RESTRICTEDWORLD TRADE
ORGANIZATIONG/VAL/W/61
29 February 2000
(00-0741)
Committee on Customs Valuation Original:  Spanish
COMMUNICATION FROM EL SALVADOR CONCERNING PARAGRAPH 1
OF ANNEX III OF TH E AGREEMENT ON IMPLEMENTATION
OF ARTICLE VII OF THE GENERAL AGREEMENT
ON TARIFFS AND TRADE 1994
The following communication, dated 18 February 2000, has been received from the
Permanent Mission of El Salvador.
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I have the honour to transmit herewith the request of my Government for a further two-year
extension of the transitional period for the implementation of the Agreement on Implementation of
Article VII of the GATT 1994.
In order to consolidate the process of implementation of its customs system and the training
of responsible staff members to ensure complia nce with the Customs Valuation Agreement, the
Government of El Salvador has decided to invoke the special provisions concerning special and more
favourable treatment for developing countries and wishes to avail itself of the possibility provided in
paragraph 1 of Annex III for developing country Members which have invoked the five-year delay
provided for in paragraph 1 of Article 20 to request an extension of such period provided it does so
within the period referred to therein.
My Government is asking the Committee for an extension of the period granted for the
implementation of the Agreement beginning on 7 May 2000, so that it can properly complete the
reforms necessary to ensure the full implementation of Article VII of the GATT 1994;  in other
words, the Agreement would enter into force for El Salvador on 7 May 2002.  It should be noted that
this request is being made in conformity with Article VII mentioned above, under which El Salvadorwas granted a period of transition of five years (see document G/VAL/2/Rev.1 of 13 October 1995).
In reviewing the current situation of the Salvadoran customs administration, we have
considered the following factors:
1. The current lack of customs valuation regulations to supplement the provisions of the
Customs Valuation Agreement and to make them more viable;
2. the process currently under way of merging the Directorate-General of Internal Taxes
of the Ministry of Finance and the Directorate-General of Customs Revenue to form asingle entity, the Tax Administration Directorate (DAT), responsible for the
administration of internal taxes and foreign trade taxes;
3. the ongoing process of preparing an organization chart and drawing up job
descriptions for the staff required to ensu re the full and effective implementation of
the new system in keeping with the requirements of a unified tax administration;G/VAL/W/61
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4. The need to train staff in customs and internal tax matters within the context of the
comprehensive inspection system is such that it will have to be developed in the wake
of the merger between the above-mentioned institutions, together with the training of
users and dissemination of information on the system.
The analysis carried out revealed that the above aspects had not yet been dealt with in a
manner truly conducive to the full application of the Customs Valuation Agreement, implying that
there was a serious tax risk stemming from the lack of any specific regulations in that area which
could provide the customs administration with the tools needed to control and manage the new
system, coupled with a serious shortage of human and technological resources.
Concerning the first of the above points, since 1997 the Salvadoran customs authorities have
been making a great effort to modernize their services in every respect.  This modernization process
began with the drawing up of a strategic plan for the improvement of all of the leading factors
contributing to the control and management of customs tax revenue, with the above-mentioned
revision of customs regulations among the main lines of action.
With respect to the merging of the tax admi nistrations, according to plan the new entity
should begin its operations in January 2001, so that throughout this year the Directorate-General of
Customs will be concentrating on all of the steps required to adapt to that situation.
Thus, work is currently under way to prepare an organization chart for the new entity, and job
descriptions are being drawn up for the required st aff in keeping with the needs of a unified tax
administration.  This process will inevitably involve the reorganization of the tax administration's
officials and employees and the hiring of new staff members corresponding to the mentioned job
descriptions.  Thus, the training of new customs and internal tax officials, which according to plan is
to take place during the second half of this year, has been identified as one of the priority activitieswithin the framework of the merging of the tax administrations.
Training in the area of customs valuation is a fundamental part of the preparation of human
resources, since tax inspection is one of the areas to be completely merged into a comprehensive audit
system involving an analysis of all economic activities of persons subject to internal and customs
taxes and of all of the elements and items of information supplied by such persons to the tax
administration.
