Note: Subject to updates as the presidential veto process progresses

On Tuesday, October 6, 2026, the Plenary of the National Assembly approved the Second Report on the Draft Organic Law Amending the Tax Code by a significant majority. The Reform approved by the legislature was sent to the President of the Republic for approval or objection within a period of thirty days, and is therefore not yet in force. We will be sending updates.

The Draft Amending Law includes additional relevant amending provisions to the Internal Tax Regime Law, the Tax Code, and other laws.

A. On the amendments to the Internal Tax Regime Law

The draft Law replaces the unnumbered Article following Article 105 of the Internal Tax Regime Law with the following text:

Penalty for failure to report foreign assets through the asset declaration.- Taxpayers who fail to file their asset declaration, in cases where they are required to file it, shall be penalized with a fine of 1,000 to 2,075 SBU ($482,000 to $1,000,150).

Likewise, taxpayers who, upon filing the asset declaration they are required to file, fail to include the information regarding their assets located abroad, in whole or in part, shall be penalized with a fine equivalent to zero point five percent (0.5%) of the total value of the unreported foreign assets, which assets shall be identified by the Tax Administration in the exercise of its powers. The fine so established may not exceed the value of 2,075 SBU ($1,000,150).

In the event that the declaration is filed late, and before the infraction is notified by the Tax Administration, the penalty provided for in the preceding paragraph shall be reduced by half and may not exceed the stated limit.

The current provision of the unnumbered Article following Article 105 of the Internal Tax Regime Law states:

Penalty for concealment of assets.- Taxpayers who fail to declare to the Internal Revenue Service, in accordance with the conditions set forth in current regulations, the information on their assets abroad and/or their value, concealing it in whole or in part, directly or indirectly, shall be penalized with a fine equivalent to two percent (2%) of the total value of their undeclared assets and/or income, for each month of delay in filing it, which may not exceed ten percent (10%) of the value of the assets and/or income, as applicable.

B. Amendments to the Tax Code

Regulatory power

The regulatory power of the highest authorities of the tax administrations is limited to the issuance of resolutions with general and mandatory effects. Circulars issued shall be mandatory only for officials, and are not binding on taxpayers.

Technical sheets, manuals, instructions, internal criteria, communications, and other non-regulatory instruments issued by the administrations may not create, modify, or extinguish material or formal obligations, exemptions, benefits, or incentives, nor alter the meaning of the laws.

Improper exercise of the regulatory power shall give rise to liability for any abuse of authority or official who issues an unlawful order.

Effectiveness of tax rules

Tax laws, their regulations, and lower-ranking regulatory acts shall take effect as of the day following their publication in the Official Registry, unless a later effective date is established.

The rule on the effectiveness of provisions referring to taxes assessed for annual periods is maintained, which shall apply from the first day of the following calendar year, and from the first day of the following month, in the case of shorter periods.

No regulatory or administrative act issued by the tax administrations may alter or change the meaning of the law or expand or restrict its scope.

Taxpayer rights and legal certainty

The right of taxpayers to have the tax administrations respect the principle of legality and the hierarchy of norms is included, so that the general obligations and rights of taxpayers may only be defined or modified through duly published laws, regulations, or resolutions of a general nature.

They may not be varied through technical sheets or other internal or regulatory instruments, nor may more burdensome changes in criteria be applied retroactively. Changes in interpretive criteria with general effects must be set forth in a duly published rule and shall apply exclusively prospectively, except when they are more favorable to the taxpayer.

The establishment of a special domicile does not prevent the taxpayer from designating a specific channel for notifications in the corresponding administrative procedure.

At any time within the statute of limitations periods, the body that issued the act or its hierarchical superior may correct clerical, name, calculation, or purely numerical errors, at the request of the interested parties or ex officio.

Substantive duties of the tax administration

The acts and resolutions issued by the administration must be notified to the taxpayers of the tax obligation, to the party subject to coercive collection, and to those affected by the action.

If the taxpayer expressly indicates, in an administrative proceeding, a means for receiving notifications, such as email or a judicial or electronic mailbox, the Tax Administration must use it as a priority in all actions of the proceeding. It may only use another means if there is a justified technical impossibility, and must ensure that the taxpayer receives the content of the act in a timely manner.

Deadlines to resolve and file claims

The request for refund of excess payment must be resolved within 120 days of the filing of the request.

The claim for excess payment may be filed within 20 business days from the day following notification of the act that denies, in whole or in part, the refund of the excess payment.

