A Salvadoran company challenged a tax authority assessment disallowing deductions for interest payments on intra-group loans and costs for various services. The company appealed, arguing the deductions were legitimate. The El Salvador Tax Court upheld the assessment in 2021, ruling in favour of the tax authority and finding the taxpayer had failed to discharge the burden of proof required to support the claimed deductions ... Read more

A wholesale cosmetics company in El Salvador was assessed by tax authorities over interest rates on loans granted to related parties domiciled in the Cayman Islands and Luxembourg. The company appealed, challenging the application of OECD Transfer Pricing Guidelines as non-binding. The Tax Court partially upheld the assessment in 2020, confirming the authority's power to determine market prices while ruling the OECD Guidelines hold no binding legal status in El Salvador ... Read more

A Salvadoran company appealed a tax authority assessment disallowing deductions for intra-group costs of sales. The Tax Court partially upheld the assessment but set aside the portions relying on OECD Transfer Pricing Guidelines, ruling that for the audited fiscal year El Salvador's Tax Code had not yet incorporated those guidelines or methodology, making their application legally impermissible ... Read more

A constitutional challenge was filed against Legislative Decrees Nos. 762, 763 and 764, enacted without proper parliamentary deliberation. El Salvador's Supreme Court ruled in 2018 that the decrees were unconstitutional, as deputies lacked sufficient time to debate the bills, violating Article 135(1) of the Constitution. The ruling invalidated measures aligning El Salvador's transfer pricing rules with OECD guidelines and provisions for tax information exchange, effective December 2018 ... Read more

A Salvadoran petroleum distributor was assessed by tax authorities who alleged that oil sales to a related party, Nejapa Power Company, were not at arm's length. The Supreme Court of El Salvador set aside the assessment in 2013, finding that the tax authority had improperly applied a presumptive basis method without satisfying the conditions required for its use, deciding in favour of the taxpayer ... Read more