Bank Accounts website
Flag Theory website
We are not currently operating in this jurisdiction.
For a full list of countries where we operate, please click below.

El Salvador

Taxes

If you want to do business in El Salvador, reading this will help you becoming knowlegeable on the specific tax laws and rates for a LLC which is the most common legal entity in El Salvador.

El Salvador has a territorial tax system. This means that usually income accrued abroad, from our research, but seek professional advice, is not subject to taxation. Certain income accrued abroad such as those from securities and other financing operations may be taxable. Corporate Income Tax standard rate is 30%. This ranks El Salvador as 136th overall with regards to CIT globally.

The valued added tax rate in El Salvador is 13.00%, which ranks the country as 73th overall with regards to VAT globally. In terms of other taxation, an employer will contribute 14.25% to the equivalent of a social security fund and an employee will contribute 9.25%. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 96hours. Contributing to this is the number of yearly labor tax payments, which is 8 in SV.

Thin cap mandates are officially enacted. This refers to any type of requirements on given company with respect todebt-to-asset ratios. Dividends received from a resident company may be included in taxable income. Dividends from foreign entities are deemed to be foreign-source and therefore not subject to taxation. Dividends are distributions of a company earnings, voted by the board, to a particular class of shareholders. Dividends can be issued as stock, cash, or property. Capital Gains are subject to a Capital Gains Tax of 10%. Except when gains are obtained within 12 months following the purchase date, in which case they are taxed as business income. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.

The interest withholding tax rate is estimated at 20%. This means that the tax authorities expects companies to automatically withhold 20% of interests remitted abroad. The dividends withholding tax rate is 5%.Which means that the relevant tax authorities expects companies to pay tax on 5% of dividends paid to non-residents. The royalties withholding tax rate is 20% This means that the relevant tax authorities expects LLC's to pay tax on 20% of royalties remitted abroad. A withholding tax rate of 25% may apply to payments on dividends, interests and royalties if recipient is resident of a considered tax haven.

There is a tax on net wealth in El Salvador. There are no inheritance and real property taxes. There is a transfer tax. There are no widely used credits for innovation spend that include breaks on taxation in this country.

The above is not tax or legal advice for your company situation. We are able to refer you to a tax advisor in El Salvador who can give you the proper advice. Ready to get started? Click incorporate now if you are in a hurry, or press the free consultation button above.

Country details

El Salvador
USD
San Salvador
North America
Spanish (El Salvador)
6,052,064

Tax treaties

Country Type Date Signed
Honduras TIEA 2006-04-25
Spain DTC  2008-07-07
Costa Rica TIEA 2006-04-25
Guatemala TIEA 2006-04-25
Nicaragua TIEA 2006-04-25

Tax treaties Map

>

Disclaimer

Although we use our best efforts to keep the information of this site accurate and up-to-date, we make no representations or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this website. We disclaim any warranties expressed or implied, merchantability, or fitness for any particular purpose. We shall in no event be held liable for any loss or other damages, including but not limited to special, incidental, consequential, or other damages. The contents of this website are just for illustrative purposes and are NOT to be considered as a legal opinion or tax advice and should not be relied upon as such. Far Horizon Capital Inc., and any associated company, is not engaged in the practice of law or tax. If you wish to receive a legal opinion or tax advice on the matter(s) in this website please contact our offices and we will refer you to an appropriate legal practitioner. Use of our websites FlagTheory.com, Incorporations.io, Residencies.io, Passports.io, is subject to our terms and conditions.

Newsletter

Flag Theory is an internationalization and offshore solutions provider, and the creator of incorporations.io. We offer expert consultation advice and assistance.

Your privacy is important for us and we will keep your information secure. View our privacy policy

View past newsletters

Consultation with

Flag Theory is an internationalization and offshore solutions provider, and the creator of incorporations.io

In order to better serve you, we ask that you please fill out the following form as accurately as you can and provide as many details as possible. Thank you.

Your privacy is important for us and we will keep your information secure. View our privacy policy