The DGII has issued new tax compliance guidance identifying low- and zero-tax jurisdictions and setting withholding, deductibility, and challenge procedures for cross-border transactions and preferential tax regimes from 2027.
El Salvador’s tax authority (DGII) released guidance MH.UVI.DGII/006.002/2026 on 22 September 2026 clarifying tax compliance rules for 2027. The guidance establishes clear criteria for identifying international jurisdictions categorised as tax havens or regions with preferential fiscal regimes, specifically those with low or zero taxation.
The DGII created two categories to classify foreign jurisdictions. The low taxation classification applies to countries where income tax rates fall below 80% of El Salvador’s rates (below 16% for natural persons and trusts; below 22% for legal entities). The no taxation classification covers jurisdictions with zero income tax or full exemptions on non-resident income and investments.
By aligning local regulations with standards from organisations like the OECD and FATF, the manual aims to prevent money laundering and ensure proper tax compliance for cross-border commercial activities.
Listed low-tax jurisdictions
The DGII identified 68 jurisdictions meeting low-tax criteria. These include Albania, Andorra, Armenia, Azerbaijan, Barbados, Bermuda, Bosnia and Herzegovina, Brunei Darussalam, Bulgaria, Cambodia, Cyprus, Croatia, Curaçao, Delaware (United States), Estonia, Florida (United States), Georgia, Gibraltar, Hong Kong, Hungary, Iceland, Ireland, Kosovo, Kuwait, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macau, Mauritius, Moldova, Montenegro, Oman, Netherlands, Poland, Puerto Rico, Qatar, Romania, San Marino, Serbia, Seychelles, Singapore, Switzerland, Taiwan, Thailand, Timor-Leste, Turkey, Ukraine, Vietnam, and others spanning five continents.
The jurisdiction list also includes United States territories (Northern Mariana Islands, United States Virgin Islands) and Portuguese territories (Azores Islands), plus special regions like Labuan in Malaysia and Cook Islands.
Zero-tax jurisdictions and enforcement rules
Twenty jurisdictions carry zero-tax or exempt status under the guidance. Salvadoran taxpayers conducting transactions with entities in any listed jurisdiction must apply mandatory withholding tax rates and follow non-deductibility rules outlined in the guidance.
The DGII established a catch-all provision. Entities in unlisted countries remain subject to these same regulations if their effective income tax rate drops below the Salvadoran threshold of 80%. Taxpayers can contest a jurisdiction’s classification by submitting official tax residency and payment certificates from foreign tax authorities proving effective taxation exceeds the threshold.
Preferential regimes and international agreements
The guidance covers preferential tax regimes regardless of jurisdiction. Holding companies, multinational corporation headquarters, offshore business companies, private interest foundations, international financial leasing arrangements, and family trusts all fall under these rules regardless of where they operate.
El Salvador maintains tax agreements with several partners. A double taxation treaty with the Kingdom of Spain took effect on 7 July 2008. A Central American technical cooperation and mutual assistance agreement with Costa Rica, Guatemala, Honduras, and Nicaragua became effective on 25 April 2006. These treaties provide specific treatment for covered jurisdictions and entities.
