On October 4, 2022, the Legislative Assembly approved a new Fire Department Law for El Salvador. The purpose of the law is to modernize the fire department, giving it more institutional independence to enable a faster response to an emergency.
This law implements an Ad-Valorem tax of 5% on the contracting, extension, renewal, or modification of insurance sold, offered, or negotiated in El Salvador. However, insurance contracted in connection with a bank loan, non-bank loan, or the extension, renewal, or modification of a loan is not subject to the law.
Finally, the law prohibits any insurance company from transferring the collection of the Ad-Valorem tax to an individual or legal entity that contracts the insurance that triggers the tax.