INDIVIDUAL TAXATION

Nonresidents are taxed on their Salvadorian-sourced income. Married couples are assessed and taxed separately.

INCOME TAX (Impuesto sobre la Renta)

Nonresidents are generally subject to tax at a flat rate of 25%.

Some specific types of income may be subject to 20% withholding tax levied on the gross income, which will be credited against their final tax liability.

RENTAL INCOME
Nonresidents are charged 25% tax on net rental income. Depreciation, VAT, and income-generating costs are deductible from the gross income.

CAPITAL GAINS
Capital gains realized by nonresidents from habitual transactions are taxed at 25%. The taxable gain is computed by deducting acquisition costs, improvement costs, and transaction costs from the transfer or sale price.

Capital gains realized from non-habitual transactions are taxed at a special rate of 10%. However, if the property has been in possession of the seller for less than twelve months before he sold the property, the capital gains will be taxed at the standard income tax rate (25% for nonresidents).

VALUE ADDED TAX Impuesto a la Transfarencia de Bienes Muebles y a la Prestacion de Servicios)

Value Added Tax (VAT) levied at 13% for the transfer, importation, and consumption of goods and services including leasing of real estate used for commercial or industrial activities. Leasing of residential properties, unless it is effectively connected to a business, is not liable for this tax.

PROPERTY TAX

Property tax is levied at a flat rate of 3% if the property value exceeds SVC34,286 (US$3,918.40).

COPORATE TAXATION

INCOME TAX

Income and capital gains earned by companies are generally taxed at the corporate income tax rate of 30%. Companies earning income of less than US$150,000 are subject to corporate income tax rate of 25%. Income-generating expenses are deductible when calculating taxable income.