El Salvador Gazettes Decree on Authentic Interpretation of Expense Deductibility Rules for Income Tax

The Salvadoran Official Gazette May 11 published Decree No. 568, providing an authentic interpretation of the rules on expense deductions for income taxation. The decree includes measures: 1) defining deductible costs and expenses as those necessary and inherent to income-generating activities across all sectors, including losses and diminished income; 2) requiring that deductible costs and expenses be measurable, reasonable, and exclusively related to business purposes; 3) allowing deductions where amounts are duly documented and recorded in the taxpayer’s accounting or special registers; and 4) clarifying that deductibility doesn’t depend on generating computed tax in the same fiscal year. The decree ...