Despite the many challenges it faces, the small Central American nation of El Salvador is seeing modest but steady growth. The country’s GDP is projected to grow by 2.4 percent by the end of this year, and by 2 percent in 2023, according to a recent World Bank report.
Despite Salvadoran President Nayib Bukele’s disastrous gamble on Bitcoin, the private sector remains stable, and the government has implemented many incentives to attract foreign investment. It’s little wonder then, that many foreign businesses and investors are considering domiciling in the country. And when they do, they will inevitably need to open a corporate bank account in El Salvador.
For foreign business entities to open a corporate bank account in El Salvador, they must first incorporate in the country. Business bank accounts and setting up shop in the country are intrinsically tied together.
As one cannot be done without the other, let us briefly review the steps that foreign companies need to take to incorporate in El Salvador. The rules for the tiny country of 6.4 million people are very similar to the regulations a company needs to comply with when doing business in Costa Rica.
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What is the Company incorporation steps to open a corporate bank account in El Salvador?
What follows are the seven essential steps that foreign entities must take in order to incorporate in El Salvador:
- Obtain local tax ID numbers for shareholders
- Create and sign the company bylaws
- Register the company bylaws, initial balance, and apply for a commerce license
- Obtain a local company tax ID number (NRC)
- Open a corporate bank account in El Salvador
- Deposit the required minimum capital to activate the account
- Register the company with all relevant government authorities
Notice how step no. 6 is the account-opening part of the incorporation process.
There is a surprisingly large quantity of banks found in such a small country, so business entities can shop around to find the bank that gives you the best corporate services, rate, and ease of banking. As in other jurisdictions in the region, local banks tend to require a few extra hoops to jump through compared to international banks.
What is the list of commercial banks in El Salvador?
El Salvador is home to several domestic banks, including:
- America Central bank
- Bandesal bank
- Cuscatlan bank
- ProCredit bank
International banks with a presence in El Salvador include:
- Agricola bank
- Atlantida bank
- Azteca bank
- BICSA bank
- Davivienda bank
- Industrial bank
- Promerica bank
Once a foreign entity has gone through the incorporation process and has decided on which bank to open an account with, there are several steps that businesses must follow to activate the account.
Opening a corporate bank account in El Salvador: 4-step guide
- Assemble supporting documents, including a shareholder list (minimum) outlining their personal data, position in the company, etc.
- To open a corporate bank account with a local bank, the head of the business must travel to El Salvador to be interviewed by a branch manager in person
- To avoid the in-person interview, hire a trusted/reputable local representative to take part in the interview on the company’s behalf
- Deposit at least 5 percent of the company’s in-country share capital (minimum $2,000) USD into the account, which is equal to $500 USD or more, to activate the account
While the company incorporation process in El Salvador can take as little as 16 days on average to complete, other more conservative estimates put the figure at between 5 to 7 weeks before a company is fully set up and ready for business.
There is one major quirk about opening a corporate bank account in El Salvador that must be mentioned here. While the bank account opening process is relatively easy and can take is little as a week, companies in El Salvador must wait between 3 to 6 months before they can make international bank transfers.
Biz Latin Hub can help you with opening a corporate bank account in El Salvador
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogota and Cartagena, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivalled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.
As well as knowledge about how to open a corporate bank account in El Salvador, our portfolio of services includes hiring & PEO, accounting & taxation, company formation, bank account opening, and corporate legal services.
Contact us today to find out more about how we can assist you in finding top talent, or otherwise do business in Latin America and the Caribbean.
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