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El Salvador Taxes are a very significant part of the El Salvador Economy. El Salvador is the smallest country in Central America and has the third largest economy in the continent. However, the economic development in El Salvador has been negligible over the recent years due to political tensions and natural disasters. To escalate the economic growth of the country, the government has attempted to renovate the tax system along with innovative measures in the export markets and foreign investment.
El Salvador Tax System
In upgrading the economic situation of El Salvador, the government has entered an innovative fiscal discipline. The value added tax or VAT has been the biggest source of revenue for the government so far. It had accounted for approximately 51.8% of the entire tax revenues collected in 2005. The general tax revenue is not higher than the proportion of GDP. Government expenses of El Salvador are lower than 15 % of GDP, and state-owned businesses take up less than 1 % of the total revenues collected.
El Salvador Tax Rates
Taxes charged by the government comprise of a value added tax of 13%, an income tax of 20%, excise taxes on alcohol and cigarettes, and import duties. Personal and corporate tax rates are low in El Salvador.
El Salvador Taxes do not impose a burden over the masses. El Salvador is well known for the fiscal freedom it offers. Government liberty, labor freedom and financial freedom in terms of taxes are characteristic features of the country.
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