El Salvador Import Tax
El Salvador is a small but strategically located country in Central America with an open and growing import market. As a member of several regional and international trade organizations, including the Central American Common Market (CACM) and the World Trade Organization (WTO), El Salvador has implemented a wide range of tariff rates on products based on their category and origin. These tariff rates are crucial for both domestic businesses and international traders who are looking to import goods into the country.
El Salvador has signed multiple free trade agreements, including the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) with the United States and the European Union-Central America Association Agreement (EU-CAAA). These agreements help to lower tariffs on many products from specific countries, making El Salvador a competitive import market. Furthermore, the country imposes special duties on certain goods depending on their country of origin and the agreements in place.
Custom Tariff Rates by Product Category
1. Agricultural Products
Agriculture remains a critical sector of the Salvadoran economy, and imported agricultural products are subject to varied tariffs based on the type of product. The rates applied to agricultural goods can be influenced by regional agreements like CACM and international agreements like CAFTA-DR.
A. Cereals and Grains
Cereals and grains form a significant portion of El Salvador’s imports due to the country’s demand for staple food items. The tariff rates for these products vary:
- Wheat: A 10% tariff is imposed on wheat imports, reflecting its importance as a staple food.
- Maize (corn): A 5% tariff applies to imported maize, which is used widely in Salvadoran cuisine.
- Rice: Rice imports face a higher tariff of 15%, though there are certain exemptions depending on the country of origin.
Special Duty Considerations: Under CAFTA-DR, imports of cereals from the United States benefit from reduced or zero tariffs, as the agreement eliminates many agricultural tariffs between El Salvador and the U.S.
B. Fruits and Vegetables
Fresh produce is subject to varying levels of tariffs, depending on whether the products are grown locally or are considered essential for import:
- Bananas: There is a 0% tariff on bananas, as this product is widely available and produced locally and regionally.
- Tomatoes: A 20% tariff is applied to imported tomatoes, as local production aims to meet domestic demand.
- Avocados: A tariff of 12% applies to avocado imports, as they are a high-demand item with limited local supply.
Special Duty Considerations: Fruits and vegetables imported from other CACM countries are exempt from tariffs due to regional trade agreements, encouraging the flow of goods within Central America.
C. Meat and Animal Products
Meat products, especially poultry and beef, are significant imports, and tariffs reflect the need to balance local production with imports.
- Poultry (chicken and turkey): A 25% tariff is applied to poultry products, aimed at protecting domestic poultry farmers.
- Beef: Imported beef is subject to a 30% tariff, as beef production is a developing industry in El Salvador.
- Pork: Pork imports face a 20% tariff, though demand is growing faster than local production.
Special Duty Considerations: Poultry and beef imports from the United States and Mexico enjoy reduced or zero tariffs due to bilateral trade agreements like CAFTA-DR and a separate agreement with Mexico.
2. Textiles and Apparel
Textiles and apparel play a dual role in the Salvadoran economy, as both a major import and export sector. Tariffs on imported textiles are structured to support the local industry while allowing access to international goods.
A. Clothing
Clothing imports into El Salvador face the following tariffs:
- Ready-made garments: These imports are subject to a 15% tariff. This tariff applies broadly to all types of apparel, including casual wear, formal wear, and sportswear.
- Textile fabric: Fabrics, especially those used in local garment production, have an 8% tariff.
- Footwear: Imported footwear faces a 10% tariff, with specific rates depending on the material and type of shoes (e.g., leather shoes, sports shoes).
Special Duty Considerations: Under CAFTA-DR, textiles and garments from the United States enjoy tariff-free entry into El Salvador, fostering trade in this key sector. Additionally, textiles from other CACM countries may also enter duty-free.
B. Cotton
Cotton is a crucial input for the textile industry, and its import is subject to the following rates:
- Raw cotton: Imported raw cotton is subject to a 5% tariff, promoting local processing.
- Processed cotton: Processed cotton, which includes spun and woven cotton, faces a 12% tariff.
Special Duty Considerations: Cotton imports from countries with special trade agreements, such as those in the European Union, may be eligible for reduced or zero tariffs, supporting local textile manufacturing.
3. Electronics and Machinery
El Salvador imports a wide range of electronics and machinery, which are critical for both consumer use and industrial applications. The tariff rates in this category vary based on the product type and intended use.
A. Consumer Electronics
Consumer electronics are essential imports, and the following tariff rates apply:
- Mobile phones: A 0% tariff is applied to mobile phone imports, reflecting the high demand and widespread use of smartphones in the country.
- Laptops and computers: These devices are also subject to a 0% tariff, encouraging access to technology and improving digital literacy.
- Television sets: Imported TVs face a 5% tariff, with larger or more advanced models potentially subject to higher rates.
Special Duty Considerations: As a signatory to the WTO Information Technology Agreement (ITA), El Salvador applies zero tariffs on many information technology products, including mobile phones and computers.
