LatinNews Daily - 23 March 2022

In brief: El Salvador temporarily cuts VAT on fuel

*El Salvador’s 84-member unicameral legislature has approved a reduction in value-added tax (VAT) on fuel for 15 days in response to the surge in prices following Russia’s invasion of Ukraine. Currently VAT on fuel (and most goods) in El Salvador is 13%. The reduction approved yesterday is partial - meaning that the temporary rates will oscillate between 1.75% and 5% depending on the fuel. VAT on premium gasoline will be cut to 4.75%, while for regular gasoline and diesel it will be reduced to 5% and 1.75% respectively. Earlier this month President Nayib Bukele announced 11 measures aimed at reducing the impact of the increase in energy prices. These include the suspension of two fuel-related taxes – the Fondo de Estabilización para el Fomento Económico (FEFE) and the Contribución al Transporte (CONTRANS) – initially for three months, which he said would cost the State US$11.52m and US$13.04m respectively.

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