El Salvador VAT Guide 2026

Overview — IVA in El Salvador

The IVA is governed by the Ley de Impuesto al Valor Agregado (IVA Law) and administered by the Dirección General de Impuestos Internos (DGII). The tax applies to the sale of goods, provision of services, and imports of goods into El Salvador. It is a consumption tax borne by the final consumer, with businesses acting as collection agents. Businesses charge IVA on their sales (output IVA) and can credit the IVA they pay on their purchases (input IVA). The difference is remitted to the DGII monthly. El Salvador's IVA system is largely harmonised with other Central American countries under the Central American Integration System (SICA).

IVA Rate Structure

The IVA rate structure is straightforward with three categories:

• Standard rate — 13% on most goods and services, including commercial activities, professional services, imports, and construction
• Zero-rated (0%) — exports of goods and services, international transport, and certain services provided to non-residents
• Exempt — basic food staples (maize, rice, beans, milk, bread), medicines, medical services, educational services, public transport, financial services (interest, insurance), residential rent, and books

Zero-rated supplies allow the supplier to claim input IVA credits. Exempt supplies do not allow input IVA recovery, meaning the IVA paid on purchases becomes a cost. This distinction is important for businesses that make both taxable and exempt supplies.

Electronic Invoicing (FEL)

El Salvador mandates electronic invoicing (Facturación Electrónica — FEL) for all VAT-registered taxpayers. The FEL system requires businesses to issue electronic invoices through DGII-authorised software or a web-based platform. Each invoice receives a unique electronic document number (Número de Identificación del Documento Electrónico) from the DGII. Key features of the FEL system:

• Real-time validation of invoices by DGII
• Automatic transmission of invoice data to tax authorities
• Electronic signature required for all invoices
• Supports credit notes, debit notes, and export invoices
• Consumers can verify invoice authenticity on DGII portal
• Non-compliance penalties include fines of up to USD 10,000

The FEL system has significantly improved tax compliance and reduced evasion. All businesses must transition to FEL; traditional paper invoices are no longer accepted for VAT purposes.

Registration & Filing

Businesses with annual turnover exceeding USD 100,000 must register for IVA with the DGII. Registration is done through the DGII online portal (Portal Tributario). Once registered, the business must:

• Issue FEL electronic invoices for all sales
• File monthly IVA returns (Form F-07) by the 10th of the following month
• Pay the net IVA due (output IVA minus input IVA) at the time of filing
• Maintain IVA records for at least 5 years

Late filing penalties range from USD 100 to USD 2,000 depending on the delay. Interest on late payments accrues at 1.5% per month. The DGII conducts regular audits and may perform unannounced inspections of business premises.

IVA on Imports & Exports

Imports of goods into El Salvador are subject to IVA at 13%, calculated on the CIF value plus customs duties. The IVA is collected by the Dirección General de Aduanas (Customs) at the point of importation. Importers can claim input IVA credits against their output IVA if they are registered taxpayers. Exports of goods and services are zero-rated, meaning no IVA is charged, and exporters can claim refunds of input IVA paid on purchases related to export activities. Export refund claims are processed by the DGII and typically take 2–4 months. El Salvador has several free trade zones and bonded warehouses where IVA is deferred on imports used for manufacturing exports.

FAQs

Do I need to register for IVA if I only sell to consumers?

Yes, if your annual turnover exceeds USD 100,000, you must register for IVA regardless of whether you sell to businesses or consumers. If your turnover is below the threshold, you may voluntarily register.

Can I claim input IVA on all business purchases?

Only purchases directly related to taxable (non-exempt) business activities. Input IVA on exempt supplies (e.g., financial services) cannot be claimed. Certain purchases like entertainment, gifts, and personal expenses are not creditable.

What is the penalty for not issuing FEL invoices?

Failure to issue electronic invoices through the FEL system can result in fines of up to USD 10,000 per infraction. Repeat offenders may face business suspension or closure.

Disclaimer

This guide provides general information about Salvadoran IVA for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Salvadoran tax advisor or the Dirección General de Impuestos Internos for advice specific to your situation. InvestmentKit does not provide tax advice.