The requested two-year extension would enable El Salvador's integrated tax administration to
make further headway in its preparation and consolidation efforts and help it to create the best
possible conditions for the effective implementation of the Agreement and for the performance of the
various activities listed below for the purpose of justifying the extension and informing the membersof the Committee.G/VAL/W/61
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TIMETABLE OF ACTIVITIES
1. General coordination
No. Activity Time
From To
1. Define the physical infrastructure in which the
DAT is to operate.01.07.00 31.09.00
2. Purchase and/or transfer office equipment and
furniture to the DAT facilities.02.01.01 30.11.01
3. Select, hire and/or relocate DAT staff and begin
DAT operations.02.01.01 30.11.01
2. Regulatory aspects
No. Activity Time
From To
1. Prepare the Organic Law for the creation of the
DAT, the definition of the tax career structure,
the determination of modalities for incorporating
staff into the new entity and the creation of a taxschool.  Revise the Tax Code and arrange for its
submission to the Legislative Assembly.12.01.00 28.04.00
2. Draw up an inventory of tax and related
legislation.02.05.00 30.06.00
3. Draw up regulations to the Organic Law
governing the creation of the DAT, the definition
of the tax career structure, the determination of
modalities for incorporating staff into the new
entity and the creation of a tax school, andprepare the General Customs Law.01.04.00 31.06.01
4. Approval and application of a law on the system
and regulations thereto.01.03.00 20.05.01
3. Operational aspects
No. Activity Time
From To
1. Prepare an analysis of the processes currently
under way in areas with common and differing
functions and define the organizational structure
of the DAT.18.02.00 30.06.00
2. Analyse, design and develop the necessary
administrative procedure (organization of human
resources in accordance with the regulationsgoverning the tax career structure) and financial,
operational and technical processes in the areas to
be integrated.01.03.00 30.09.00
3. Redesign and develop operational and technical
processes in areas with specific functions to be
integrated with other units.01.03.00 30.09.00G/VAL/W/61
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No. Activity Time
From To
4. Prepare administrative, financial, technical and
operational DAT manuals (organization, job
descriptions and procedures).01.03.00 30.11.01
5. Gradually introduce the different activities and
processes of the DAT.03.03.01 30.11.01
4. Human resources, training and dissemination
No. Activity Time
From To
1. Define, coordinate and introduce the mechanisms
for administrating the human resources data
processing system.01.08.00 30.11.00
2. Prepare training policy and other aspects of
human resources administration as well as the
operational mechanisms for introducing them.01.09.00 30.10.00
3. Coordinate training in the new DAT procedures
(valuation experts, tax auditors, legal experts,
customs experts, customs agents, importers,
transporters, etc.).01.11.00 30.11.01
5. Data processing
No. Activity Time
From To
1. Draw up an inventory of technical/operational
systems.15.02.00 31.04.01
2. Prepare policies and standards in the areas of
communication, technical support and
development for the DAT.01.03.00 30.06.01
3. Improve the valuation database (determination of
current requirements and decentralization of the
database).06.03.00 05.06.00
4. Define, adapt and coordinate the integration of
computerized collection procedures (physical
location, software, hardware and technical staff).01.04.00 31.07.00
5. Select, adapt and introduce the administrative
systems (human resources, inventories,
purchases, finances, etc.).01.04.00 15.12.00
6. Define the common information required for the
DAT and the means of integrating the differentsystems.01.06.00 01.12.00
7. Design, develop and introduce the interfaces
required to integrate the technical information
systems and transfer the information.01.09.00 01.04.01
8. Design, develop and coordinate the introduction
of the one-time entry of data.01.04.01 01.07.01G/VAL/W/61
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6. Administrative and financial aspects
No. Activity Time
From To
1. Provide logistical support for the development of
the project.01.01.00 31.12.00
2. Prepare and maintain the inventory of goods
allocated to the project.03.01.00 31.12.01
3. Organize the accounting for the programme. 01.03.00 31.12.01
4. Organize competitive bidding and tenders for the
purchase of goods and services and for the hiring
of consultants, determine the project's needs with
respect to infrastructure, equipment and supplies.01.03.00 31.10.01
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