El Salvador is not a country to overlook as a business
jurisdiction. A country of just 6.5 million people has a
positive business relationship with the United States, hosting
giant companies such as FedEx and General Motors. The two countries
have an impressive exchange of nearly USD 6 billion in
It is also an easy destination to conduct business, facilitated
by a dollarized economy and a growing and thriving service-based
industry. This article will walk you through the different types of
accounting in El Salvador and the tax declaration obligations
facing you there.
What is the business tax in El Salvador?
Operating a business in El
Salvador requires diligent tax management. The type of taxes
your business will encounter depends on its legal structure and the
nature of its activities. Here’s an overview of the primary
taxes applicable to businesses in El Salvador:
- Value Added Tax (VAT): This is a 13% tax on the purchase of
goods and services.
- Corporate Income Tax: Companies are taxed on earnings from 25%
- Tax on Dividends: Profits distributed as dividends are subject
to a 10% tax.
- Tax for Limited Liability Companies (LLCs): LLCs face