El Salvador’s Legislative Decree No. 969 – published on 14 March 2024 in the Official Gazette – broadens the scope of income exempted from income tax, as per Article 3 of the Income Tax Law, which effectively exempts all foreign-sourced income.
It should be noted that any income, capital movement, remuneration, or benefit, whether in cash or other forms, generated directly or indirectly by the investment of domestic or foreign capital, and received by individuals, corporations, or unincorporated entities in El Salvador from any source outside the country, will not be subject to any form of income tax under the Income Tax Law.
Article 3 already exempts certain types of income from taxation, including reasonable amounts given to employees in cash or kind for transportation, meals, work equipment, etc, as well as the value of goods inherited or received as donations.
The Legislative Decree No. 969 was enacted on 22 March, 2024.
