El Salvador: Living There - Tax Issues
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Living There
During the past years, El Salvador’s Tax System has been through a process of reform in order to simplify collection and to optimize efficiency. Tax revenues from direct taxes have been reduced to two basic sources:
Income Tax (Impuesto Sobre la Renta)
The Income Tax Law (Ley de Impuesto Sobre la Renta) determines that all natural persons, successions and trusteeships domiciled in El Salvador and obtaining annual incomes above SVC22,000 (US$2,514) arising from various revenues are liable to income tax levied at progressive rates:
INCOME TAX |
|
| TAXABLE INCOME, SVC (US$) | MARGINAL TAX RATE |
| Up to 22,000 (US$2,409) | nil |
| 22,000 – 80,000 (US$8,759) | 10% on band over US$2,409 |
| 80,000 – 200,000 (US$21,897) | 20% on band over US$8,759 |
| Over 200,000 (US$21,897) | 30% on band over US$21,897 |
| Source: Global Property Guide | |
For individuals, taxable income is computed as net income (gross income less income-generating expenses) less certain deductions. Resident individuals are entitled to the following deductions:
- Medical expenses up to SVC5,000 (US$571) by the taxpayer, his spouse, parents, and dependents provided that such expenses are not covered by insurance
- Educational expenses up to SVC5,000 (US$571) by the taxpayer and his children less than 25 years of age
Capital Gains Tax
Capital gains earned by resident individuals from selling real property are taxed at the standard income tax rates.
El Salvador - more data and information
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