Tax rate by region El Salvador

Select region

SaaS VAT & E-Invoicing in El Salvador: A Compliance Guide

SaaS businesses operating in El Salvador are subject to a Value Added Tax (VAT) of 13%, implemented in 1992 to enhance tax compliance and public revenue. As no digital goods or services are exempt, businesses must meticulously track and report VAT on all SaaS sales. VAT returns are filed annually, with payments due by April 30th of each year. To ensure seamless compliance, businesses must retain invoices, credit/debit notes, import/export documentation, records of supplied/received goods and services, and copies of issued/received tax invoices for a minimum of 5 years. El Salvador mandates e-invoicing, necessitating the use of certified electronic invoicing systems.

El Salvador

El Salvador adopted a VAT system in 1992 to improve tax compliance and enhance public revenue.

Official government link: Ministerio de Hacienda

13.00%

E-products and services VAT/Sales tax rate

Reduced tax rate product categories

No digital goods or services with reduced tax in El Salvador

Exempted product categories

No digital goods or services are exempt in El Salvador

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

Currently, there are no specific regulations for digital services by non-resident providers.

Online registration possible

Yes

Local representative needed

Not specified

Registration procedure

First, gather all necessary documentation, including your identification (passport or national ID), proof of business registration, and any relevant legal documents. Next, apply for a Tax Identification Number (NIT) through the Ministry of Finance. Then, complete the VAT registration form provided by the tax authority (DGII). Submit this form along with your documentation to the tax office (DGII). After submission, the tax authority will review your application. Once approved, you will receive your VAT registration number.

List of digital and electronic services liable for tax

Software and Applications: Downloadable software, mobile apps, and software as a service (SaaS).
Digital Media: E-books, digital music, digital videos, and online newspapers or magazines.
Online Services: Cloud storage services, web hosting services, and online gaming.
Digital Content: Virtual goods in games, digital art, and other digital files or products.

Penalties

Penalties are imposed for late filing, failure to file, under-reporting, or tax avoidance/evasion.

Penalties for non-compliance with formal requirements also are imposed.

There are penalties for non-registration or late registration.

Registration threshold

No threshold, non-resident companies must register for VAT

Filing interval

Annually

Filing deadline

No later than April 30th of each year

E-invoicing requirements

Yes

Record keeping

The following items should be kept for at least 5 years: Invoices for sales and purchases
Credit notes and debit notes
Import and export documentation
Records of all goods and services supplied and received
All tax invoices received
Copies of tax invoices issued

Effortless Subscription Management and Billing

Essential VAT Compliance Strategies for El Salvador

Given the complexities of VAT compliance in El Salvador, engaging with tax professionals is highly recommended. They can assist with registration, filing, and navigating specific regulations. Additionally, adopting e-invoicing solutions can streamline record-keeping and reporting processes, minimizing errors and ensuring timely compliance.

VAT Regulations for SaaS Businesses in El Salvador

Remember, accurate and timely VAT compliance is crucial for maintaining good standing with authorities and ensuring a smooth business operation in El Salvador. By adhering to regulations, diligently maintaining records, and collaborating with tax professionals, SaaS businesses can navigate El Salvador’s VAT landscape effectively.

What is the current VAT rate for SaaS businesses in El Salvador?

The current standard VAT rate for SaaS businesses in El Salvador is 13%.
Are there any exemptions for specific SaaS products or services?

No, there are currently no exemptions for any specific SaaS products or services in El Salvador. All SaaS sales are subject to the standard 13% VAT rate.
What are the key record-keeping requirements for VAT compliance in El Salvador?

Businesses must retain the following records for at least 5 years: invoices, credit/debit notes, import/export documentation, records of supplied/received goods and services, and copies of issued/received tax invoices. Additionally, e-invoicing is mandatory in El Salvador, requiring the use of certified electronic invoicing systems.

Ready to get started?

We’ve been where you are. Let’s share our 18 years of experience and make your global dreams a reality.

Talk to an Expert