In April of the current year, the new Law for the Promotion of Innovation and Technological Manufacturing was approved in the Republic of El Salvador. Through this law, this Central American country promotes investment and the development of new technology-based businesses.
What fiscal incentives are granted?
The beneficiaries of this law, with a valid Qualification Agreement issued by the Ministry of Economy, may have access to the following fiscal incentives:
Total exemption from Income Tax for the incentivized activities.
Exemption from all types of Income Tax withholdings for the incentivized activities.
Total exemption from municipal taxes on the net assets declared by the beneficiaries.
Exemption from the Capital Gain tax.
Total exemption from payment of Import Duties and taxes on the importation of goods, inputs, machinery, equipment, and tools necessary for the development of the incentivized activities.
The above fiscal incentives will be granted for a period of fifteen years.
El Salvador, is a small but vibrant country located in Central America, it is increasingly gaining attention as an attractive destination for investors. With its strategic geographical location, growing economy, and pro-business environment, the nation offers a range of opportunities for both local and foreign investors looking to diversify their portfolios and tap into the region’s potential.
1. Strategic Location
El Salvador’s geographical location plays a crucial role in its appeal to investors. Positioned in the heart of Central America, the country serves as a natural bridge connecting North and South America. Its close proximity to major markets like the United States and access to the Pacific Ocean provide significant advantages for businesses involved in trade and logistics.
2. Growing Economy
In recent years, El Salvador has experienced steady economic growth, driven by factors such as increasing foreign direct investment, a growing middle class, and a supportive government focused on economic development. The country’s diverse economy spans various sectors, including manufacturing, agriculture, services, and technology. Additionally, El Salvador’s commitment to regional integration and free trade agreements has further stimulated economic activity, creating a favorable environment for investors.
3. Business-Friendly Policies
El Salvador’s government has been actively implementing business-friendly policies to attract and retain investors. The nation offers attractive incentives, such as tax benefits, streamlined bureaucratic processes, and protection of foreign investments. The ease of doing business has significantly improved, making it more convenient for both local and international entrepreneurs to set up and operate businesses in the country.
4. Thriving Technology Sector
El Salvador has embraced technological advancements, fostering a dynamic tech ecosystem. The country is witnessing a surge in tech startups, particularly in areas like fintech, software development, and digital services. The skilled and tech-savvy workforce, coupled with a supportive government, has turned El Salvador into an emerging hub for technology innovation.
This is a great opportunity to consider opening operations in the American continent. The increasing tension between the United States and China has opened our eyes to the reality that we need to diversify our production centers. Taking advantage of the tax benefits offered by El Salvador, along with its geographical advantages, growing economy and one of the most competitive salary ranges in the world, makes it worthwhile to consider opening a branch in this beautiful country.
So, if you are interested in finding out more about by business and outsourcing and its opportunities, contact us today! Below this article, you will find a link to set up a free fifteen-minute consultation with us to discuss your options further.
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