Local Expertise
Tax & Compliance
Strategic Partners
Why structure your investment well
Entering a new market always involves decisions that are hard to reverse. In El Salvador, the legal structure you choose, the wording of your incorporation deed, and the quality of your initial registrations define the risk profile your company will carry for years.
A poorly defined structure can create legal, tax, and operational risk from the start. Drafting errors, vague corporate purpose clauses, or a missed municipal registration translate into objections from the Commercial Registry, redoing filings, delays, and additional cost — all preventable with proper preparation.
Our approach is preventive: we set you up to comply, not to correct. We work with you from before the deed is signed, so every initial decision — entity type, corporate purpose, share capital, management, domicile — is aligned with your business plan and the local regulatory reality.
Legal risk
Tax risk
Operational friction
Banking
Step-by-step process
Initial consultation
The most important conversation in the process. In 30–60 minutes we define: intended economic activity, shareholder/partner profile (individual or corporate, Salvadoran or foreign), operational expectations (hiring, banking, local or international invoicing), and constraints (sector authorization, parent-company requirements). The output is an entity recommendation, a phased plan with estimated timelines, and a document checklist.
What we need from you
- Project and activity summary
- Shareholder / representative identification
- Parent-company information (if branch)
Deliverables
- Entity recommendation
- Plan with estimated timelines
- Document checklist
Legal entity creation
Our legal area handles the drafting and signing of the public deed (S.A. or S. de R.L.) or deed of establishment (branch) before a notary, and we manage the Commercial Registry filing. Before any signing, we verify that all partners or representatives hold a NIT. For branches, we make sure parent-company documents are apostilled or legalized and translated into Spanish where required.
Timelines:
- Obtaining the NIT (partners / representatives): approximately 1–2 weeks.
- Drafting and signing of the public deed: 1–2 weeks once documentation is complete.
- Registration with the Commercial Registry: approximately 3–6 weeks, subject to objections.
- Reference minimum legal capital: USD 2,000 for S.A. and S. de R.L., evidenced by certified check or bank certificate.
Municipal (City Hall) registration
Registration with the municipality where the company will be domiciled is mandatory for any company operating in El Salvador. It includes the initial registration, classification of the economic activity, and the obligation to file asset declarations to determine applicable municipal fees. Skipping or delaying this step can trigger penalties, temporary closure, and operational issues.
Timelines and obligations:
- Initial registration: within the first 30 days following the start of operations, at the corresponding city hall.
- Annual sworn declaration of assets: filed within the first quarter of the year.
- Municipal fees: monthly payment based on declared assets (ranges and rates vary by municipality).
- Renewal: municipal licenses are renewed annually.
Tax registration
Once the entity is created, we handle tax registration with the Ministry of Finance. We register the company as a VAT taxpayer, obtain the NRC (Taxpayer Registration Number), enroll the company in the Electronic Tax Document (DTE) Transmission System and define the tax obligations applicable to the actual activity. Obligations are not standard: they depend on the activity, the volume of operations, and any special regimes that may apply.
Taxes and tax calendar:
- VAT: general rate 13%. Monthly return and payment within the first 10 business days of the following month.
- Corporate Income Tax (ISR): 30% as a general rule; 25% for legal entities with annual taxable income equal to or below USD 150,000.
- ISR advance payment: monthly advance of approximately 1.75% on gross income.
- Annual ISR return: filed by April 30 of the following year.
- Withholdings: applicable to professional services, payments to non-residents, dividends, and other items as the case requires.
- Other potential obligations: fiscal opinion for taxpayers meeting thresholds, withholding reports, and reports of transactions with related parties.
Hiring & labor compliance
If the company hires employees in El Salvador, additional labor obligations apply before the employment relationship begins. This includes employer registration with mandatory institutions (ISSS, AFP, Ministry of Labor), employee enrollment, employment contracts under Salvadoran law, and ongoing obligations (payroll filings, withholdings, benefits).
Entities, contributions and timelines:
- ISSS (social security): employer contributes approximately 7.5% and employee 3% on the contributable salary (subject to the current salary cap).
- AFP (pensions): employer contributes approximately 8.75% and employee 7.25% on the contributable salary.
- INCAF (vocational training): 1% on payroll, applicable to companies with 10 or more employees.
- ISR withholding on salaries according to the current progressive table.
- Year-end bonus (aguinaldo): mandatory benefit; days based on seniority (reference: 15 days between 1 and 3 years, 19 days between 3 and 10 years, 21 days with more than 10 years).
- Annual vacation: 15 paid days plus a 30% vacation premium.
- Internal work regulations: mandatory when the company has 10 or more permanent employees, and must be approved by the Ministry of Labor.
- Timelines: employer registration and employee enrollment must be completed before the effective start of the employment relationship.
Accounting & ongoing compliance
Accounting proves compliance and protects your investment. We handle monthly bookkeeping under Salvadoran standards, reconcile accounts, prepare financial statements, manage tax filings, and keep documentation audit- and bank-ready for your parent company.
Monthly deliverables and scope:
- Monthly bookkeeping under IFRS for SMEs (or full IFRS where applicable).
- Legal books: Journal, Ledger, and Financial Statements, duly legalized.
- Bank and key-account reconciliations (customers, suppliers, taxes payable).
- Monthly financial statements: Balance Sheet and Income Statement.
- Calculation and filing of returns: monthly VAT, monthly advance payment, monthly withholdings.
- Supporting documentation archived and available for audit.
- Monthly executive report to the client with close, alerts, and upcoming obligations.
- Annual close: auditable financial statements, ISR return, fiscal opinion where applicable.