B. Industrial Machinery
Machinery, particularly for industrial use, is a significant import category with varying tariff rates:
- Tractors: Agricultural machinery, such as tractors, is subject to a 10% tariff.
- Heavy equipment: Other forms of heavy industrial machinery, such as bulldozers and excavators, face a 12% tariff.
- Agricultural machinery: Specific equipment used in farming, such as harvesters, is subject to a 5% tariff.
Special Duty Considerations: Industrial machinery from CACM countries generally enters duty-free, and machinery from the United States benefits from reduced tariffs under CAFTA-DR.
4. Pharmaceuticals and Medical Equipment
Pharmaceuticals and medical equipment are critical imports, and El Salvador maintains relatively low tariffs on these essential products.
A. Pharmaceuticals
- Medicines: There is a 0% tariff on imported medicines, as access to healthcare products is a priority for the government.
- Vitamins and dietary supplements: These products face a 5% tariff, encouraging local production while maintaining access to imported goods.
- Medical supplies and surgical equipment: A low 3% tariff applies to medical equipment used in hospitals and clinics.
Special Duty Considerations: Under CAFTA-DR, many pharmaceutical imports from the United States enjoy tariff-free status or significantly reduced tariffs, making healthcare products more affordable.
5. Automobiles and Transport Equipment
The automotive sector is a significant part of the Salvadoran import market. Tariff rates differ for consumer and commercial vehicles.
A. Automobiles
- Passenger vehicles: A 15% tariff is imposed on imported passenger cars. This applies to most types of vehicles, including sedans, SUVs, and luxury cars.
- Commercial vehicles: Light and heavy commercial vehicles face a 10% tariff, supporting the country’s transport infrastructure needs.
- Motorcycles: Motorcycles, which are popular due to their affordability, face a 12% tariff.
Special Duty Considerations: Commercial vehicles imported from Mexico benefit from reduced tariffs under a bilateral trade agreement, encouraging trade between the two nations.
B. Spare Parts
Automotive spare parts are essential for maintaining the vehicle fleet in El Salvador:
- Vehicle spare parts: Imported vehicle parts are subject to an 8% tariff.
- Aircraft parts: Parts for aircraft face no tariffs (0%), reflecting the need to support the aviation industry.
- Shipping and transport equipment: These products face a 5% tariff, ensuring the smooth operation of El Salvador’s transport infrastructure.
6. Chemicals and Plastic Products
A. Chemical Products
El Salvador imports a wide variety of chemical products, particularly those used in agriculture and industry:
- Fertilizers: There is no tariff (0%) on fertilizers, reflecting the importance of agriculture to the national economy.
- Pesticides: Imported pesticides face a 10% tariff.
- Household cleaning products: These goods are subject to a 12% tariff.
B. Plastics
Plastic products, both raw and finished, are essential imports for manufacturing:
- Plastic containers: Imported plastic containers are subject to an 18% tariff, encouraging local production.
- Plastic raw materials: A lower tariff of 5% applies to raw plastic materials, which are used in the production of various consumer goods.
7. Metals and Construction Materials
A. Iron and Steel
Iron and steel products are vital for the construction industry in El Salvador. The tariffs on these products are structured to protect domestic industries while facilitating access to essential raw materials:
- Steel rods and bars: These products face a 5% tariff.
- Sheet metal: Imported sheet metal is subject to a 10% tariff.
Special Duty Considerations: Imports of iron and steel from countries with which El Salvador has free trade agreements, such as Mexico and the United States, benefit from reduced tariffs, especially for industrial use.
B. Cement and Concrete
Construction materials are in high demand due to ongoing infrastructure development in El Salvador:
- Cement: Imported cement is subject to a 15% tariff.
- Concrete blocks: These materials face a 10% tariff.
8. Food and Beverages
A. Processed Foods
Processed food items, which are not widely produced locally, face higher tariffs to encourage domestic production:
- Canned foods: A 15% tariff applies to imported canned foods.
- Dairy products: Dairy imports are subject to a 25% tariff, as local production is strong in this sector.
- Snack foods: A 20% tariff applies to imported snack foods.
Special Duty Considerations: Under CAFTA-DR, certain food products imported from the United States may benefit from reduced or zero tariffs, particularly in the processed food category.
B. Beverages
The tariffs on beverages, especially alcoholic drinks, are relatively high compared to other consumer goods:
- Alcoholic beverages: A 30% tariff applies to imported alcoholic drinks, including wine, beer, and spirits.
- Non-alcoholic beverages: These products, such as sodas and juices, face a 20% tariff.
9. Energy and Fuel Products
A. Petroleum and Fuel
Energy imports, especially petroleum products, are critical for El Salvador’s energy needs. The tariff rates reflect the country’s dependency on foreign fuel sources:
- Gasoline: A 10% tariff applies to gasoline imports.
