Transfer Prices in El Salvador, regulations and formal obligations demanded by the Tax Administration.


The regulations of Transfer Prices in El Salvador were incorporated to the Tax Code through Legislative Decree N° 233. These regulations are applied to related subjects and in the case of transactions that are executed with subjects located in countries, states or territories with preferential fiscal regime, low or no taxation (Article 62-A of the Tax Code).

Taxpayers must present the informative statement of the operations performed with (Form F982), as long as the total amount of these operations is higher than $ 571,000.

Some relevant aspects that must be mentioned are:
. Type of operation performed
. Type of relationship with the foreign entity.
. Method of transfer prices applied to each operation performed.
. Price or profitability margin associated to the operation performed.
. Financial results for the type of operation at the taxpayers’ global activity level.

Date of presentation:
It has been established that the deadline of the Annual Informative Statement of the Transfer Prices, through the Form 982, will be on 31 March every year, for the Income Statement (April), it must have the adjustments resulting from the study of the Transfer Prices, consequently, on 31 May every year, it must be shown to the Legal Auditor the compliance of the regulations of the Transfer Prices.
The related parties are defined as follows:
. A person or company with direct or indirect participation in at least 25% of the social capital or voting stock of the other one.
. The companies that belong to the same unit of a business group, and
. Salvadorian entities that have economic links with a foreign supplier of exclusive distribution and/or buy from the foreign entity that represent more than 50% of the total volume of the Salvadorian entities.

The rules of transfer prices are also applied to the transactions performed with entities located in preferential fiscal regime as well as tax heavens.
The unfulfillment of this obligation can be affected to a fine of five monthly basic salaries (Article 248 of the Tax Code).

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