and the ability to pay the owed tax in up to 8 monthly installments. That second part is what sets this amnesty apart from previous ones and makes it a realistic option for businesses that don't have the liquidity to pay everything at once.
The amnesty applies to VAT, Income Tax, and special contributions administered by the General Directorate of Internal Revenue (DGII). If your company has accumulated debts in any of these categories, DL 875 opens the door to resolving them under much more favorable conditions than usual.
It's important to understand that the forgiveness is not a total pardon of the debt. What gets eliminated are the penalties and late interest, which in many cases represent a substantial portion of the amount owed. The principal tax remains due, but now you can pay it in installments.
How It Benefits You in Practice
The most immediate impact is on the numbers. Tax penalties in El Salvador can represent up to 75% of the original tax. When you add the late interest that accumulates month after month, the total debt can be several times greater than the tax you actually owed. By applying for this amnesty, that surcharge disappears and you only pay what was originally due.
But what truly makes this amnesty different is the installment payment option. If your business has cash flow limitations, you don't have to choose between paying the tax debt or keeping operations running. With up to 8 monthly installments, you can spread the payment in a way that doesn't compromise your working capital. This is especially relevant for MSMEs operating on tight margins.
Upon completing payment, you obtain a clean tax compliance certificate. This document enables you to participate in government bids, sign contracts with the state, and access financing lines that would otherwise be blocked. For many businesses, recovering compliance status represents more than getting current — it means recovering business opportunities.
Steps to Apply for the Amnesty
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Request a consolidated account statement from the DGII. Ask for a report that includes all your pending obligations, broken down by tax, penalties, and interest. This document is the basis for calculating how much you save and how much you would need to pay under the amnesty.
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Design a payment plan with your accountant. With the numbers clear, work with an accounting professional to define the installment schedule that best fits your cash flow. Not all debts need to be paid the same way — you can prioritize those with the highest accumulated penalties to maximize the benefit.
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Submit the application and pay the first installment within the deadline. Once you have the plan defined, formalize your application with the DGII and make the first installment payment within the period established in the decree. Don't wait until the last moment, because gathering documentation and processing the application takes time.
Important Dates and Conditions
The amnesty period under DL 875 begins in October 2023. We recommend consulting the decree text directly or contacting the DGII to confirm the exact application deadlines and installment due dates.
There's one point you cannot lose sight of: missing a single installment can invalidate all amnesty benefits. If you enroll in the 8-installment plan and miss one payment, you lose the penalty and interest forgiveness, and the debt reverts to its original amount. That's why it's essential that the payment plan you design is realistic and sustainable for your business.
An Amnesty Designed for MSMEs
The combination of penalty forgiveness and installment payments makes this one of the most accessible amnesties approved in recent years. It doesn't just reduce what you owe — it gives you the time to pay it without straining your operations.
If you have pending tax obligations and want to evaluate whether DL 875 makes sense for you, at Contabilidad Hidalgo we can help. We'll review your account statement, calculate the real savings, design an installment plan that works for your business, and guide you through every step of the process.
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