El Salvador’s tax administration issued a guidance aimed at assisting taxpayers in identifying jurisdictions that offer preferential tax regimes with minimal or no taxation, ensuring the correct application of El Salvador’s taxation provisions, on 17 September 2024.
Titled “Orientation Guide to Facilitate the Recognition of Countries, States, and Territories with Preferential Tax Regime and Tax Treatment for Fiscal Year 2025”, the guide comprises three sections:
1. Basic concepts: This section includes geographic regions like countries and states, preferential or low taxation regimes, international organization-defined tax havens, and the roles of OECD and FATF.
2. Fundamental aspects: The key aspects of this section involve recognising countries, states, and territories; identifying those with conventions like double-taxation avoidance; and understanding the tax treatment such as transfer pricing, withholding tax and deductions for transactions with individuals or entities in low or no-tax regions.
3. Scope and final considerations: This section involves consulting the tax administration for cases not covered by the Guide, clarifications that unlisted jurisdictions might be deemed preferential or low-tax if they meet domestic criteria, and allowing submissions of information for jurisdiction review.
