Taxes in El Salvador
The main taxes
| Tax | Rate in 2026 | Who pays |
|---|---|---|
| Income tax (ISR), companies | 30%; 25% if taxable income is USD 150,000 or less | Companies and branches, on income from El Salvador |
| Monthly advance payment | 1.75% of gross revenue each month | Companies, credited against the annual income tax |
| Income tax (ISR), individuals | 0% to 30% for residents; 30% flat for non-residents | Employees and self-employed people |
| IVA | 13%; exports 0% | Registered businesses charge it; the buyer bears it |
| Dividends | 5% withheld; 25% if paid to a listed tax haven | Shareholders, withheld by the company |
| Payments to non-residents | 20% withheld; 25% to tax havens; 5% on some items | Foreign service providers, lenders and licensors |
| Capital gains | 10%; ordinary rates if the asset is sold within 12 months | Sellers of assets |
| Real estate transfer tax | 3% on the value above USD 28,571.43 | Buyers of real estate |
| Social security and pensions | Employer 7.5% (ISSS) and 8.75% (AFP) | Employers and employees |
| Municipal taxes | Set by each municipality | Businesses with assets in the municipality |
Source: PwC Worldwide Tax Summaries: El Salvador, taxes on corporate income; Income Tax Law, consolidated to Official Gazette No. 79 of 30 April 2025 (General Directorate of Customs, PDF, in Spanish); PwC Worldwide Tax Summaries: El Salvador, other taxes; PwC Worldwide Tax Summaries: El Salvador, income determination; PwC Worldwide Tax Summaries: El Salvador, withholding taxes1,2,3,5,6
Territorial taxation
Income tax applies to income from goods located in El Salvador, activities carried out in the country and services provided or used there, even when paid abroad. Legislative Decree No. 969 of 12 March 2024 added foreign-source income to the list of amounts that are not income, for individuals and companies, resident or not. See foreign-source income.5,7
Deadlines that matter
- Tax year: 1 January to 31 December.
- Annual income tax return: by 30 April of the following year, paid with the return at a local bank.
- Monthly returns: IVA and the advance payment within the first ten working days of the following month.
- Related-party transactions: Form F-982 within three months of the year end when transactions reach USD 571,429.
Source: PwC Worldwide Tax Summaries: El Salvador, other taxes; PwC Worldwide Tax Summaries: El Salvador, tax administration; Deloitte: Form F-982 filing for 20253,4,8
What changed recently
- April 2025: the personal income tax threshold rose to USD 6,600 a year, or USD 550 a month.
- April 2026: Legislative Decree No. 544 replaced the 3% withholding on non-residents’ income from securities traded on the Salvadoran stock exchange with a full exemption.
- January 2026: the "Quincena 25" law introduced a January payment of 50% of the monthly salary for employees earning up to USD 1,500, free of income tax and social security contributions.
Source: Executive Decree No. 10 of 30 April 2025: income tax withholding tables (Judicial Documentation Centre, PDF, in Spanish); PwC Worldwide Tax Summaries: El Salvador, significant developments9,10
Frequently Asked Questions
What is the corporate tax rate in El Salvador?
Companies pay 30% income tax, or 25% when taxable income is USD 150,000 or less. Companies also make a monthly advance payment of 1.75% of gross revenue.
What is the VAT rate in El Salvador?
IVA, the value added tax, is 13%. Exports are taxed at 0%.
Does El Salvador tax foreign income?
No. El Salvador taxes income on a territorial basis, and income from foreign sources has been outside income tax since a March 2024 reform.
How are dividends taxed?
The company withholds 5% on dividends paid to shareholders, or 25% when they are paid to a listed tax haven.
Each tax in detail
Income tax (ISR)
Companies 30% (25% up to USD 150,000); individuals 0% to 30%.
30% Rate for companies and non-resident individuals
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Monthly advance payment
1.75% of gross revenue each month, credited against the annual income tax.
1.75% Of gross revenue accrued in the month
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VAT (IVA)
13% on goods, services and imports; exports at 0%; monthly returns.
13% Standard IVA rate
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Withholding taxes
20% on payments abroad, 25% to tax havens, 5% on dividends.
20% On payments to non-residents
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Capital gains
10% on net gains; ordinary rates if sold within 12 months.
10% Rate on net capital gains
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Municipal taxes
Monthly taxes on business assets, set by each of the 44 municipalities.
44 Municipalities since 1 May 2024
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Social security (ISSS) and pensions (AFP)
ISSS 7.5% + 3% up to USD 1,000; AFP 8.75% + 7.25% of salary.
7.5% Employer ISSS on salary up to USD 1,000 a month
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Customs
Central American tariff on CIF value, plus 13% IVA on imports.
0%–40% Usual DAI bands in the tariff
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Foreign-source income
Since March 2024, income from abroad is outside income tax.
12 Mar 2024 Date of Legislative Decree No. 969
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Transfer pricing
Market prices for related parties; Form F-982 above USD 571,429.
$571,429 Yearly related-party transactions that trigger Form F-982
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Double tax treaties
The treaty with Spain, in force since 2009, and what it reduces.
1 Double tax treaty listed: Spain
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Sources
- PwC Worldwide Tax Summaries: El Salvador, taxes on corporate income
- Income Tax Law, consolidated to Official Gazette No. 79 of 30 April 2025 (General Directorate of Customs, PDF, in Spanish)
- PwC Worldwide Tax Summaries: El Salvador, other taxes
- PwC Worldwide Tax Summaries: El Salvador, tax administration
- PwC Worldwide Tax Summaries: El Salvador, income determination
- PwC Worldwide Tax Summaries: El Salvador, withholding taxes
- Legislative Assembly: Decree No. 969 of 12 March 2024 (PDF, in Spanish)
- Deloitte: Form F-982 filing for 2025 (in Spanish)
- Executive Decree No. 10 of 30 April 2025: income tax withholding tables (Judicial Documentation Centre, PDF, in Spanish)
- PwC Worldwide Tax Summaries: El Salvador, significant developments
Figures checked 8 November 2026. Prepared by InvestSalvador.com for general information. It is not investment, tax or legal advice; please confirm details with a qualified adviser before acting.
