LEGAL FRAMEWORK

El Salvador has a series of laws that foster the business climate and promote the attraction of foreign investment

Free Zone Law

LAW ON INDUSTRIAL AND COMMERCIALIZATION FREE ZONES

The Law on Industrial and Commercial Free Zones regulates the operation of Free Zones and Active Processing Warehouses, as well as the benefits and responsibilities of the owners of the companies that develop, manage and use them.

ACTIVITIES INCENTIVED UNDER THE LAW

  • Manufacture of industrial goods included in chapters 3 and 25 onwards of the HTS.
  • Fishing of marine species for industrial transformation, as well as their respective processing and commercialization.
  • Cultivation, processing and commercialization of flora species produced in greenhouses or laboratories.
  • Breeding and commercialization of amphibian and reptile species in captivity.
  • Ethyl alcohol dehydration.
  • Services necessary for production activities such as design, painting, cutting, stamping, finishing, screen printing, embroidery, washing, ironing, quality control, recycling and repair.

BENEFITS OF THE INDUSTRIAL AND COMMERCIALIZATION FREE ZONES LAW

  • Exemption from customs duties and import taxes on raw materials, machinery and materials for the production of the benefited product.
  • Full exemption from real estate transfer tax.
  • Income tax exemption for up to 60 years*.
  • Income tax exemption on the distribution of profits or dividends for 12 years.
  • Municipal tax exemption*

*Exemption period will vary depending on whether the company is established in a free zone or DPA, inside or outside the metropolitan area of ​​San Salvador

INCOME TAX EXEMPTION

Location % exemption Exemption period for companies within the Free Zone Exemption period for companies operating as DPA 
Metropolitan Area of ​​San Salvador (AMSS) 100% For 15 years For 10 years
60% For the next 10 years For the next 5 years
40% For the next 10 years For the next 10 years
Outside the AMSS 100% For 20 years For 15 years
60% For the next 15 years For the next 10 years
40% For the next 10 years For the next 10 years

Once the term of total exemptions has expired, users of the free zone will have an additional period of 5 years of total exemption if it is verified that they have increased their investment by 100% over the initial investment.
Some strategic industries may benefit from an additional 5 to 10 years of full exemption.

MUNICIPAL TAX EXEMPTION

Location % exemption Exemption period for companies within the Free Zone Exemption period for companies operating as DPA 
Metropolitan Area of ​​San Salvador (AMSS) 100% For 15 years For 10 years
90% For the next 10 years For the next 5 years
75% Onwards Onwards
Outside the AMSS 100% For 20 years For 15 years
90% For the next 15 years For the next 10 years
75% Onwards Onwards

Some strategic industries may benefit from an additional 5 to 10 years of full exemption.

International Services Law

INTERNATIONAL SERVICES LAW

The International Services Law seeks to turn El Salvador into a world-class center for international logistics services. Establishes a legal framework, with clear rules for new opportunities in the service sector with the potential to be marketed internationally, such as: international distribution, international logistics operations, call centers, information technology, business processes, among others.

The law's main objective is to regulate the establishment and operation of parks and service centers, as well as the benefits and responsibilities of the owners of companies that develop, manage or use them.

ACTIVITIES INCENTIVED UNDER THE LAW

  • International distribution
  • International logistics operations
  • International call center «Call Center»
  • Information technologies
  • Technological equipment repair
  • Business processes BPO's
  • Research and development
  • Telemedicine
  • Cinematography
  • Repair and maintenance of maritime vessels, aircraft or containers
  • Specialized services for aircraft
  • Medical-Hospital Services
  • Elderly and convalescent care
  • International financial services

INTERNATIONAL SERVICES LAW BENEFITS

  • Total exemption from Income Tax for income from the incentivized activity, during the period that they carry out their operations in the country.
  • Total exemption from Municipal Taxes on the assets of the company during the period that they carry out their operations in the country.
  • Total exemption from customs duties and other taxes levied on the import of machinery, equipment, tools, accessories, etc., that are necessary for the execution of the incentivized activity
Advertising
Advertising