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 30%.

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 30% tax on net rental income. Depreciation, VAT, and income-generating costs are deductible from the gross income.

CAPITAL GAINS TAX
Capital gains are subject to capital gains tax at a flat rate of 10%. The basic cost of the asset, improvement costs over the ownership period, and transaction costs are deductible when computing for the taxable gains.

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

There are no property taxes in El Salvador.

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.

Annual Business Tax

Companies are required to register with the Registry of Commerce and to obtain an annual business license. The annual business license fee is assessed based on the company´s assets. The maximum fee is US$11,428.57.

CAPITAL GAINS TAX

Capital gains are subject to capital gains tax at a flat rate of 10%. The basic cost of the asset, improvement costs over the ownership period, and transaction costs are deductible when computing for the taxable gains.