Conditions strengthened by the human ingredient, one of the main treasures of the Country. Salvadorans are hard working people, whose working capacities are well-known at world-wide levels

El Salvador has based its development on aggressive processes on the following:
• Commercial Opening leading to tax reduction on final goods imports at 15% as ceiling, with an average tariff of 7%; raw materials and capital goods pay no taxes
• Modernization of the Government through diverse privatizations, such as banks, power companies, telecommunications and pensions systems, which translates into offering highly competitive services in the country
• Customs Modernization, giving flexibility to all procedures through the offices of TELEDESPACHO, being able to carry out on line operations.
• Tax Reforms, which reduced the income tax payments for corporations to 25% and established the Added Value Tax (IVA, VAT) at 13%.
• Monetary integration, which gives the U.S. dollar free circulation and set the exchange rate at 8.75 colones per US dollar

Negotiations Process:
Different operating options are necessary in order to market products in Salvadoran territory::

A) Dependant Agent
According to Art. 384 of the Commerce Code, the Dependant Agent is defined as the person in charge of promoting business on behalf of a principal, in a determined area or region, domiciled in El Salvador or in another country, and to inform this principal all the proposals for his acceptance. The dependant agent is subordinated to the principal.

B) Representative or Distributor
El Art. 392. of the Commerce Code defines the representative or distributor agent as the individual or company who continuously with or without legal representation and by contract has been designated by a principal to become the agent, representative or distributor of determined products or services in the country.

Whenever the agent, representative or distributor should not act by own account, but following instructions from its principal, he will not be liable if case of non-compliance; in this case, his responsibilities are limited to strict compliance of instructions received from the principal.

The agency-representation or distribution could be exclusive or of any other type agreed upon by the parties..

C) Agente Intermediario
The intermediary agents do not oblige the parties between themselves. Those contracts entered into with their intervention will be proven and executed in accordance with their nature, without attributing any public function whatsoever to the intermediaries. These could be individuals or companies.

The customary exercise of intermediation requires the authorization by the Superintendence of Societies and Mercantile Companies, or of the office designated for these matters and the intermediary will be subject to the observance of special laws and regulations on these issues. The intermediary will present a guarantee before the referred to Superintendence or office in charge of responding to customers and third parties of damages that might be caused, as prior requirement to be authorized.


D) Franquicias
This has been a very successful modality; it initially began with the fast food line, however this has grown in other fields as well.

E) Alianzas estratégicas y Licencias
In El Salvador, globalization has brought on this operating alternative, in which they enter into the domestic or regional market by means of an alliance between a foreign company and a local one.

F) Oficina de ventas (sucursal)
Establishing a sales office in El Salvador requires its registration at the National Registration Center of the Firm's Name, as well as at the Contributors Registry Office (VAT), Tributary Identification Number (NIT for its initials in Spanish), etc. This process is simplified by the National Investments Office (ONI for its initials in Spanish) of the Ministry of Economy, which centralizes the different matters and speeds the authorizations for start-up of the company.

The distribution of the different products in the Salvadoran market will be carried out using several mechanisms:

• Establishing a sales office that will be in charge of promoting, selling and distributing the products with its own labor force.


• Distributing the products through agents or local distributors with whom links have been established.


• Distributing the products through wholesalers or tradesmen established in the local markets.

In general, mass consumption goods are efficiently distributed using a local importer (distributor or wholesaler) who takes advantage of its established contacts and business networks to channel the products into the Salvador market, at a national level.

Regarding industrial goods, these are mainly handled by an Agent/ Distributor who works on specific commission basis. There are importers / distributors as well, who may be working with some of these lines.

The purchase of machinery and equipment is generally made directly through the suppliers in foreign countries.

Mention must be made to the fact that sales and distribution of foreign products in the Salvadoran market is done directly between the importer and final consumer and/or buying agents at institutional levels, for which they have specialized sales staff.

The following recommendations are made, for those entrepreneurs who wish to establish commercial relations in El Salvador:

Business luncheons and breakfasts are very common activities in the businessmen's agendas.
Appointments must be made in advance and it is expected they are met with an acceptable margin of punctuality. Should there be any type of delay or inconvenience, it would be expected that the persons you are meeting with, be informed.
Whenever going to a business appointment it is recommended to bring along business cards. Business meetings usually begin with the exchange of personal business cards.
Hand shake is the usual greeting between men and women..
It is important to have a local lawyer who will offer advisory services and to follow-up on all proceedings particularly at the time of formalizing its operations in the country.
It is quite frequent that in El Salvador the business executives speak English, however, it is preferable to be assured if it is necessary to be accompanied by an interpreter in order not to have any delays in communications at the moment of attending meetings.
It is advisable to bring samples of the products, to facilitate the presentation of the goods and talk about its advantages.
On dress code matters, casual wear is customary for day wear and formal suit for some special meetings; it is indispensable to use suits for evening events, unless otherwise mentioned.
As part of the Salvadoran culture, it is very important to cultivate interpersonal relations and in the business environment, it facilitates keeping a very satisfactory business link.

More information may be found regarding necessary procedures for the establishment and operation of a company, under section of this Business Guide.