The administration must resolve claims within a maximum period of 120 days, counted from the following business day. However, the period is suspended in accordance with the following cases and rules:

1. If clarifications or documents in addition to those submitted by the taxpayer are required, the administration must issue the request within a maximum period of 60 days counted from the filing of the claim. Once the request has been complied with, the computation of the period shall resume for the remaining time. In no case may the period be suspended for more than 90 days counted from the filing of the claim, nor more than once, on this ground.
2. If the need for a supplementary assessment is verified, the period shall be automatically suspended from the day following notification of the order until the completion of the supplementary assessment.
3. Customs claims in which the resolution shall be issued within 30 business days by the respective District Customs Manager.

Petition for review

The administration is required to admit for processing the petition for review requested by a person with a legitimate interest in, or affected by, the legal effects of the act or resolution for which the petition for review has been filed. With respect to the first two grounds for admissibility of the review, the reform clarifies their scope in the following terms:

1. When the error of fact or law is verified and justified by means of a prior legal report, and provided that the error is identified from the analysis of the merits of the case file.
2. When documents of transcendental value that were unknown at the time the act or resolution was issued subsequently appear, and provided that it is demonstrated that it was impossible for them to have been submitted in the prior proceeding, due to fortuitous event or force majeure.

The other grounds of the petition for review are not amended.

To be admissible, the petition for review must meet the requirements established for filing an administrative claim.

If the petition for review is initiated ex officio, in addition to the requirements of Article 119 of the Tax Code, it must specify the grounds on which it is based and the evidentiary announcement, where applicable. If it is unclear or does not meet the established requirements, the authority shall order that it be clarified or completed within ten days, and if this is not done, it shall be deemed not filed.

If a contentious tax action has been initiated regarding the same contested act, the petition for review filed on the same matter through the administrative channel shall be rendered void.

With respect to the grounds of inadmissibility of the petition, the reform clarifies that it is inadmissible when: i) the merits of the disputed matter were resolved in the judicial venue, ii) more than one year has elapsed since the date on which the act or resolution was notified, in the case of grounds 1, 2, 3, and 4 of Article 143, iii) none of the grounds provided for in the aforementioned article is met. The other grounds of inadmissibility of the petition for review are not amended.

The administration must issue a reasoned resolution within the period of 180 days counted from the filing of the petition for review. Administrative silence shall not exclude the administration’s duty to issue a resolution.

If the tax authority fails to issue the reasoned resolution within 180 days, the administrative act subject to the petition for review shall be deemed ratified.

Proceedings for exceptions to coercive collection

The claim for exceptions to coercive enforcement shall be filed, at the choice of the coercive subject, before the competent judge or before the enforcing officer, within 20 days counted from the business day following notification of the payment order.

The filing of the claim for exceptions suspends the competence of the collecting officer; therefore, the revocation or substitution of precautionary measures, if requested by the party subject to coercive collection, shall fall within the competence of the judge.

The proceeding shall be conducted in accordance with the provisions of the General Organic Code of Processes.

Amounts recognized within an assessment

If, in the exercise of the assessment power, the Tax Administration establishes or recognizes amounts unduly paid by the taxpayer, the statute of limitations shall be deemed interrupted.

Likewise, if, when resolving a challenge or appeal in the administrative venue against an assessment act, amounts in favor of the taxpayer related to the assessed differences arise, the refund must be ordered in the same act that addresses the claim or appeal, provided that no more than 3 years have elapsed between the payment date and the filing of said claim or appeal.

Penalty regime

For the contraventions established in the Tax Code and in other tax laws, a fine ranging from 6% of one unified basic wage of the worker (SBU) up to 3 SBU shall apply as a pecuniary penalty, without prejudice to the other penalties established for each infraction in the respective rules.

Regulatory offenses shall be penalized with a fine of 6% of one SBU up to 2 SBU, without prejudice to the other penalties that, for each infraction, are established in the respective rules.

Repealing provisions

The draft approved by the Assembly repeals the Sole Transitory Provision of the Organic Law on Tax Incentives for Various Productive Sectors published on October 12, 2016, which established an exclusive 10-year term beginning in 2017 for the application of the single income tax for the activities of the banana sector.

The draft also repeals the Interpretative Provision of Article 547 of the COOTAD, which clarified that producers in the agricultural, livestock, aquaculture, and forestry plantation sectors are not subject to the municipal business license tax.

Transitory provision

As a measure to protect taxpayers’ rights, petitions for review pending resolution as of the date of publication of this reform in the Official Registry must be resolved within a term of 180 days counted from the day following publication; otherwise, tacit denial of the petition shall be deemed to have occurred.

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The content of this Draft Organic Law Amending the Tax Code may be modified while it is in the process of approval or partial objection by the Presidency of the Republic; therefore, this summary and its conclusions are still provisional.

This document does not constitute a legal opinion; it is merely a general informational bulletin. Should you require specific advice, please contact us at the following addresses:
unidadtributaria@robalinolaw.com