VAT, GST and Sales Tax in El Salvador


Name of the tax Value-added tax (VAT)
Local name Impuesto a la transferencia de bienes muebles y a la prestación de servicios (ITBMS)
Date introduced Jul-92
Trading bloc membership None that relate to VAT
Administered by Ministry of Treasury (
VAT rates
Standard 13%
Other Exempt and zero-rated
VAT number format Taxpayer registry number (NRC)
Vat return periods Monthly
Registration Annual turnover of USD5,714.29 or fixed assets of USD2,285.71
Recovery of VAT by non-established businesses No, unless the nonresident business has a registered legal or tax representative in El Salvador

Scope of the tax

VAT applies to the following transactions:

  • The transfer of tangible goods or rendering of services in El Salvador
  • The purchase of imported services by a taxable person in El Salvador
  • The importation of tangible, movable goods from outside El Salvador, regardless of the status of the importer
  • Self-consumption of inventories by VAT taxpayers or transfers of tangible goods for promotional purposes
  • The exportation of tangible, movable goods from El Salvador to another jurisdiction.

Who is liable

Any individual or business that has annual turnover exceeding USD5,714.29 or that owns fixed assets valued at USD2,285.71 or more must register as a VAT taxpayer. The requirement to register also applies to permanent establishments in El Salvador of foreign entities. In addition, entities and individuals must pay VAT when any of the taxable events outlined in Section B occur.

Voluntary registration. Individuals whose turnover is below the registration threshold may register voluntarily as VAT taxpayers. Nonresident entities that wish to recover local VAT paid may also register voluntarily.

Small taxpayers. No special regime exists for small taxpayers in El Salvador.

Group registration. VAT grouping is not allowed under the Salvadoran VAT Law. Legal entities that are closely connected must register for VAT individually.

Non-established businesses. A “non-established business” is a business that has no fixed establishment in El Salvador. In prin­ciple, a non-established business must register for VAT if it trans­fers tangible goods or renders services in El Salvador on a regular basis. To register for VAT, a non-established business must pro­vide the tax authorities with the following:

  • A copy of its Articles of Incorporation, legalized by a Salvadoran consulate (or with an apostille), together with an official trans­lation into Spanish
  • Any other documentation required by the tax authorities, includ­ing registration of a legal or tax representative

Tax representatives. Businesses that are established outside El Salvador must appoint a resident tax representative to register for Salvadoran VAT purposes. The tax representative is jointly and severally liable for VAT debts with the business that it repre­sents. The liability is limited to the value of the property or assets to be administered, unless the representatives had acted with malice or gross negligence, in which case the tax representatives are severally liable with their own assets up to the amount of the total tax due.

Reverse charge. The Salvadoran VAT Law establishes a reverse-charge mechanism. Under this mechanism, the consumer must self-assess, withhold and pay the VAT due. The reverse-charge mechanism applies if the taxable activities (services performed or used within the country) are rendered by a nonresident. The consumer or resident taxpayer may offset the VAT paid for the services with VAT debits under the general VAT rules.

Digital economy. There are no specific regulations regarding digi­tal economy.

Registration procedures. The time limit for an individual or entity to register as a taxpayer for VAT purposes is within 15 days fol­lowing the initiation of operations. To register, file Form F-210. Legal entities applying must attach the following documentation:

  • Deed of incorporation, merger, or other deed, duly registered before the Commerce Registry
  • Legal identification document (Documento Onico de Identidad or passport) of the entity’s authorized legal representative, elec­tion credential or power of attorney (special, general, judicial or administrative)
  • Proof of payment to the VAT Registry

If the entity wishes to register as an importer, it must make that clear in the request for registration. After reviewing the docu­ments, if there are no observations from the tax authorities, the document should be issued within minutes after the documenta­tion is filed.

Noncompliance with registration obligations. A penalty of three minimum legal wages is imposed on a taxpayer that fails to reg­ister for VAT purposes. In the event of late registration, a penalty of two minimum legal wages applies. These penalties apply regardless of whether interest and penalties are assessed for unpaid VAT.

