El Salvador’s tax revenue witnessed a significant increase of $550.6 million by the end of 2024, as confirmed by the latest report from the Ministry of Finance. This growth highlights the dynamic nature of the country’s economy, driven largely by consumption and income taxes levied on both individuals and businesses.

The Ministry of Finance projected a specific amount in the national budget annually, which is then allocated to various public expenditures. Compared to the previous fiscal year and budget expectations, 2024 closed with notable growth, primarily due to increased revenue from the Value Added Tax (VAT). According to the report published on Fiscal Transparency, tax collection brought in $7,369.1 million, marking an 8.1% year-on-year increase from 2023. Additionally, tax revenues exceeded budget projections by $406.9 million, or 5.9%. Including current revenues and contributions, the Ministry of Finance received $7,648.6 million by the end of 2024, which is $504 million (7.1%) more than the previous year’s results and $200.7 million (2.7%) higher than the budget.

VAT revenue reached $3,501 million, an increase of $324.7 million (10.2%) compared to 2023, and $232.3 million (7.1%) above the budget projection. Meanwhile, Income Tax (ISR) revenue surpassed $3,102.8 million, growing by $225.3 million, or 7.3% more than in 2023, with a budget surplus of $124.8 million (4.2%). While VAT is collected on consumption, income tax is paid with a one-year delay, meaning the revenue collected in 2024 reflects salaries and profits earned in 2023. Together, these two taxes account for 89% of the government’s revenue.

Customs duties on imports contributed $340.7 million (5.8%), and selective consumption taxes brought in $235.9 million (1.5%). However, special contributions fell by 34.1%, totaling $47.4 million, primarily due to a lack of revenue from the FOVIAL road maintenance fund. Other miscellaneous taxes and levies, including real estate transfers, vehicle registration, migration and tourism, and insurance premiums, amounted to $109.3 million, showing a growth of 21.9%.

This surge in tax revenue underscores the robust economic activity in El Salvador and the government’s effective fiscal management, positioning the country for continued economic stability and growth.