- Diesel fuel: Diesel imports face a 5% tariff, reflecting its use in both industry and transport.
- Natural gas: There is no tariff (0%) on imported natural gas, as El Salvador seeks to diversify its energy sources.
Special Duty Considerations: Fuel imports from CACM countries and the United States may benefit from reduced tariffs, especially under agreements like CAFTA-DR.
B. Renewable Energy Equipment
To encourage the adoption of renewable energy technologies, El Salvador imposes zero tariffs on the following products:
- Solar panels: 0% tariff.
- Wind turbines: 0% tariff.
10. Luxury Goods
A. Jewelry and Precious Stones
Luxury goods, particularly jewelry, are subject to higher tariffs to encourage local production and consumption:
- Gold jewelry: A 10% tariff applies to imported gold jewelry.
- Diamonds and other precious stones: A tariff of 8% is imposed on precious stone imports.
B. Perfumes and Cosmetics
Perfumes and cosmetics are popular imports, and tariffs are structured to allow market access while protecting local producers:
- Perfumes: These products face a 20% tariff.
- Cosmetics: A 12% tariff applies to imported cosmetics, including skincare and haircare products.
Special Import Duties for Specific Countries
CAFTA-DR Members
El Salvador is a member of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), which includes the United States and several Central American countries. As a result, many goods from these countries enjoy preferential tariffs, including:
- Agricultural products: Most agricultural products from the U.S. enter El Salvador duty-free, significantly reducing the cost of imports.
- Textiles and apparel: Textiles from the U.S. and other CAFTA-DR members are subject to reduced tariffs or enter duty-free, supporting the textile industry.
- Pharmaceuticals and medical equipment: Duty-free or reduced tariffs on U.S. pharmaceutical products ensure better access to healthcare supplies.
European Union
El Salvador is also a signatory to the European Union-Central America Association Agreement (EU-CAAA), which reduces tariffs on many products from EU countries. Notable categories include:
- Textiles and garments: Textile imports from the European Union enjoy reduced tariffs compared to other non-EU countries.
- Automobiles: Cars and transport equipment from the EU may enter at lower tariff rates.
Mexico
Under the El Salvador-Mexico Free Trade Agreement, specific products from Mexico benefit from preferential tariff rates. Notable categories include:
- Vehicles and transport equipment: Commercial vehicles and transport machinery from Mexico enjoy reduced tariffs.
- Processed foods: Processed food imports from Mexico are subject to lower tariffs under the bilateral trade agreement.
Country Facts About El Salvador
- Formal Name: Republic of El Salvador
- Capital City: San Salvador
- Largest Cities:
- San Salvador
- Santa Ana
- San Miguel
- Per Capita Income: Approximately USD 4,200
- Population: Approximately 6.5 million people
- Official Language: Spanish
- Currency: United States Dollar (USD)
- Location: Central America, bordered by Guatemala to the west, Honduras to the north and east, and the Pacific Ocean to the south
Geography, Economy, and Major Industries
Geography
El Salvador, the smallest and most densely populated country in Central America, has a diverse geography that includes mountains, volcanoes, coastal plains, and fertile agricultural regions. The country lies along the Pacific Ocean, bordered by Guatemala to the west and Honduras to the north and east. Its tropical climate and fertile volcanic soil make it ideal for agriculture, while its coastal plains support fishing and tourism industries.
The country is home to several active volcanoes, contributing to the fertile soils in the highlands, while the lowland coastal plains are used for agriculture and urban development. El Salvador experiences a tropical climate with a distinct dry and rainy season.
Economy
El Salvador has a small but open economy that is highly dependent on trade, particularly with the United States. The adoption of the U.S. dollar as the national currency in 2001 helped stabilize the economy but limited the country’s ability to conduct independent monetary policy. El Salvador’s economy is heavily reliant on remittances from Salvadorans living abroad, which account for nearly 20% of the country’s GDP.
The country’s economic activity is dominated by the services sector, which includes banking, telecommunications, and retail. While agriculture and manufacturing are also important, the services sector has grown significantly in recent years. The government has prioritized diversifying the economy by promoting industrialization and encouraging foreign direct investment.
Major Industries
- Agriculture: Traditional exports like coffee, sugar, and maize remain important, although the agricultural sector has shrunk in favor of services and manufacturing.
- Manufacturing: The textile and apparel industry is a critical part of El Salvador’s export economy, with many products destined for the U.S. under preferential trade agreements.
- Services: The services sector, including financial services, telecommunications, and retail, is the largest contributor to the country’s GDP, supported by strong consumer demand and remittances from abroad.
- Tourism: Although not as large as other sectors, tourism is a growing industry in El Salvador, especially ecotourism and cultural tourism. The country’s beautiful beaches, rich history, and archaeological sites attract a growing number of international visitors.