Deregistration. Whenever a company ceases operations as a con­sequence of dissolution, liquidation, or merger, it should deregis­ter before the tax authorities, and request the cancellation of its Tax ID (in Spanish: Número de Identificación Tributaria) and Contributors’ Registration Number (in Spanish: Número de Registro de Contribuyente); also, it must request the annulment of unused invoices, VAT invoices, with specification of its autho­rized serial number, explaining the motive for cancellation.

VAT rates

The VAT law in El Salvador provides for exempt activities and zero-rated activities. Unlike zero-rated activities, exempt activities do not permit a taxpayer to claim the input tax deduction (See Section F). In El Salvador, the standard rate of VAT is 13%. The standard rate applies to the transfer of tangible goods or rendering of ser­vices, unless a specific measure provides for an exemption.

The following list provides some examples of exempt supplies of goods and services.

Examples of exempt supplies of goods and services

  • Health services offered by public institutions
  • Rental of houses and apartments for noncommercial purposes
  • Public land transport
  • The importation by registered VAT taxpayers of machinery used as a fixed asset in the production of goods and services that are not exempt (if the assets are registered with the tax authorities 30 days in advance)
  • Education provided by private or public institutions authorized by the Ministry of Education
  • Certain financial services regarding interest payments made by domiciled and non-domiciled financial institutions (domiciled financial institutions must be authorized by the Superintendence of the Financial System, and the non-domiciled financial insti­tutions must be authorized by the competent authority in their country of origin and qualified by the Central Bank of Reserve)
  • Water services offered by public entities
  • Personal insurance services and reinsurance

Option to tax for exempt supplies. Not applicable.

Time of supply

The taxable event when VAT becomes due is called the “tax point.”

For the supply of goods, the tax event is the earliest of the follow­ing events:

  • The issuance of the invoice, receipt or other document related to the transaction
  • Delivery of the goods
  • Receipt of payment

For the supply of services, the tax event is the earliest of the fol­lowing events:

  • The issuance of the invoice, receipt or other document related to the transaction
  • Provision of the service
  • Receipt of payment

Continuous supplies of services. For a continuous supply of ser­vices rendered in return for periodic payments, the tax event is the earlier of the issuance of the invoice or the due date estab­lished for the periodic payment, notwithstanding the date of pay­ment for the service.

Imported goods. The taxable event for imported goods is when the goods clear all customs formalities for importation (definite importation).

Recovery of VAT by taxable persons

A taxable person may recover input tax, which is VAT paid on the purchase of goods and services for business purposes. Input tax is generally credited against output tax, which is the VAT charged on supplies made. Input tax includes VAT charged on goods and services supplied in El Salvador, VAT paid on imported goods and VAT self-assessed on reverse-charge services. In general, the input tax credit is allowed for ordinary business expenditure that is indispensable to the taxpayer’s taxable activity (that is, the business activity that generates output tax).

A valid tax document referred to as “proof of tax credit” or an “import declaration” must support every claim for an input tax credit.

Nondeductible input tax. Input tax may not be recovered on pur­chases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur).

Examples of items for which input tax is nondeductible

  • Acquisition, importation or entry of supplies or food when it is not the taxpayer’s ordinary business
  • Purchase, import, leasing, maintenance, improvement or repair of new and used vehicles that by their nature, are not strictly necessary for carrying out the ordinary business activities of the taxpayer
  • Use of any type of services in hotels, and the lease or sublease of real estate or the use of any other services that are not used in core business activities
  • Purchase of airline tickets, except those strictly related to busi­ness trips
  • Acquisition, importation or sale of clothing, jewelry or shoes, if this is not the company’s ordinary business, among others

Examples of items for which input tax is deductible
(if related to a taxable business use)

  • Acquisitions of movable, tangible goods destined to form part of the current assets
  • Disbursements for the use of services in the ordinary course of business provided that they are not intended for the construc­tion or alteration of real estate property
  • General expenses intended solely for the purpose of achieving the objects, business or activity of the taxpayer

Refunds. If the amount of input VAT recoverable in a particular month exceeds the amount of output VAT payable, the taxpayer obtains an input VAT credit. The credit may be carried forward to offset output tax in subsequent VAT periods.

A cash refund or Public Treasury notes may be claimed only if the credit relates to export activities. An input VAT credit related to export supplies may be carried forward to offset output VAT in the following VAT period. If the credit may not be fully offset against output VAT within a tax period, the taxpayer may request an offset of other tax liabilities, including input VAT withheld, perceived or generated as a result of the import of goods, or a refund of the excess amount.

