El Salvador: Tax Killing Off Stock Market

Taxes on transactions made on the stock exchange in El Salvador are discouraging operations on the secondary market, which fell 80% in May compared to the same period in 2015.

Thursday, August 11, 2016

The reduction from 20% to 3% in the tax on stock gains in November 2015 was not enough to prevent trading on the secondary market in the first quarter to fall by 80%.

Rolando Duarte, president of the Stock Exchange, explained to Laprensagrafica.com that   "... The tax has meant a fall in the profitability of the securities that are resold on the secondary market."In the secondary market operations are short term, the tax is 'flat' and the commissions that are earned are so small and the effect of the tax is so great that it is killing off the secondary market."

"... Duarte warned that removing the tax only on government securities "would mean that the secondary market, which is the essence of the capital market, will practically focus only on public shares."

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El Salvador: Stock Market Trading Down

April 2016

The reduction from 20% to 3% in the tax on stock profits was not enough to prevent trading on the secondary market in the first quarter of the year falling by 94%.

In the first quarter transactions in the four markets operated by the Stock Exchange of El Salvador recorded a drop of 3% compared to the same period in 2015.

El Salvador: Less Taxes, More Stock Exchange Transactions

January 2016

Lowering the tax on transactions for non-domiciled investors from 20% to 3% had a positive effect on the performance of the stock market in 2015, which grew by 6% compared to 2014.

The forecast made by Rolando Duarte, president of the Stock Exchange of El Salvador (BVES), is that this type of investment will continue to grow, thanks to the incentive which was first implemented in 2015.

Stock Market Opposes Tax Reform

June 2014

The package of new taxes proposed by the government of El Salvador will raise the price of the stock trading and the business of repurchasing shares.

The tax reform would not only reduce the profitability of the business, but would also make the resources accessible to the government, when it comes to the local market to issue bonds in order to finance public investment projects, more expensive.

El Salvador: Disincentive in Stock Investing

May 2014

A potential tax on financial transactions would discourage investment in the stock market as securities would be taxed each time they are traded.

In light of a tax proposal that would tax at 0.25% per $750 all kinds of securities, including repos and securitizations, the Stock Exchange of El Salvador (BVES) has expressed its concern for contracts already traded on the market and its dampening effect on investment.

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