El Salvador

In El Salvador, the Value-Added Tax (VAT), is levied at a rate of 13% on the taxable amount of goods and services. The taxable amount is generally the agreed price or remuneration, and for imports, it is based on the customs value. VAT applies to the sale or transfer of tangible movable goods, withdrawal of such goods from inventory for personal use, and imports of goods and services. Certain exemptions include imports by diplomats, international organizations, and municipalities, as well as donations to non-profit organizations. VAT also exempts the import of specific machinery used by registered taxpayers and vehicles for public transportation after five years.

Capital gains in El Salvador are subject to a flat rate of 10% on net profits. However, if gains are realized within 12 months of the purchase date, they are taxed as ordinary income. Capital gains for securities are also subject to taxation, though the 12-month rule does not apply in this case. Importantly, El Salvador's Bitcoin Law exempts Bitcoin exchanges from capital gains tax or any other legal tender-related tax. Additionally, capital losses can be offset against capital gains, and excess capital losses can be carried forward for up to five years.

El Salvador imposes a corporate income tax (CIT) rate of 30% on the total amount of a company's revenues. A reduced CIT rate of 25% applies to companies whose taxable income is equal to or less than USD 150,000 in the fiscal year. CIT is based on the principle of territoriality; taxes are applied on goods located, activities performed, and capital invested in El Salvador, as well as on services rendered or used in the country. A 1.75% advance tax on gross accrued revenues is paid monthly as an advance payment, credited against the annual CIT. Corporations must file tax returns and make the final CIT payment by 30 April each year. There is a municipal tax related to taxpayers' income, varying by location of operations.

El Salvador taxes citizens, residents, and non-residents on income earned in El Salvador and other Salvadoran-source income. Domiciled individuals use a progressive tax table: 0-6,600 USD exempt; 6,600-9,142.86 USD: USD 212.12 plus 10% on excess over 4,064; 9,142.86-22,857.14 USD: USD 720 plus 20% on excess over 9,142.86; above 22,857.14 USD: USD 3,462.86 plus 30% on excess over 22,857.14. Non-domiciled individuals are taxed at a flat rate of 30% on their net income. Employer withholding rates on salary: 0-550 USD: N/A; 550-895.24 USD: USD 17.67 plus 10% on excess over 472; 895.24-2,038.10 USD: USD 60 plus 20% on excess over 895.24; above 2,038.10 USD: USD 288.57 plus 30% on excess over 2,038.10. Tax returns are due within the first four months after the tax period ends, with final payment due by 30 April.

Payments or amounts credited to non-residents arising from income obtained in El Salvador are subject to a 20% WHT on general income. Dividends are subject to 5% WHT; interest at 20%; royalties at 20%. Payments to entities located in tax haven jurisdictions are subject to a 25% WHT. Payments to resident individuals for services rendered (other than under a labour relationship) are subject to 10% WHT. Income from securities listed on the Salvadoran stock exchange received by non-residents is subject to a reduced WHT rate of 3%. Acquisition of intangible goods among resident entities is subject to 5% WHT. Reduced WHT of 5% applies to dividends, international transport services, insurance/reinsurance services, and transfer of intangible assets or rights to intangibles. A double taxation treaty between El Salvador and Spain provides reduced rates: dividends at 12% (or 5% if locally more favourable; exempt if Spanish company owns 50%+ of capital), interest at 10%, royalties at 10%, and services at 10%.