Partial exemption. Not applicable.

Preregistration costs. Taxpayers are not permitted to recover input VAT paid on purchases made prior to VAT registration.

Recovery of VAT by non-established businesses

El Salvador does not refund VAT incurred by foreign or non-established businesses unless they are registered for VAT in El Salvador.


Tax credit documents, invoices and credit notes. A taxpayer must generally provide VAT invoices for all taxable supplies made, including exports. However, for supplies made to other VAT tax­payers, a “proof of tax credit” document must be issued. A proof of tax credit document is required to support a claim for the input tax credit. Proof of tax credit documents must be issued in tripli­cate (with two copies provided to the purchaser of the goods or services). Invoices must include an official invoice number (NCF) and the taxpayer’s registration number (NRC), and it must show the VAT amount separately, among other requirements.

If the nature of a business makes it impractical for a taxpayer to issue tax invoices, the tax authorities may authorize the use of cash registers and computerized systems to issue tickets (cash receipts) instead of invoices.

Price reductions, discounts or bonuses may be excluded from the VAT base if they are included in the proof of tax credit document or in credit and debit notes. A credit note must contain the same information as a tax credit document.

Exports. A zero rate of VAT applies to the exportation of goods and services. For the exportation of goods to qualify for the zero rate, a definitive transfer of the goods that are to be used or con­sumed abroad must occur. Exports must be supported by customs documents that prove the goods have left El Salvador. Suitable evidence includes export invoices and bills of lading.

Foreign-currency invoices. VAT invoices and tax credit documents may be issued in Salvadoran colones (SVC) or US dollars (USD).

In addition, an exportation of services occurs when a local tax­payer renders a taxable service within the country in favor of a nonresident entity or individual that makes use of the services strictly outside the country; however, the following legal require­ments should be met for considering an operation as exportation of services:

  • The rendering of services should be performed within El Salvador.
  • The receiver of services should be a non-domiciled or nonresi­dent company or individual.
  • The services should be used exclusively outside of El Salvador.

VAT returns and payment

VAT returns. VAT returns are submitted monthly. Form F-07 must be submitted by the 10th working day of the month following the end of the return period. Payment in full is due on the same date. A return must be filed even if no VAT is due for the period.

In addition, Form F-930, the monthly VAT return of withholdings and collection of VAT, must be filed every month within the first 15 working days of the month following the end of the return period.

By legal disposition, the tax due may be paid in Salvadoran colo­nes or US dollars. However, in practice, Salvadoran colones have been removed from circulation and all transactions are made in US dollars.

Special schemes. Not applicable.

Electronic filing and archiving. Electronic filings are allowed, provided that the taxpayer has created a user id on the tax author­ity’s website and downloaded the corresponding program (Declaración Electrónica de Tributos).

Electronic archiving of VAT documents may be done after four years of the issuance or reception of the documents, as long as the integrity of information is guaranteed and the documents are available and accessible to the tax authorities when required. Also, the conversion process must be certified by an external auditor. This period may be shortened if the taxpayer submits a request and the tax authorities approve.

Annual returns. There are no annual returns for VAT.


Penalties may vary from 5% up to 50% of the VAT amount due. For some offenses, the penalty may be computed based on the minimum legal wage.

Penalties for tax evasion under the Salvadoran Criminal Code include imprisonment for a period of four to eight years.

Tax evasion. The Salvadoran Tax Code regulates penalties for unintentional or intentional tax avoidance. If tax avoidance is considered unintentional, the penalty is 25% of the unpaid tax. For intentional tax avoidance that results in an underpayment of tax that is below the criminal amount, the penalty is 50% of the unpaid tax.

Tax fraud. Criminal tax avoidance penalties are based on the amount of the evasion or attempted evasion. If the amount of unpaid taxes ranges from USD11,428.57 to USD34,285.71, the penalty is imprisonment for four to six years. If the amount of unpaid taxes exceeds USD34,285.71, the penalty is six to eight years of imprisonment.

If the unpaid taxes plus the corresponding penalties are paid to the tax authorities, no criminal fraud penalties are imposed.