x
Overview
El Salvador is a country on the Pacific Coast of Central America. It’s development strategy is based on a policy of openness to international trade and investment, therefore this country has an open attitude towards foreign direct investments.
Timeframe: within 7 weeks
Minimum paid up capital requirement: USD $2,000*
Overview
The most common legal entity in El Salvador is a Limited Liability Company (LLC).
It is important to note, that corporate income tax rate in El Salvador is 30%, and applies to the total amount of the company’s revenues. However corporate income tax is based on the territorial principle, and, in general, is paid on goods located, activities realized, and capital invested in El Salvador as well as on services provided in the country.
Even though there are no restrictions in relations to the shareholder’s citizenship or residence, it is important to take into consideration that a special withholding tax rate of 25% is applied when dividends, interests and royalties are payed to resident of tax havens.
Benefits
- ▪Low capital requirements
- ▪At present the Online Gambling activity is not regulated in El Salvador
- ▪Not blacklisted
*Companies with this amount of capital will be subjected to registration tax of 11,40 USD.
Comprehensive Guide to Company Incorporation
General information
Company structure
- ▪Minimum 1 Director (natural person, no restrictions with regards to citizenship or residence)
- ▪Minimum 2 Shareholders (natural person or legal entity, no restrictions with regards to citizenship or residence)
Taxation
- ▪Corporate Income Tax – 30%;
- ▪“Pago a Cuenta” tax – 1.75% (paid monthly as an advance payment of the Corporate Income Tax);
- ▪Value added tax – 13%;
▪Withholding tax: 1. Non-resident: 5% on Dividends, 20% on Interest, 20% on Royalties; 2. Non-resident in a tax haven: 25% on Dividends, 25% on Interest, 25% on Royalties
Accounting and Audit requirements
- ▪Company is required to appoint an external audit
- ▪Audited financial statements are to be submitted annually to the Registry of Commerce
- ▪Depending on the income, some companies have to perform an annual tax audit.
Local office – Required
Registered Agent – Required*
Secretary – Required
* Company must appoint a local administrator, who will represent it before the Salvadoran Tax Office, whether he or she is Salvadoran or a foreigner residing in El Salvador.
Company name
- ▪Letters: Roman alphabet
- ▪Must contain the words “limited liability company” or the abbreviation “LLC”
- ▪Restricted connections for company name: names of state and local government bodies and agencies
- ▪A company’s name shall not be contrary to good morals, as well as shall not be misleading with regard to the legal form, area of activity or scope of activity of the undertaking
- ▪Company name is restricted to be identical or similar that of an existing company
- ▪Registrar may reject any name which it considers undesirable or contrary to the public interest
In order to obtain an El Salvador Online Gambling permit, the following steps shall be carried out:
- ▪Application for reservation of company name
- ▪Preparation and submission application with the Ministry of Finance for obtaining the income tax contribution number (NIT) and the value added tax contribution number (IVA)
- ▪Registration at the City Hall
- ▪Registration at the General Office of Statistics and Census
- ▪Registration at the Registry of Commerce
- ▪Opening of a bank account
In order to obtain El Salvador Online Gambling permit, please provide the following documents:
- ▪Notarized copy of valid passport (each of Director or Shareholder)
- ▪Notarized copy of proof of address (e.g. Utility bill of each Director)
- ▪Salvadoran Tax Payers Identification Card (NIT) – for each shareholder (if any)
- ▪Bank reference (of each Director)
- ▪2 Character reference Letter issued by professionals (of each Director and Shareholder)
- ▪Detailed CV dated and signed by applicant (of each Director and Shareholder)
- ▪Diploma of higher education
- ▪Notarized criminal record
In case the shareholder is a company, it is required to provide:
- ▪Certified true copy certificate of registration
- ▪List of shareholders
- ▪Copy of the last annual/financial return
- ▪Apostilled Certificate of Good Standing
Additional Due diligence may be prescribed by Government Authorities*:
- ▪Original documents that prove source of capital
All documentation shall be provided in English**
* Additional documents may be requested by the Registry or local Bank at any point to certify specific information
** If documents are not in English, then they must be accompanied by a notarized translation