Understand the Jurisdictions Setup Requirement Before Proceed Your Register Company in El Salvador
El Salvador, sometimes called the “Land of the volcanoes”, is a tropical, mountainous country located in the center of Central America. Bordering the Pacific Ocean in south, Guatemala in west and Honduras in the north, El Salvador is the only Central American country without a Caribbean coastline.
Why Invest in El Salvador
El Salvador is gaining its traction to become one of the preferred investment destinations in Latin America. The country’s stable economy is one of the main reasons that attract global investors. Foreign Direct Investment (FDI) has been one of the main contributors that underpinned economic growth in El Salvador. FDI flows to El Salvador accounted for USD 792 million in 2017, where most of the increase is due to higher retained earnings.
Among others, the textile industry, telecommunications, tourism, as well as the production of electricity are the sectors that obtained most of the FDI. Despite several economic and political instabilities, El Salvador offers a fair amount of fiscal benefits for companies seeking to do business in El Salvador. On top of that, a highly qualified workforce and a strategic geographic location have constituted other important advantages for companies who want to invest and do business in the country.
Company Incorporation in El Salvador
As with most jurisdictions, company incorporation process in El Salvador is straightforward and easy. Registration of the companies at the El Salvador Commercial Office usually complete in the window of 5 working days.
- Tax Identification Number (NIT) of the partners
- Personal identity documents like personal ID card, resident card or passport of each one of the partners. Please note that in the case of being shareholders of other companies, a document of company establishment is required.
- Company name (must run name search with the El Salvador Commercial Registry to check the availability of the proposed company name).
- Corporate purpose: There is no limit on the corporate purposes as long as they are related to the main intended business activity.
- Share Capital
- Business Law in El Salvador stipulates that the Share Capital must be of USD 2,000.00 (for Salvadorans as well as for Foreigners).
- From this capital, the amount of USD 100.00 (which is equivalent to that of 5% of the minimum required capital) has to be paid at the moment of the constitution of the company with a certified check from a Salvadoran Bank.
- Shareholders: Commercial Law in El Salvador mandates that all companies must have a minimum of two shareholders, who can be natural or legal persons (i.e. individuals or companies). The shareholders can be from El Salvador or from overseas.
- The percentage of shareholder participation for each partner as well as the way the stock will be distributed.
- The Legal Representative (certification of the legal representation of the Company)
Other relevant registration processes:
- Obtain the income tax distribution number (NIT) and the Value Added Tax number from the Ministry of Finance.
- Registration at the City Hall – the municipality or city where the company will be domiciled/located.
- Registration at the General Office of Statistics and Census
- Registration at the Registry of Commerce and obtain the Certificate of Registration.
Once all of these basic requirements are met, the company constitution is complete – the company can begin its business activities in El Salvador.
For those investors who are looking for new opportunities in countries with untapped business possibilities, El Salvador is one of the best countries to explore!
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