As of January 1, of this year, the new “Instructions for Qualifying Institutions Domiciled Abroad in the context of the Income Tax Law, Tax Law on the Transfer of Personal Property and the Provision of Services and Tributary Code†entered into force.
These Instructions regulate tax benefits such as VAT exemption (currently 13%) and income tax reduction (from 20%-25% to 10%), payable on all interest resulting from loans granted in El Salvador by financial entities not domiciled in the country. Through qualification, such entities can enjoy these tax incentives.
Main modifications introduced by the instructions:
